African Potash signs supply deal with Zambia distributor

African Potash signs supply deal with Zambia distributor

The deal will give African Potash, which wants to become a one-stop shop African fertilizer business, a platform to distribute the product across eastern and southern Africa.

Shares in African Potash (LON:AFPO) jumped Friday after the miner announced it has sealed a deal to sell 50,000 metric tonnes (MT) of its fertilizer product to a Zambian distributor in the Common Market for Eastern and Southern Africa (COMESA) for $500 a tonne.

The stock was up 2.5% at 3.625p in early trading, a fresh 12-month high, and traded around 2.9p mid-afternoon in London on the news.

This is the third supply deal the sub-Sahara focused company, which wants to become a one-stop shop African fertilizer business, secures in less than a month.

"We are delighted to have concluded negotiations [that will see delivery of] both NPK and UREA fertilizers in Zambia at a price that supports the growth and development of the African farmer," executive chairman Chris Cleverly said in a statement.

African Potash, which also owns the Lac Dinga project in the Republic of Congo, plans to create a vertically integrated operator that has the mining, processing and marketing skills to tap into a region that buys in an estimated 10 million tonnes of fertilizer a year.

Africa is one the most important markets for fertilizers, having the potential to increase the value of its annual agricultural output to $500 billion by 2020 according to the African Development Bank (ADB).