African Potash soars on fertilizer trade deal

African Potash soars on fertilizer trade deal

African Potash 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.

Shares in African Potash (LON:AFPO) closed 4.8% higher in London Friday after the miner announced a trade deal with Windmill —a private fertilizer producer in Southern Africa — expected to bring in net revenue of $300,000.

Earlier this month, the miner formed a long-term deal with South African investment company Beryl Holdings, to collaborate on its fertilizer operations in southern and eastern Africa.

Under the deal, Beryl's main fertilizer trading activities will be restructured into a newly-formed Mauritian company, which will become a wholly-owned African Potash subsidiary.

“Building a strong permanent relationship with a company such as Windmill, which has an important position in the rapidly expanding African fertilizer industry, is a vital move for African Potash,” the company’s executive chairman, Chris Cleverly, said in a statement.

Windmill’s chief executive officer, George Rundogo, noted that fertilizer in Africa is becoming ever more important as “climatic changes" are affecting long term agriculture patterns.

African Potash, which owns the Lac Dinga project in the Republic of Congo, said in September it planned to create a vertically integrated operator that had 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).