Canpotex secures potash demand from China in deal with Sinofert

Canpotex secures potash demand from China in deal with Sinofert

Canada's Canpotex has signed a new three-year deal to supply potash to China’s Sinofert Holdings Ltd. (HKG:0297) with a minimum of 1.9 million metric tons of red standard-grade potash over the period.

The memorandum of understanding (MOU), announced in Saskatoon last week, establishes that prices for the commodity will be negotiated every six months.

Under the agrrement, the marketing arm of Saskatchewan’s three largest potash producers —PotashCorp, Agrium and Mosaic—  will supply a minimum of 1.9 million metric tonnes of red standard grade potash to Sinofert until the end of 2017.

The pact also provides Canpotex exclusivity to Sinofert for red grade potash as long as minimum annual purchases are made.

"Saskatchewan supplies potash to China since 1972, and with this agreement we will continue to be a leading supplier to this growing market,” said Steve Dechka, president and CEO of Canpotex.

“Canpotex is committed to making an important contribution to global food security and meeting China’s growing potash needs.”

The deal also gives Sinofert the option to purchase an additional 800,000 metric tonnes yearly of other potash grades.

Last year, Canpotex signed a deal to provide millions of tonnes of potash to India.

Potash prices have yet to fully recover after a steep drop from around the $400-a-ton level in the summer of 2013. The decline was prompted by Russia’s Uralkali decision to pull out of a sales partnership with Belarus.