ESTABLISHED international potash producer K&S KALI GmbH may distribute and sell WA-produced Sulphate of Potash (SoP) fertiliser in Australia and around the world.
Kalium Lakes Ltd (KLL), which is trialling its proposed method for producing SoP from brine pumped from beneath a chain of salt lakes in the Little Sandy Desert and K&S have reached in-principal agreement on the terms of an initial 10-year deal on product off-take, distribution and sales.
K&S will take all of KLL's expected stage one production of 75,000 tonnes of SoP per annum and will distribute it both in Australia and through its existing global distribution networks.
K&S will also provide its product expertise and technical support to KLL during the design, construction and commissioning of its Beyondie SoP project 160 kilometres south east of Newman.
Founded in 1889 and headquartered in Kassel, Germany, K&S is listed on the Frankfurt stock exchange, has a market capitalisation of US$5.1 billion and employs about 15,000 people globally.
It is one of the top potash providers worldwide and the world's largest salt producer.
It has mineral production sites in Europe and North and South America, as well as a worldwide sales network.
K&S already markets a range of SoP and Muriate of Potash (MoP) fertiliser products for agriculture and horticulture.
Its SoP products range includes some that are spread dry or sprayed in solution for broadacre farming applications and others specifically designed for use in fertigators for commercial greenhouse fruit and vegetable production.
Last Thursday KLL told the Australian Securities Exchange a formal binding off-take agreement was still to be signed and depended on certain conditions being met.
These, KLL said, included K&S completing due diligence and it completing a favourable bankable feasibility study, obtaining all approvals and tenure and its board determining to proceed with the remainder of a $124 million pre-production capital investment to develop the trial site into stage one production.
It said the price K&S will pay for SoP will be linked to the sales price it realised, including any premiums for Beyondie products - KLL is proposing to produce granular SoP, a premium SoP and a soluble SoP.
"Downside" pricing mechanisms will be included in the deal, KLL said, and K&S will receive a marketing fee for distributing and selling the SoP products.
KLL managing director Brett Hazelden said agreement on terms for an off-take deal with K&S brought the Beyondie project "a step closer to becoming Australia's first SoP producer, with the aim of supplying Australian and overseas farmers with a locally produced product".
"We welcome K&S as a long-term partner and look forward to working together to optimise the project given K&S' extensive expertise in design, construction and operation of SoP facilities," Mr Hazelden said.
K&S Asia-Pacific chief executive officer Alexander Baart said K&S "looks forward to building a strong and mutually beneficial relationship" with KLL.
It is expected distribution of Beyondie SoP within Australia will come under Mr Baart's division.
SoP currently sells for about US$500 a tonne on international markets.
KLL has said that over the planned 23-year life of the Beyondie project it expects a life-of-mine operating cost equivalent to US$250/t for SoP free on board for bulk export via Geraldton port.
About 3000 tonnes of salt have accumulated in the ponds since the large-scale trials began about August last year.
The advantage of SoP over MoP and many other mineral fertilisers is that it contains negligible salt so can be used to help restore paddocks already affected by salt.
KLL also has an 85 per cent interest in a SoP joint venture with BCI Minerals at Lake Carnegie north east of Wiluna.
It is the front runner of five Perth-based companies looking to exploit remote WA salt lakes to produce SoP fertiliser.
