Australian Potash attracts $140m of funding as fertiliser shortage concerns grow

Australian Potash (ASX:APC) has been awarded a $140m loan from the Northern Australia Infrastructure Facility (NAIF) to advance its Lake Wells sulphate of potash project in WA.

International prices for phosphate fertiliser have jumped in recent weeks to around $US200 per tonne, fuelling concerns of a market shortage, according to ABC news reports.

“Financially, the NAIF facility offers a long tenor [payment period] of 17 years and an interest rate that improves the opportunity for attractive returns to equity invested the project,” managing director and chief executive, Matt Shackleton, said.

The Lake Wells project near Laverton is one of the lowest CO2 emitting sulphate of potash projects in Australia and is powered by renewable energy sources.

The project will produce the company’s trademarked brand of K-Brite premium sulphate of potash product which is certified for use in organic farming in compliance with European regulations.

Australian Potash — Sulphate of potash prices have been less volatile than some other commodities. Image: APC

Banks looking at next leg of project financing

Approximately 30 per cent by value of the construction contracts for the project will be awarded to companies in Northern Australia, and 20 per cent to indigenous companies.

“We now turn our attention to closing out the balance to the development financing pathway, and to moving into the pre-mobilisation phase for the development of the Lake Wells sulphate of potash project,” said Shackleton.

Meanwhile, Export Finance Australia is pressing ahead with its due diligence on the project to provide a tranche of debt financing in the form of a senior debt facility.

A group of commercial banks are expected to make a decision on providing debt financing for the project by mid-year.

The company is focused on delivering the results of its front-end engineering development study for the project.

“Lake Wells is a substantially de-risked, technically sound, low cost and socially responsible project that will deliver a premium product for at least 30 years,” added Shackleton.

Australian Potash has already signed supply deals to cover all of its expected annual output of 150,000 tonnes.

Other fertiliser projects receive loans

NAIF last week awarded a loan to another fertiliser company for $71m to support its plan to expand production to 500,000 tonnes per year from 240,000 tonnes pear year.

Agripower Australia produces a range of natural silicon fertilisers for use in agriculture and is using the loan to develop the world’s largest resource of biogenic amorphous silica.

The 2 billion-tonnes deposit is located at the company’s mine near Greenvale and processing facility close to Charters Towers in Queensland.

“We are excited to support Agripower’s plans and continue NAIF’s recent momentum of investment in a range of industries and sectors across North Queensland and Northern Australia more broadly,” NAIF chief executive Chris Wade said.

The financing will go toward building a railway to connect Greenvale to the Yabulu rail system, and the company is developing a processing facility at Yabulu port.

“Each year, Agripower expects to produce 1 million tonnes of fertiliser from the new facility, to be exported around the world — and Agripower believes its 2-billion tonne deposit could create a mine life of 200 years,” said Queensland premier Annastacia Palszczuk.

NAIF also supports BCI Minerals potash project

In December, NAIF advanced a $450m loan to BCI Minerals’ (ASX:BCI) Mardie salt and potash project 100km southwest of Karratha in WA to fund infrastructure for the project.

The project, awarded major project status by the Australian government in 2020, is to produce 4 million tonnes of high purity salt and 100,000 tonnes per year of sulphate of potash.

BCI Minerals’ project will supply agricultural and chemical industries in Asia and is the first major salt project in Australia for two decades.

NAIF has made financing commitments of $2.8bn to projects across Northern Australia, which are forecast to generate $8.5bn in economic output and support 8,000 jobs.