ANGLO American has signed agreements with two of China’s largest fertiliser companies to promote the use of polyhalite in the country.
Polyhalite is a form of potash fertiliser that Anglo intends to mine at its Woodsmith project in the northeast of England. The R4.8bn project has been slowed by Anglo, however, following a strategic review in which the group will first focus on simplifying the organisation and securing the balance sheet.
A memorandum of understandings was signed between Anglo and Sinochem Fertilizer, a member of Syngenta Group which is the largest distributor of agricultural inputs in China, with sales covering 95% of China’s arable land. A second memoranda was signed with BeiFeng AMP, the third largest fertiliser distributor in China, focused on the three northeastern provinces known as the country’s ‘grain barn’.
The parties will jointly develop commercial-scale demonstrations and further research on major arable crops such as corn, soybean, potato, rice and high value crops such as apple, citrus and grapes, the group said. Anglo has run such demonstrations previously in its own research, it said.
“China is a key customer for us in our ambition to be a leader in sustainable crop nutrition,” said Tom McCulley, CEO of Anglo American’s Crop Nutrients business.
“Given our crop nutrients business forms part of Anglo American’s exceptional growth trajectory over the next decade, we are continuing to foster strategic partnerships across the agricultural industry to prepare the market for the full range of commercial and environmental benefits that polyhalite can offer farmers and the entire food value chain.”
Anaysts have been critical of Anglo’s Woodsmith project saying it would not generate enough value to beat its cost of capital. But Duncan Wanblad, Anglo CEO said he was convinced it would be a flagship project for the group.
“It took five to six years of cash out for Quellaveco (Anglo’s $5.3bn copper project in Peru). That notion of putting in that capital for that amount of time is making people nervous,” he said.
“But I am absolutely convinced this will be a cornerstone asset in Anglo American,” said Wanblad. “The value of Woodsmith has not changed at all. We have to deal with it and it becomes more of a thing to focus on, but it’s no surprise,” he said of the criticism.
