The export marketing arm of Saskatchewan’s three potash-producing companies has signed a three-year deal to sell their wares into the Chinese market.
Canpotex, which represents Saskatoon’s PotashCorp, Calgary’s Agrium and Minneapolis-based Mosaic Group, said Wednesday it had reached a deal to supply at least 3.15 million tonnes of potash to Chinese agribusiness Sinofert, the country’s largest fertilizer distributor.
A dollar figure wasn’t mentioned in Canpotex’s statement Wednesday but a Canadian Press article on the agreement pegs its estimated value at about US$2.2 billion.
The deal’s pricing is to be negotiated every six months from Jan. 1, 2011 to Dec. 31, 2013, based on market conditions. The two companies’ memorandum of understanding “allows for growth in Chinese consumption,” Canpotex said.
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The memo also guarantees Canpotex will maintain a market share over the three-year period that’s equal to the greater of the agreed tonnage or one-third of the seaborne potash imports to China in each year.
Steven Dechka, Canpotex’s Singapore-based CEO, said in a release that the new memorandum “reflects our continued joint commitment to the Chinese market where the pursuit of self-sufficiency in food production remains a priority.”
It also shows “our confidence in Sinofert as our long-term business partner in this critically important overseas market,” he said.
PotashCorp, which supplies just over half of Canpotex’s potash, owns about 20 per cent of Sinofert through a Barbados-based subsidiary.
