Guernsey-Based African Potash To Supply Fertilizer In Zambia, DRC

Written by Dana Sanchez

African Potash, a fertilizer miner, producer and distributor based in Guernsey, Channel Islands, has signed deals to supply fertilizer in Zambia and Democratic Republic of Congo.

“Securing this sales contract means that we are now very close to consummating our inaugural fertilizer trade,” said African Potash Executive Chairman Chris Cleverly in an update to shareholders on Thursday, MiningWeekly reports.

The company, which is listed on the London Stock Exchange, in 2013 acquired a 70-percent interest in La Societe des Potasses et des Mines S.A., which has exclusive rights to do mining research for potash salts — a primary source of potassium fertilizer — in the Lac Dinga Project in the Republic of Congo. The Lac Dinga Project is African Potash‘s maiden asset and main target for exploration, according to the company’s website.

African Potash secured an agreement in August with the Common Market for Eastern and Southern Africa (COMESA), a free trade union for 20 African member countries, to supply and deliver at least 500,000 metric tonnes of fertilizer a year.

Despite a 2014 economic growth rate of 8.9 percent, the Democratic Republic of Congo uses just 1 kilogram of fertilizer per hectare of arable land compared to 16 kilograms in India and 234 kilograms in the U.K., according to World Bank figures, Chemicals-Technology reports.

“No region of the world has been able to expand agricultural growth rates, and thus tackle hunger, without increasing fertilizer use,” said African Potash Executive Chairman Chris Cleverly.

In the first transaction of the COMESA agreement, South Africa-based Cudolog — a dealer in agriculture chemicals — will supply 50,000 tonnes of fertilizer.

The sale price is $500 per metric tonne, Cleverly said.

The contract was signed during the East and Southern Africa Fertilizer Trade Platform  annual conference and fertilizer expo in Lusaka, Zambia, Chemicals-Technology reports.

“We are continuing to establish relationships and work towards concluding agreements to complete the full trading chain,” Cleverly said.

The company said it is negotiating to establish financing of around $50 million to fund its trading operations.

African Potash has also signed a deal with a local Congolese distributor to supply 150,000 tonnes of fertilizer to Congo.

The supply will be done under the the COMESA agreement. Mask Africa Crowd Farm Fund agreed to supply and deliver at least 500,000 tonnes of fertilizer during the first three years, Chemicals-Technology reports.

Shareholders in African Potash have seen 226-percent profit so far this year, according to Roland Head writing for TheMotleyFool.

“Investors can enjoy the potential for a major re-rating if Lac Dinga lives up to expectations and proves to be a major potash resource,” Head wrote.