Agrimin on track to be shovel ready as fertiliser prices surge to multi-year highs

Agrimin (ASX: AMN) has completed the first phase of Front End Engineering Design (FEED) testwork for a process plant at its globally significant Mackay Potash Project in WA. 

For the uninitiated, potash contains key nutrients for growing crops, making plants more resilient to drought, frost and insects as well as improving quality and crop yields. 

The FEED program will now advance to a second phase of testwork for operating parameters such as temperature range and feed grade variations. 

The conclusion of FEED works will support Mackay's final investment decision, expected to take place in the third quarter of 2022. 

Agrimin Mackay project timeline (Source: Agrimin Bell Potter Unearthed Conference slides)

Russia-Ukraine war drives fertiliser price surge

Agrimin has observed a jump in potash prices due to potential supply shortages from major producers Russia and Belarus.

“Potash supply is being affected significantly given Russia and Belarus account for approximately 40% of global supply. In addition to economic sanctions against Belarus, Russia recently announced a ban on fertiliser exports which has further exacerbated very tight market conditions,” said Agrimin CEO Mark Savich.

Current prices for standard bulk sulphate of potash (SOP) are US$720 a tonne in China and US$860 a tonne in Northwest Europe. 

SOP prices at the end of 2021 (Source: Agrimin)

Agrimin noted that Mackay’s Definitive Feasibility Study (completed in July 2020) assumed a SOP price of US$500 a tonne with a post-tax NPV of US$655m.

“It could take several years for global potash trade flows to normalise and Agrimin is in an excellent position with a Tier 1 potash project in Australia that is on track to be shovel ready this year.”