Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The company plans to create a vertically integrated operator that has the mining, processing and marketing skills to tap into a region that buys in an estimated 10 million tonnes of fertilizer a year.
Shares in African Potash (LON:AFPO) were up almost 24% early afternoon in London after the miner announced it has sealed a preliminary agreement with an unnamed Malawian company to provide about of 50,000 metric tonnes of fertilizer a year over an initial three years.
The deal, which is subject to the signing of a definitive contract, will see African Potash sourcing and funding the provision of fertilizer through its proprietary network and methods, with first delivery anticipated in the fall.
This is the second supply deal that Africa Potash manages to secure in only a week. The tentative agreement strengthen the firm’s position as a supplier in the Common Market for Eastern and Southern Africa, known as COMESA for short.
According to the company, which focus on sub-Saharan potash assets, there is a strong demand for fertilizer in landlocked Malawi as the country is trying to fight deforestation, and increase nutritional levels.
“[The use of fertilizer] is expected to improve serious issues in Malawi, such child mortality rates and the reduction of reliance on expensive imported food,” the company’s chairman Chris Cleverly said in a statement.
African Potash, which also owns the Lac Dinga project in the Republic of Congo, plans to create a vertically integrated operator that has the mining, processing and marketing skills to tap into a region that buys in an estimated 10 million tonnes of fertilizer a year.
Africa is one the most important markets for fertilizers, having the potential to increase the value of its annual agricultural output to $500 billion by 2020 according to the African Development Bank (ADB).
Source: Google Finance.
