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Rinehart reveals $395m fertiliser play

Gina Rinehart will acquire a 5% stake in Sirius Minerals, along with a royalty agreement and an exclusive supply of the English company’s fertiliser product.

The $395 million deal will give Rinehart’s Hancock Prospecting a 5% royalty stream on the first 13 million tonnes of Sirius’ polyhalite product per annum, and a 1% royalty on production thereafter.

Hancock Prospecting will also have the right to purchase up to 20,000 tonnes of the product annually, and will acquire US$50 million in Sirius shares – roughly 5% of the business at its current value.

Sirius is developing a large-scale mine and mineral transport project near Whitby in North Yorkshire.

The project involves building a mine, a 37 kilometre underground conveyor system, and materials handling and port facilities. Developers are targeting 10mtpa of capacity for the project, and will have the potential to increase this to 13mtpa and, subject to further approvals, 20mtpa.

Polyhalite is a naturally occurring evaporate mineral comprising potassium, calcium, sulphur and magnesium.

Sirius describes the product as “an effective multi-nutrient fertiliser suitable for widespread use in commercial farming,” and Rinehart agrees, saying the deal will greatly benefit Hancock’s agricultural interests.

“This project delivers a new and natural product which is relevant to Hancock’s focus on agriculture and after years of field tests and across many crop types, demonstrated improved yields,” the mining magnate said.

“I am advised that Sirius is working to progress the project and has the potential to become one of the world’s leading producers of multi-nutrient fertiliser, and could have a life of 100 years.

“This fits with my approach of investing in strategic areas for the long term, and I hope the product is of assistance to many Australian farmers.”

Rinehart’s agricultural interests could soon expand significantly: in a partnership with China’s Shanghai CRED, Hancock is squaring off against a consortium of farmers for ownership of the massive Kidman cattle empire, with the bidding heading quickly towards the $400 million mark.

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