RE FTArticle26 Sep 2018 20:03
<br />Sirius Minerals needs its small Chinese partners to meet their grand ambitions<br /><br /> Twitter<br /> Facebook<br /> LinkedIn<br /><br />Print this page<br />3<br />7 hours ago<br /><br />By: Archie Zhang and Lucy Hornby in Beijing, Dan McCrum and Neil Hume in London<br /><br />Interviews with three of the Chinese partners announced by Sirius Minerals, the UK group attempting to dig a fertiliser mine in North Yorkshire, illustrate the gap between the scale of their businesses and the commitments made so that Sirius can secure $3bn in financing for the controversial project.<br /><br />Sirius has unveiled a string of such deals with foreign customers this year, essential steps to demonstrate a viable market for its novel product, polyhalite, as it negotiates with lenders and seeks a $1.5bn UK government guarantee to underpin the project.<br /><br />Sirius has described its two newest Chinese partners as small, entrepreneurial businesses. While their enthusiasm for the product is clear, so is the transformation required for them to distribute around $300m worth of fertiliser a year in the 2020s.<br /><br />Guangzhou Eiliseng Biotech Co has agreed to buy at least 1.15m tonnes in year seven of the UK mine's production, which will be 2028 on current schedules, at a cost of around $165m based on the miner's indications for typical pricing. Sirius Minerals recently hosted a trip to its potash project for the customer, and we caught up with Jing Hai Shan, Eiliseng's youthful general manager, to find a bit more.<br /><br />First the background. Eiliseng was founded in 2014. It has 400 staff and its �speciality areas� include Inner Mongolia, Hebei, Sichuan, and Yunnan. The company handles between 600,000 and 630,000 tonnes of seeds and fertilisers a year, selling mainly to distributors and wholesalers.<br /><br />So the deal with Sirius is a serious undertaking for the company, a point acknowledged by Jing. But as China tries to avoid further contamination of its farmland, he says demand for Poly4, as the product is known, will take off.<br /><br />�In a nutshell it�s because of change in government policy. Beijing is pushing towards a zero chemical fertiliser use by 2020. Poly4 fits into this perfectly. It�s organic,� Jing explained during the meeting at Sirius' London offices.<br /><br />�So we are going to see a decline in chemical fertiliser usage and an increase in organic usage which is why we are daring to sign this contract. In terms of distribution I don�t see many issues selling this product,� he added.<br /><br />(A change in policy is coming, but it overstates the impact to suggest a ban. The plan is for a zero increase in chemical fertiliser use from 2020.)<br /><br />There are other attractions, including a shift in diet, according to Jing: �a lot of China�s arable land is damaged and we think Poly4 can help fix damaged land to a certain extent while providing fertilisers for the growth of plants. We see a huge market for th
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