14/05/2008 - 13:59

Arafura expects $224m/pa from phosphate

14/05/2008 - 13:59

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Perth-based Arafura Resources Ltd is the latest in a string of companies announcing positive phosphate news - with $220 million a year in projected revenue - as rising global demand for agricultural inputs excites investor interest.

Arafura expects $224m/pa from phosphate

Perth-based Arafura Resources Ltd is the latest in a string of companies announcing positive phosphate news - with $224 million a year in projected revenue - as rising global demand for agricultural inputs excites investor interest.

Increasing demand for crops and knock-on effect for the supply of fertiliser inputs has brought phosphate and its sister mineral potassium sulfate (potash) to the spotlight.

With a rising world population, limited land for agriculture and the emergence of biofuels, the importance and price of both commodities has skyrocketed over the past six months.

Phosphate prices have risen from $US42 per tonne to recent high of $400/t, and bullish analysts believe the price could go higher as phosphate demand is forecast to grow at 2.1 per cent each year up to 2020, outstripping supply that is projected to grow at 2 per cent.

Arafura announced today it had received better than expected preliminary results from a test work in the recovery of phosphoric acid from its Nolans project in the Northern Territory.

The results demonstrated that the type of phosphoric acid produced was of a type that qualified it as a premium quality fertiliser product, which retails for over $US1800 ($A1918) per tonne.

"These results are extremely good news," Arafura managing director Alistair Stephens said.

"Based on the recovery assumptions in the (prefeasibility study), the project will generate revenues of $575 million per year using current commodity prices."

The company said the $575m figure is derived from revenues from each commodity present in the project including phosphoric acid, rare earths and uranium. Revenue from phosphoric acid alone is said to amount to $US210m each year. .

Mr Stephens also added there was growing interest from the agriculture sector in the project's product.

"Nolan's phosphoric acid could halve Australia's need to import [phosphoric acid], and a local source will provide benefits to Australia's farmers," he added.

"In addition demand for phosphoric acid from the biofuel sector is very strong. This coupled with a retraction in exports of Chinese fertiliser which also attracts an export tariff of 135 per cent positions Arafura to capitalise on emerging market opportunities."

Earlier this week South Perth-based Korab Resources Ltd announced it had been approached by Micronised Mineral Solutions to develop a phosphate deposit at its Batchelor project.

Meanwhile mining giant BHP Billiton this week entered into an agreement to acquire Canadian company Anglo Potash Ltd for $C8.15 cash per share, representing a total equity value of $C284 million.

Anglo Potash's only asset is its 25 per cent interest in the Canadian potash joint venture development project, where BHP already has a 75 per cent interest.

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