Gina Rinehart's Hancock Prospecting has announced a $US300 million ($A395 million) investment in a UK-based fertiliser business chaired by former Fortescue Metals Group deputy CEO Russell Scrimshaw.
The investment coincides with Hancock's $365 million bid for Australia's S Kidman & Co cattle empire, with Chinese partner Shanghai CRED, although they are competing with an all-Australian consortium that made a competing bid over the weekend.
Hancock will pay $US250 million for a 5 per cent royalty on the first 13 million tonnes per annum of product from Sirius Minerals’ $US2.9 billion North Yorkshire polyhalite project, and has also purchased $US50 million worth of shares in the company.
Hancock will also have the right to purchase up to 20,000 tonnes of product per annum for use on its Australian agricultural operations.
Sirius, which is chaired by former FMG deputy CEO Mr Scrimshaw (and also employed former FMG chief financial officer Chris Catlow as deputy chair until last year), is not to be confused with Perth-based Sirius Resources, which was acquired by Independence Group last year.
Former investment banker and Sirius chief executive Chris Fraser also has ties to FMG; he was the lead adviser on the initial capital development financing for the iron ore giant.
Sirius’s North Yorkshire project hosts polyhalite, a naturally occurring mineral that contains potassium, sulphur, magnesium and calcium – four of the six key nutrients for plant growth.
The project involves construction of a mine, a 37-kilometre underground conveyor system, and materials-handling and port facilities.
The first phase of the project involves the development of 10mtpa of annual capacity, with a potential to quickly increase to 13mtpa.
A 20mtpa operation has been targeted.
“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,” Hancock chair Gina Rinehart said.
“Sirius has a large, high quality mineral resource and is located in a stable jurisdiction with a competitive tax rate.
“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.”
Hancock chief executive Garry Korte said the ability to feed the world’s population and meet the increased demand through more efficient, higher yielding agricultural land use, required investment in innovative products like polyhalite.
“The strong investment fundamentals also meet Hancock’s criteria,” he said.