Australian urea producer Neurizer Ltd said on Monday it signed a A$1.5 billion ($1.0 billion) deal with a unit of South Korean conglomerate DL Holdings to supply 500,000 tonnes of granular urea per year.
Neurizer, which develops inputs for food production, said the take or pay agreement with Daelim Co Ltd is for an initial five-year term with an option to extend by mutual agreement.
The agreement guarantees 50 per cent offtake of Neurizer Urea Project's initial yearly production by Daelim, and secures significant revenue which will be used to finance the project in South Australia, the company said. (https://bit.ly/3R53IHj)
Neurizer also said the contract value was based on forecast prices by commodities consultancy firm CRU Group, and at current prices, the contract would be worth more than A$2.8 billion.
The offtake agreement, first announced in November last year, comes shortly after DL Holdings' construction unit DL E&C Co Ltd took a 9.1 per cent stake in Neurizer last month.
Shares of Neurizer soared 33.3 per cent to A$0.24 in early trading on Monday.
($1 = 1.4656 Australian dollars)