Sirius Minerals, a mining firm based in the United Kingdom, this week, announced it had signed a 7-year distribution deal with Intercontinental Trade (ITL) DMCC, Dubai. The Dubai based firm will have exclusive rights to distribute its polyhalite fertilizer in Nigeria.
The Muhammadu Buhari administration has taken agricultural self-sufficiency as a key agenda. Farmers have been given support worth billions of Naira consisting of loans and inputs. The government has also banned the importation of some food items such as palm oil.
Recently, Audu Ogbeh, the Minister of Agriculture and Rural Development had stated that the government would close some land borders in a bid to counter smuggling. Though Ogbeh refused to mention the specific border, or name the product; Pointers are towards the Republic of Benin which had a huge surge in imported parboiled rice.
For Sirius, the deal is a major one, as it seeks further funding to expand its mines.
Aside from Sirius, several other companies are involved in the Nigerian fertilizer space. A $1.5 billion fertilizer plant, located in Eleme, Rivers State, owned by the Indorama Corporation began operations in June 2016. The Nigerian Sovereign Investment Authority (NSIA) is also into fertilizer blending (production).
Notore located in Onne, Rivers State (which bought over the assets of the defunct National Fertilizer Company), also produces urea-based fertilizer.
Importing fertilizer leaves the company susceptible to two major risks: port delays and foreign exchange volatility. Delays in clearing at the ports could lead to damage of the products and subsequently losses.
A depreciation of the Naira against the dollar or pound could lead to a sharp increase in the cost of the fertilizer, which the firm may not be able to pass on to customers.
At the peak of the last foreign exchange crisis, several firms had difficulty repatriating foreign exchange earnings due to demand management by the Central Bank of Nigeria (CBN).
Sirius Minerals is a fertilizer company located in North Yorkshire, United Kingdom. The company’s primary activity is the extraction of polyhalite fertilizer, which it markets using the brand name poly4. Sirius is listed on the AIM segment of the London Stock Exchange (LSE). The firm closed at 31.8 pence on Friday’s trading session, up 0.96%.
Polyhalite is an evaporite mineral comprising a natural combination of potassium (14 percent. K2O), sulphur (19 percent. S), magnesium (6 percent. MgO), and calcium (17 percent. CaO).
ITL trading, founded over 20 years ago, with offices in Dubai, Nigeria, and London. The company’s activities are divided into four major segments, Products, Industrial Chemicals, Commodities, and Steel.