Chinese company agrees to buy $2.375 billion of Arizona potash
Prospect Global Resources announced signing of an agreement with Sichuan Chemical Industry Holding (Group) Co., Ltd. for more than $2-billion over a 10-year period, under which Sichuan
will purchase at least 500,000 metric tons of potash annually, or 25%
of the projected output of Prospect Global's American West Potash field
in Holbrook, Arizona [right, credit American West].
Prospect says "The conservative deal valuation reflects current market prices of about $475
per metric ton for a total of 5 million metric tons. The contract is
take-or-pay, backed by a letter of credit. The agreement also provides
an option for American West to sell and Sichuan Chemical to purchase an
additional amount of potash." By my calculation, the agreement is worth $2.375 billion.
Financial news sources are reporting on the agreement, which Prospect believes is "the largest-ever purchase and sale contract - in price and volume - for a potash mine under development in the United States. It is also believed to be one of the largest potash export contracts in U.S. history."