NEURIZER has signed a $1.5 billion offtake agreement with South Korea’s Daelim Co Ltd to supply 500,000 tonnes of urea per year from the company’s South Australia NeuRizer Urea Project (NRUP) project.
Formerly known as the Leigh Creek Energy Project, the NRUP will produce low-cost, high-quality nitrogen-based fertiliser ensuring a secure supply for local and export agriculture markets.
Located in South Australia, 550-kilometres north of Adelaide, it will initially produce 1 million tonnes or urea per annum (Mtpa) with this new agreement contracting half of this supply to Daelim.
The project does have potential to increase production to 2Mtpa.
NeuRizer managing director Phil Staveley said the agreement brings the project another step closer to production by underpinning future revenue and is likely to be the only offtake agreement required to secure debt funding for the construction of the project as it is sufficient to cover all costs.
It also extends the strong relationship NeuRizer has with Daelim whose subsidiary DL E&C was awarded the Engineering, Procurement, Construction and Commissioning (EPCC) contract for NRUP in June 2021.
“The signing of this binding take or pay agreement with DL Trading secures significant revenue for the NRUP,” Mr Staveley said.
“This guarantee to take up 50 per cent of the project’s initial yearly production allows both NeuRizer and Daelim to move confidently towards project construction.”
Options for local market
Mr Staverley said while this agreement is focused purely on the export market, it won’t stop NeuRizer from supplying local customers.
“A further 50pc uncontracted urea supply allows us to remain agile to support domestic demand and take advantage of market pricing.
“The continued global fertiliser crisis made a compelling case for [Daelim] to shore up domestic supply from a reliable and cost controlled source.”
Currently, NeuRizer has secured all necessary infrastructure and facilities to enable the shipment of at least 84,000t product per month.
The initial term for the contract is five years with the option to extend by mutual agreement.
NeuRizer executive chairman Justyn Peters said the project comes at a time when Australia is in great need for domestic urea production.
“With international gas prices dramatically increasing, with our only domestic production of urea closing down at the end of this year, with food staples in supermarkets continually running short and food security becoming more of an issue daily, and by NeuRizer providing domestic urea production we go a long way to solving these issues,” Mr Peters said.
NeuRizer announced at the company’s half year financial results in March that it hopes to start production in 2025.
“The Company, along with our world class partners, will continue to progress the [NRUP] towards a final investment decision later this year and first urea production in 2025,” Mr Staverley said in a statement.
The project is to be developed in two stages with the first to include construction of gas wells and gas-fired power generation, and the second to feature further expansion of gas fields and power generation alongside ammonia, urea and logistic facilities.
The South Australian project is one of three new urea projects in development with the Perdaman Urea Project and Strike Energy’s Project Haber proposed for Western Australia.