Australia backs Phosphate Hill with $105 million loan to secure sole DAP supply

Australia’s federal and Queensland governments have extended a A$160 million (about $105 million) loan to Mayfair to support and upgrade Phosphate Hill, the country’s only producer of DAP and MAP, amid a spike in sulfur costs that is pressuring the operation, according to Argus Media.

The plant, about 140 km southeast of Mount Isa in Queensland, produces roughly 400,000 tonnes of DAP and 200,000 tonnes of MAP, and employs about 540 people. Dyno Nobel sold the site to Brisbane-based investor Mayfair for a nominal A$1, with up to A$100 million in deferred payments, and Mayfair assumed the economic risk from April 1. The sale completed Dyno Nobel’s exit from the fertilizers business.

The loan is intended, in part, to help manage rising sulfur costs. Australia imports 99% of its sulfur from Canada, and Argus assessed sulfur at $1,150/t FOB Vancouver on June 25, up 136% since late February after the U.S.-Iran war disrupted Gulf supply. Phosphate Hill output fell 9% year on year to 272,800 tonnes in the six months to March 31.

Australian agribusiness Ridley, which held the supply agreement for the plant’s output, plans to renegotiate its offtake with Mayfair. The funding keeps a significant non-Gulf phosphate source online at a time when higher sulfur costs are lifting phosphate production expenses worldwide.

Source: Argus Media