KEY POINTS
- Kore Potash signed a $1.93 billion EPC deal with PowerChina.
- Kola project aims for first production by early 2029.
- Brazil and Africa are primary markets for the potash supply.
For the development of the 2.2 million-ton-per-year muriate of potash (MoP) Kola project, Kore Potash, the company that owns 97% of the Kola and DX potash assets in Congo-Brazzaville, has finalised an engineering, procurement, and construction (EPC) deal with PowerChina International Group.
Kola project’s $1.93B EPC contract finalized with PowerChina
The project will not be dependent on state infrastructure thanks to the $1.93 billion fixed-price EPC contract, which includes $708.9 million for the construction of utility pipes and transportation links. Andre Baya, CEO of Kore Potash, characterised this strategy as a significant benefit in contrast to previous international potash initiatives.
“The Kola project has reached a major milestone with this EPC contract. We have reduced the risk of time and cost overruns by collaborating with PowerChina, one of the biggest global engineering firms, which has sped up financing and made construction easier in the direction of profitable production,” Baya stated.
The financial closing is still pending for the EPC contract. In April 2021, Kore and Summit Corporation signed a nonbinding memorandum of understanding for a debt and royalty financing plan. By February 2025, a nonbinding financing term sheet is anticipated.
First production is anticipated in the first half of 2029, and the Kola project is expected to take 43 months to complete. It is estimated that the mine will last for 33 years.
Potash production to meet growing demand in Brazil and Africa
According to mining weekly, the EPC contract has clauses that stipulate fines for delays or noncompliance with performance metrics in order to mitigate risks. The board of Kore wants to establish the business as one of the most affordable suppliers of potash for important markets in Africa and Brazil.
Because of its agricultural exports, which necessitate the supply of potassium for plant growth, Brazil is a market that depends on imports of potash and has increasing demand.
According to Kore, potash is essential to preserving the world’s food supply.
Kore is evaluating PowerChina’s non-binding offer to run the Kola project and has created a contract operator arrangement in anticipation of operations. With its wealth of third-party operations experience, PowerChina may be able to reduce project costs. However, Kore made it clear that it is not required to approve PowerChina’s application.
In order to satisfy the rising demand for potash worldwide, especially in Brazil and high-growth African markets, Kore Potash is still concentrating on cost-effective production.
