LONDON (Reuters) - Sirius Minerals (SXX.L), which is developing the world’s largest deposit of a fertilizer named polyhalite, saw losses mount last year but expects to start production at its mine in northern England ahead of schedule in mid-2021.
CEO Chris Fraser said the company, set up to develop the mine, has deals to sell 4.4 million tonnes a year of the fertilizer and is seeking “similar arrangements” with northwest Europe and Brazil.
Britain’s departure from the European Union would also open up more direct negotiation with China, where Sirius has already signed supply contracts, he said.
“We could then have the ability to go and talk directly to China about trade, rather than have to go through the glove of the European Union,” Fraser, who accompanied British Prime Minister Theresa May to China in February, told Reuters in an interview. “Our dialogue with China is very strong.”
Sirius reported an operating loss of 24 million pounds ($33 million) for 2017 on Tuesday, versus 16.9 million pounds in 2016 as the company began to build its huge mine beneath a national park in Yorkshire, England.
As the company is in the development stage, Fraser said the loss was “a paper loss”.
Production is scheduled to reach 10 million tonnes per year in 2021 and 20 million tonnes annually by 2026.
Fraser said output should begin in the middle of 2021, up to six months earlier than previously planned after the hiring of a new drilling company DMC Mining Services of Canada, a subsidiary of Poland’s KGHM (KGH.WA).
This year’s plan is to secure up to $3 billion dollars in financing, after an initial $1.2 billion was raised, and to win additional supply contracts.
Britain’s government may provide treasury-backed guarantees to reassure investors in Sirius. They include Australia’s richest woman Gina Rinehart.
Polyhalite contains four of the six nutrients that ensure plant growth – potassium, sulfur, magnesium and calcium.
Sirius, which calls its product POLY4, says that makes it superior to more widely used potash, which only contains potassium and can leave a damaging chloride residue.
Although the potash market is oversupplied, Fraser said there was a long-term need for fertilizer as a growing global population must be fed.
Investment group Shore Capital reiterated its “buy” rating and said Sirius should become “progressively de-risked” as it moves toward production.
The share price had risen around 20 percent this year, but was down just over 1 percent after the results on Tuesday.
(This story corrects paragraph 10 after company clarifies that it is in talks but has not yet secured state-backed guarantees)
Editing by Susan Fenton