In situ goal gasification developer Leigh Creek Energy has signed an offtake agreement that will allow it to proceed to finance its coal to gas to urea plant at the former Leigh Creek coal field in South Australia.
The company’s executives travelled to Korea to sign a heads of agreement with Daelim which plans to take 500,000 tonnes of urea a year for five years, subject to a binding agreement being executed.
LCK has demonstrated its in situ gasification technology and said it would now proceed to develop a commercial the project.
LCK said in a statement: “An offtake of this size is for the total of our export urea.
“This is the first and only offtake agreement that we will necessarily need to execute in order to secure our component of funding for the project.
“However it does not exclude us from securing other offtake agreements and we are still in offtake discussions with other parties.”
Australia, and the world, is facing a shortage of fertilisers with plants shuttered in Europe due to a lack of gas supplies, and the imminent closure of Incitec Pivot’s Gibson Island plant in Brisbane due to an inability to secure a gas supply contract. China has also halted urea export.
Even before this closure, Australia imports much of the two million tonnes applied locally every year.
Pricing for the urea exported will market index linked.
LCK completed its pre-feasibility studies with urea prices globally at $489 a tonne, however prices are now in excess of $1,300 per tonne.
LCK claims a production cost for Leigh Creek urea of $109 per tonne, and also claims it will be a ‘carbon neutral’ product.
The Leigh Creek Urea Project (LCUP) is LCK’s flagship project to produce low cost granular urea at its site 550km north of Adelaide.
Picture: Leigh Creek Energy
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