Arianne Phosphate, a development-stage phosphate mining company, advancing the Lac à Paul project in Quebec’s Saguenay-Lac-Saint-Jean region, is pleased to announce the signing of a Memorandum of Understanding (“MoU”) with a major global producer of sulfuric acid, to explore the possibility of setting up a downstream operation that would produce phosphoric acid.
Although currently at an early stage of discussion, the venture is assessing the construction of a facility capable of producing a high quality phosphoric acid that could produce for both the fertilizer market and for specialty applications. The facility would see the delivery of Arianne’s high purity phosphate rock along with sulfuric acid provided by one of the world’s largest producers and suppliers of sulfuric acid. The joint venture would benefit from being able to have direct access to the necessary inputs from producers focused on their specific segment of the market and thus, the cost and competitive advantages that would come as a result.
“This would certainly be an interesting opportunity for both organizations,” said Brian Ostroff, Chief Executive Officer of Arianne Phosphate. “What we know about the industry is that integration is a key driver of profitability and that’s why 85% of the world’s phosphate rock production is owned and integrated by the organizations that make the downstream products. Today there are many operations that are challenged by their reliance on others for their rock supplies and the risks of this have become very evident with recent unforeseen supply disruptions. This venture would allow both companies to take their currently non-integrated production, combine them, and create something of considerable value. It really is a case of one plus one equals three and would create an entity immune from external supply shocks.”
The MoU will allow for both companies to combine their respective market knowledge and address how best to move the potential venture forward. Costs, logistics and end markets will all continue to be reviewed to determine the full extent of the opportunity. Matters such as capacity, end products and location will be further studied to better assess feasibility and decisions regarding a possible business venture made from that review.