The EPC contract has been signed at a fixed price of about $1.93-billion, with $708.9-million of that allocated for the construction of transportation links and utility pipelines that will enable the project to avoid relying on State infrastructure.

Kore says the reliance on its own infrastructure will be a critical advantage compared with other potash projects around the world.

“The entry into this EPC contract marks a significant milestone for the Kola potash project. By signing this fixed-price construction contract with one of the largest international engineering groups, the company has minimised risks associated with cost and time overruns typical in large mining projects.

“The company also believes this structure will facilitate accelerated financing and a relatively straightforward construction process, leading us to profitable production,” says Kore CEO Andre Baya.

The EPC remains subject to financial close for the project. Kore in April 2021 signed a nonbinding memorandum of understanding with Summit Corporation, which intends to provide Kore with a debt and royalty financing proposal for the construction of Kola.

Kore expects to receive a nonbinding financing term sheet from Summit by the end of February 2025.

The construction period for Kola is estimated at 43 months and the project is scheduled to deliver first production during the first half of 2029. It has an estimated life-of-mine of 33 years.

As part of efforts to limit the risks of the project construction, the EPC with PowerChina includes provisions for penalties in the event of delayed completion and noncompliance with performance metrics.

Kore says the EPC affirms the board of directors’ aim for the company to become one of the lowest-cost producers of potash for sale to Brazil and high-growth markets in Africa.

“Brazil is a potash import-dependent market with significant growing demand. The country is one of the largest net exporters of agricultural goods, which require MoP that helps provide potassium for plant growth.

“Potash is applied in the agricultural sector and is critical to maintaining food supply for the growing global population. The Brazilian potash market is Kore’s main target market followed by the high-growth African markets,” the company states.

Further, Kore notes that developing the operating capacity to run the Kola operations after commissioning is a challenge and, as such, it has opted for a contract operator model.

PowerChina has submitted a nonbinding proposal to operate the Kola project on Kore’s behalf.

“PowerChina has significant experience as a third-party operator of a potash mine, process plant, ports, etc, and has proposed that existing resources be deployed to operate the entire Kola project operation, which could potentially lead to cost savings for Kore,” Kore points out.

It notes, however, that there can be no certainty that a binding operator proposal will be entered into with PowerChina, adding that it is also not required to accept PowerChina’s proposal.