DENVER (AP) — Potash mine developer Prospect Global Resources has signed a 10-year potash supply deal worth more than $2 billion with a Chinese fertilizer maker, which the companies said is one of the largest potash export deals in U.S. history.
Shares of Prospect Global soared in premarketing trading as the company said that state-owned Sichuan Chemical Industry Holding Co., one of China's biggest fertilizer and chemical makers, will buy at least 500,000 metric tons of potash a year. That amount represents a quarter of projected output from the Denver-based company's American West Potash field in Holbrook, Ariz. The field is expected to be in production by early 2016.
The company's shares added $1.12, or 39 percent, to $4 in premarket trading. Shares have lost two-thirds of their value this year.
The potash deal comes as a long drought in North America damaged grain harvests and sent prices soaring for wheat and corn, while demand for food grows in developing countries like China. Potash is a key fertilizer ingredient, and the companies said that importing enough of it was "vital to China's food security."
