The two agricultural companies have also set up a formal memorandum of understanding to create a joint venture.
Australian phosphate developer Fertoz (ASX:FTZ) has signed an agreement with international fertilizer company Humic Growth Solutions to supply phosphates which will be blended with Humic products.
The decade spanning sales and supply deal outlines the production of a blended humate/phosphate fertilizer.
There is also a formal memorandum of understanding between the two agricultural companies to create a joint venture.
The pair of producers have estimated that sales in the first 24 months will reach 35,000 to 40,000 tons through the new value-added fertilizer products. That number is expected to grow in the years that follow.
The unique phosphate humate product will deliver much needed nutrients to crops, while simultaneously improving soil health.
“Blending these with our high-quality, high-availability organic rock phosphate allows Humic Growth Solutions and Fertoz to jointly market premium blended fertilizer products to broad acre crop farmers, high-intensity vegetable growers and greenhouse operations looking for fertigation productions and drip-feed fertilizers,” Pat Aver, Fertoz executive chairman, said in the announcement.
“This relationship makes a solid strategic fit as well as a geographically advantageous one, as the closest HGS processing facility is only 190 miles from our Montana stockpile and it has road and rail access to all of North America.”
The hybrid soil additive, which is already in demand by farmers can be used by traditional and organic farmers.
“Blended humates and phosphate are high-value fertilizers, so freight costs are not a major consideration, meaning we will be able to sell the blended product right across the United States and Canada,” added Avery.
Humic Growth Solutions is the largest manufacturer and supplier of organic humic products, which include a 100-percent soluble humic acid powder and patent protected humic acid granule.
The humate Humic Growth sources come from Alberta and is processed at the company’s facilities in Alberta, Idaho, Florida and Montana. The final product is then exported to world markets.
“HGS has a great suite of humate-based products but we are always looking for complementary components that bring agronomic value and can economically improve yields and crop quality to producers around the world,” Humic Growth Solutions, founder and CEO Kevin Merritt, said.
“We selected Fertoz phosphate due to its high quality, its proximity to our Montana processing facility, its well-developed logistics solutions and its impressive sales history and developing market penetration.”
Fertoz shares were up 11 percent on Thursday (November 22), closing at AU$0.20.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.