Suvo’s extended deal with Chaozhou Chengcheng Industrial increases hydrous kaolin volumes

Suvo’s extended ~$6.56m offtake agreement with China’s Chaozhou Chengcheng Industrial includes a 25% increase in hydrous kaolin sales volumes.

The extended offtake agreement is valued at ~$6.56m and will see a 25% increase in minimum order volumes. Pic: Getty Images

• Suvo extends hydrous kaolin offtake agreement with China’s Chaozhou Chengcheng Industrial for a further five years

• Extension includes a 25% increase in sales volumes with minimum order of 8750t over five years

• Further growth expected at the company’s Pittong kaolin operations in Victoria

Special Report: Suvo Strategic Minerals is building sales volume momentum for hydrous kaolin from its Pittong project in Victoria with a major extension of an offtake agreement with China’s Chaozhou Chengcheng Industrial.

The agreement extends the supply of hydrous kaolin from Pittong to the buyer for a further five years and is valued at ~$6.56m.

Chengcheng will order at least 8750t of hydrous kaolin over five years, a 25% increase in minimum order volumes over the previous three-year contract that covered 4275t of material.

It follows on Suvo Strategic Minerals (ASX:SUV) extending in January 2025 a sales contract with Norske Skog for the supply of 21,000-24,000t of hydrous kaolin over the new three-year term.

“We are pleased to extend this take or pay offtake agreement with our valued customer, Chengcheng,” Suvo executive chairman Aaron Banks said.

“As a result of winning new business, following an aggressive marketing campaign throughout China, with our local distribution partner, Chengcheng, we were able to increase the annual minimum order quantities in the agreement by 25%.

“ the increase in demand from one of our major customers just last month and now another positive step forward with this agreement, we anticipate significant growth in sales volumes in 2025.”

He added the company expected further growth at its Pittong operations, which reported positive EBITDA and net profit at the project level of $510,000 and $390,000 respectively last quarter.

“We continue working on other product development opportunities as we look to grow the sales of kaolin from our Pittong operations and generate positive cashflows.”

Pittong operations

Pittong sits 40km west of Ballarat and is the sole wet kaolin mine and processing plant in Australia with a nameplate capacity of 60,000tpa and has been in operation since 1972.

Feedstock from the three permitted deposits is fed into the plant and is processed into four separate product forms – a 10% moisture lump, high solids slurry, 1% moisture powder and 1% moisture pulverised powder – for end users.

The solids slurry is used in paper and board manufacturing while the other products are used in paper, coatings, paint and specialist industries including rubber and pharmaceutical applications.

This article was developed in collaboration with Suvo Strategic Minerals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Suvo’s extended deal with Chaozhou Chengcheng Industrial increases hydrous kaolin volumes