What it is
An off-take agreement is a commitment to buy a set share of a project’s future output, usually signed before the project is built.
For a mine, a gas field or an LNG plant, it is often the document that makes everything else possible. Lenders look at who has agreed to buy, for how long and on what terms before they look at much else.
His own first serious deals were mineral off-take agreements with Chinese state-owned enterprises during Australia’s mining boom.
What he looks at
Who the buyer is
A long contract is only as good as the party on the other side of it. He looks at the buyer’s balance sheet, who stands behind it, and what happens if it changes hands.
Volume and flexibility
How much must be taken, how much can be turned down, and what that costs. Take-or-pay terms decide who carries the risk when demand falls.
Price
Fixed, indexed or linked to another market. The formula matters less on signing day than it does years into the term.
Term and the way out
How long it runs, what lets either side walk away, and what survives if one of them does.
Where disputes go
Governing law and the seat of arbitration matter most when the buyer and the seller sit in different countries.
Why it matters
The asset is what people see. The off-take is what tells you whether it will be financed.
