Saudi Arabian Mining Co. (Ma’aden), Riyadh, said its 60 percent-owned phosphates subsidiary, Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC), has signed new agreements to reschedule and refinance some $4.1 billion in debt to strengthen its cash position, according to a company filing to Tadawul, the Saudi stock exchange, on June 21.
MWSPC has signed new financing deals valued at $2.3 billion to pay down existing loans. It will also reschedule and transfer a $1.8 billion loan provided by Saudi Arabia’s Public Investment Fund (PIF) – the Kingdom’s sovereign wealth fund. As part of the agreement, this loan will now be held by Saudi Arabia’s Public Pension Agency.
The refinancing allows MWSPC to reduce interest expenses and push back payments to 2022, according to Saudi Arabia’s financial news portal, Argaam, citing Ma’aden CEO Mosaed Al-Ohali speaking to CNBC Arabia.
A number of local and international lenders took part in the refinancing, including Alinma Bank, National Commercial Bank, Al-Rajhi Bank, Bank Albilad, Riyad Bank, Saudi British Bank, Bank AlJazira, Samba Bank, and Saudi Fransi Bank, according to Ma’aden’s statement.
TheMosaic Co., which holds a 25 percent interest in MWSPC, said the refinancing marks MWSPC’s transition to its operational financial structure as the joint venture completes its ramp up to full capacity.
“This refinancing removes recourse to Mosaic by all lenders to MWSPC, and defers principal paydown until June 30, 2022, enhancing expected free cash flow,” said Mosaic. “In addition, Mosaic’s contractual commitment to make future cash contributions to MWSPC has now been eliminated.”
The phosphate subsidiary, in which SABIC owns the remaining 15 percent interest, officially started “commercial” operations at its ammonium phosphate plant at Ras Al-Khair on Saudi Arabia’s East Coast on Dec. 2, 2018. But, according to a market source at the time, MWSPC had been selling DAP cargoes for some time before that (GM Dec. 7, 2018). Trial DAP production began at the 2.9 million mt/y capacity plant on July 8, 2017 (GM July 14, 2017).
MWSPC also operates phosphate mining and other production facilities at Wa’ad Al Shamal, in Saudi Arabia’s far north.
It was Ma’aden’s second’s phosphate production project, and the Saudi mining company is now planning a third large-scale phosphate complex, “Phosphate 3.” The 1.1 million mt/y capacity ammonia plant for the new complex already is under construction adjacent to MWSPC’s ammonium phosphate site and that of Ma’aden Phosphate Co., Ma’aden’s first phosphate fertilizer venture (GM Oct. 26, 2018).
The Saudi mining company has yet to make a decision on when to start construction of the phosphate fertilizer production component of Phosphate 3, but last December its then President and CEO Darren Davis said the company would likely make a decision in 2020 (GM Dec. 6, 2019).
Ma’aden previously has said it plans to build Phosphate 3 in phases and anticipated a completion by 2025. The expected cost of Phosphate 3 is put at SAR24 billion ($6.4 billion). On completion, it will increase Ma’aden’s capacity to supply phosphate fertilizer to global markets by 3 million mt/y, with total production capacity of nearly 9 million mt/y (GM Nov. 2, 2018).