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Orascom to acquire Abraaj’s fertilizer production

News

Orascom Construction Industries, Cairo, said Feb. 21 that it has signed an agreement with United Arab Emirates-based Abraaj Capital (Abraaj), the leading regional private equity firm, which has agreed to merge its fertilizer production operations under OCI for a combined cash and shares equity consideration of approximately US $1.59 billion. OCI will also assume $1.1 billion in net debt.

Orascom will pay $874.5 million in cash and issue approximately 12.77 million new OCI shares through a capital increase to Abraaj. Following the capital increase, Abraaj will be a 5.95 percent shareholder in OCI. Abraaj will have one seat on OCI’s board of directors and will be held by Arif Naqvi, vice-chairman and CEO of Abraaj Capital.

Abraaj’s has a 100 percent controlling stake in Egyptian Fertilizers Co. (EFC), a free zone company, which includes a 20 percent stake, already indirectly held by OCI. EFC has an annual production capacity of 1.27 million mt of ammonia/ urea, which will increase to 1.47 million mt by 2010 following the implementation of a debottlenecking project. An Uhde/OCI consortium also constructed the two ammonia/urea production lines at EFC in 2000 and 2006 in Ain Sokhna, which is located adjacent to the EBIC plant in the Suez Industrial Development Park, an 8.8 million square meter industrial park managed by OCI on a concession basis.

EFC owns a 20 percent stake in Notore Chemical Industries Ltd. (NCIL), which owns an ammonia/urea production plant in Nigeria with an annual production capacity of 500,000 mt. The plant is currently being rehabilitated and is expected to restart production during mid-2008. ECI says NCIL has sufficient gas allocation for an additional two ammonia/urea production lines.

Abraaj also has a strategic alliance with UAE-based Dana Gas PJSC, the Middle East’s largest private sector natural gas company – which is currently active in gas exploration, production, transportation and marketing in the region, including in Egypt, the Kurdistan region of Iraq, and the UAE. Dana Gas’ strategic alliance with Abraaj Capital envisages negotiating possible future gas supply agreements for fertilizer plants and other gas-intensive industries.

OCI’s current investments in ammonia and nitrogen-based fertilizers include a 30 percent stake in Egyptian Basic Industries Corp. (EBIC) in partnership with Kellogg Brown & Root (KBR) and the government-owned Egyptian General Petroleum Company (EGPC) which is scheduled to commission a greenfield ammonia production plant with an annual capacity of 800,000 mt during the second half of 2008. A KBR/OCI consortium is constructing the plant which is located in Ain Sokhna adjacent to the Sokhna Port on the Red Sea. KBR is the provider of the process technology.

OCI’s investments also include a 51 percent stake in Sorfert Algeria in partnership with state-owned oil & gas conglomerate Sonatrach (49 percent shareholder) which is currently constructing north Africa’s largest urea/ammonia production complex, with an annual production capacity of 1.3 million mt of ammonia/urea and 800,000 million mt of ammonia. The production complex is scheduled for commissioning during the end of 2010. An OCI/Uhde consortium is currently constructing the new complex which is located 60 km from the Mediterranean coast near three major Algerian ports. Uhde is the supplier of the process technology.

OCI says the merger will make its fertilizer group one of the world’s top five producers of nitrogen fertilizer and ammonia with a total combined annual capacity of 4.2 million mt by 2010.

Yara reports progress on Libyan jv

News Briefs

Oslo-Yara International ASA said Feb. 18 that it, the National Oil Corp. of Libya (NOC), and the Libyan Investment Authority (LIA) have come a step further in plans to establish a joint venture for the production and marketing of mineral fertilizer in Libya. NOC and Yara signed a heads of agreement April 25, 2007, outlining the intention to establish a joint venture company that would comprise the ammonia and urea plants located at Marsa el Brega in Libya, presently owned by NOC. NOC, Yara, and LIA on Feb. 18 signed a joint venture framework agreement that will enable them, after final negotiations, to establish and commence the creation of the joint venture company. The planned jv will be owned 25 percent each by NOC and LIA, and 50 percent by Yara. Yara says this is a strategic partnership to further upgrade and develop the existing production capacity at Marsa el Brega and to evaluate and potentially develop further fertilizer projects in Libya. The existing operations currently produce approximately 700,000 mt/y, of which approximately 150,000 mt are available for sale, and 900,000 mt/y of urea. NOC will supply natural gas and services to the new company. It is intended that Yara will contribute towards a further upgrading of the production assets, including building new world-scale fertilizer plants, and will be appointed as the marketer of products from the Marsa el Brega site.

Yara to expand Siilinjarvi phosphate rock mine

Europe, News Briefs, Phosphate Rock

Helsinki-Yara International ASA said Feb. 14 that it plans to expand Siilinjarvi phosphate rock production. At phase one, capacity will be increased by 150,000 mt of rock per year, to 1 million mt/y. To do so, Yara will modify existing grinding and flotation equipment. The expansion is expected to be operational during the second half of 2009, with the second phase planned for 2010-11. The potential increase is planned to be 300,000 mt. If phase two is carried out, it will mean investment for new crushing, grinding, and flotation equipment. Yara also announced that a feasibility study for Solki, a separate project from Siilinjarvi, has been started. Yara is interested in opening a mine in Sokli in Finnish Lapland if a commercially sustainable means of implementation can be found.

PotashCorp eyed privatization, passes on auction

News Briefs, Saskatchewan

Saskatoon-Potash Corp. of Saskatchewan Inc. President and CEO Bill Doyle said executives considered taking the company private after the company’s share price dropped some 20 percent during a three-day period on Wall Street. Doyle said the drop did not reflect the strong fundamentals of the business. Instead, however, the company opted to implement a 5 percent stock buyback plan. In other news last week, Doyle told analysts that PotashCorp will pass on the upcoming March 11 auction of rights to potash reserves in Russia. Doyle said investment conditions were not right for the move now, though he did not rule out future investment. He expects the bidding to be extraordinarily high. PotashCorp already controls most of the world’s idled potash capacity, with plans to boost its own capacity.

Mosaic mine gets another approval

Florida, News Briefs

Hardee County, Fla.-The Mosaic Co. received approval of its development of regional impact from the Central Florida Regional Planning Council in mid-February, which would include about 10,800 acres for its South Meade Mine. Approximately 7,750 acres would be mined by 2020, and land reclamation would continue until 2026, according to local news reports. The balance of the area would be used for buffer zones for conservation, mitigation, and clay-settling ponds. Mosaic said the ponds would be built with new technology to prevent spills, but would also include spillways surrounding the containment area. Mosaic would also monitor ground water on the sides of the ponds. On April 17, the Hardee County Commission was scheduled to hold a final public hearing and a vote on the proposal.

FertiNitro stake for sale

Europe, News Briefs

Milan-Saipem SpA, an Italian oil services company, said Feb. 14 that it plans to sell its 20 percent stake in FertiNitro, the Venezuela nitrogen manufacturer, in 2008. FertiNitro ranks as one of the world’s largest nitrogen plants, with nameplate daily production capacity of 3,600 mt of ammonia and 4,400 mt of urea. It is owned 35 percent by a Koch Industries Inc. subsidiary, 35 percent by Pequiven, a state-owned petrochemicals company, 20 percent by a Snamprogetti SpA subsidiary, and 10 percent by a Cerveceria Polar, C.A. subsidiary. Saipem bought Snamprogetti in 2006. Saipem said the sale would be part of its continuing plan to shed non-core assets.

OCP seeking foreign investment

News Briefs, Phosphate

Rabat-Morocco’s state-owned Office Cherifien de Phosphate (OCP) is reported to be opening up for foreign investment, according to Reuters and other wire services. OCP had not responded to inquiries at press time. Citing a statement from OCP, Reuters said OCP has opened to foreign direct investment a world-class integrated facility, the Jorf Phosphate Hub located at Jorf-Lasfar, with a port that can accommodate vessels of up to 100,000 mt. OCP reportedly is eyeing the investment of $2.5 billion over the next five years to boost Morocco’s position as a central platform for the phosphate industry. Investors would receive tax and real estate benefits and direct access to phosphate products at lower costs. OCP is reported to be eyeing investors in the European Union, India, Brazil, U.S., and Pakistan.

Illinois planners ponder fertilizer center

Eastern Cornbelt, News Briefs

Maple Park, Ill.-Hintzsche Fertilizer Inc. officials say that Lee County planners need to get the idea out of their heads about Hintzsche building an anhydrous ammonia plant on Interstate 39 interchange property near Paw Paw. “They keep talking about an ammonia facility, which it isn’t,” John Hintzsche told Green Markets. “Nobody wants ammonia production in their backyard. We know this.” Still, there are those with the county board who aren’t sure about the Hintzsche plans and have put the matter off for at least another month while they consider the future of the area, which now is mostly farmland but is expected soon to see rapid commercial development. Just what kind of development is the issue, according to those who consider that industry development doesn’t fit in with the county’s long-term vision. Hintzsche – whose family-owned company is involved in agronomy and fertilizer, seed, petroleum and other businesses, with locations in Cortland, Kirkland, Minooka, Troxol, and Waterman – sees it as an ideal spot in the center of its Illinois agriculture markets. He said plans call for a retail farm center with a storage and distribution hub that could handle 15,000 tons of dry MAP, potash, urea, and other fertilizer lines.

LOL earnings up 83 percent in 2007

News Briefs, Northern Plains

Arden Hills, Minn.-Land O’Lakes Inc. reported an 83 percent increase in net earnings for the year ending Dec. 31, 2007, to $162.1 million on sales of $8.9 billion versus 2006’s $88.7 million and $7.1 billion. LOL reported improved performances nearly across the board in all businesses. LOL’s agronomy business reported $13.6 million in pretax earnings for the year, up from $11.8 million in 2006. Those earnings were generated by LOL’s stake in Agriliance LLC. For the fourth quarter, the restructured agronomy business (in its off season) reported a pretax loss of $35.6 million versus a year-ago $16.3 million loss. Those losses include one-time losses related to Agriliance’s repositioning. LOL reported $287 million in crop protection sales through Winfield Solutions LLC for the fourth quarter since the Sept. 1 repositioning. LOL’s seed sales were up significantly for the year, to $917 million from 2006’s $756 million, while pretax earnings were up slightly, to $43.9 million versus $40.1 million. Seed corn volumes were up 35 percent, just over twice the acreage increase. Soybean seed sales were down 6 percent, while overall acreage declined 14 percent. LOL-wide, fourth-quarter net income was off, at $5.5 million on sales of $2.6 billion from the year-ago $44.5 million and $1.9 billion. The company cited reduced earnings in its dairy food section due to the impact of strong product prices on volumes and product mix.

Agrico reports improvements at Belleville

Canada, News Briefs

Belleville, Ont.-Agrico Canada Ltd. reports that construction began on a 10 mt automated fertilizer blender at the Agrico Farm Centre at Belleville, Ont., in January. Agrico said the entire facility will be reorganized to accommodate modern bagging and tote-filling equipment. “These improvements will allow us to serve our customers quickly and more efficiently,” said Barry Cooper, manager. “The renovations will be completed without any interruption to service and the plant will be fully operational to fulfill the spring fertilizer requirements of our many customers.” Agrico said the new blending system will be high speed and efficient, allowing the blending of multiple products, including additives such as Avail, Agrotain, micronutrients, and growth stimulants. It is expected the new facility will increase the speed and ease with which growers can load their products and head to the field. “We will be able to meet all demand for fertilizer products and blends this spring,” said Cooper. “As the newest, most modern facility in the area, we are confident we will be supporting our customers better than we have in the past.”