Brisbane-based Senex Energy, a unit of South Korean steel giant POSCO International Corporation, is reportedly not the only company keeping a close eye on Incitec Pivot Ltd.’s (IPL) progress for the sale of its fertilizers business (GM Feb. 16, p. 34).
According to the Australian Financial Review, Australian business magnate Gina Rinehart’s Hancock Energy has lined up Morgan Stanley should IPL’s negotiations with Indonesia’s state-owned PT Pupuk Kalimantan Timur break down.
IPL in a business update on Feb. 15 said the process for the potential sale of its fertilizer business “is progressing” but discussions were “incomplete,” and that the shareback would remain suspended. The Australian group has not disclosed the identity of the company it has negotiated with since last summer, but the Australian Financial Review outed the bidder back in July (GM July 28, 2023).
Pupuk Kaltim’s bid is expected to set off a raft of Australian Foreign Investment Review Board (FIRB) issues, including questions about the certainty of future supplies of fertilizers and whether any FIRB undertaking agreed to by Pupuk actually could be enforced, according to the report.
In December, there were reports that IPL may “walk away” from the proposed deal with Pupuk Kaltim after IPL Chairman Grey Robinson cited “complications” in negotiations with the bidder (GM Dec. 22, 2023).
Any deal would need to detail how the buyer would procure gas to produce fertilizers. POSCO and Hancock Energy between them are targeting 60 petajoules of gas production in 2025, according to the report.
Analysts have said IPL’s fertilizer business could be worth A$900 million to A$1.5 billion, or approximately $589-$981 million at current exchange rates.