Riyadh-based Saudi Arabian Mining Company (Ma’aden) reported an 83% plunge in net profit after zakat and tax, to SAR1.58 billion (approximately $421 million at current exchange rates) in the 12 months ended Dec. 31, 2023, down from SAR9.32 billion for the previous year.
In a filing to the Saudi Stock Exchange, Ma’aden cited a decline in sales as a result of weaker prices for all its products except gold. The net profit result beat an average analysts’ forecast for SAR1.37 billion, however, according to Bloomberg. Sales in 2023 fell by 27%, to SAR29.27 billion from the prior year’s SAR40.28 billion, but also beat market estimates.
The company said FY2023 net profit was also impacted by higher finance costs due to increased borrowing rates and a lower share of profit from joint ventures on the back of lower commodity market prices. It said this was partially offset by improved raw materials costs, higher income from time deposit, and lower income taxes and zakat.
Ma’aden said the decrease in sales was due to prices “normalizing” after spiking on global supply disruption in 2022. But it said the weaker prices were partially offset by higher sales volumes of ammonium phosphate fertilizer, alumina, and gold.
The company reported that phosphate production last year reached a record 9.099 million mt. Production of DAP was up 15%, to 5.899 million mt from 5.151 million mt the previous year. DAP sales volumes grew 14% year-over-year, to 5.945 million mt from 5.201 million mt.
Ammonia production last year was essentially flat versus 2022, at 3.2 million mt, while ammonia sales volumes dipped by 7%, to 1.996 million mt from 2.147 million mt.
Ma’aden said it expects better conditions in FY2024, with more stable markets for phosphates and aluminum in particular.
“The global phosphate market is expected to remain stable in FY2024. Phosphate demand is set to rise due to improved affordability and low inventory in key markets, offset against supply returning to the market throughout the year,” said Ma’aden CEO Robert Wilt in a company earnings statement.
“Ammonia demand is expected to improve, driven by increased phosphate and nitrogen fertilizer production, and met through increased supply from the US and other markets,” he said.
Wilt
said Ma’aden has approved the final investment decision for Phase 1 of its
ambitious Phosphate 3 project. The CEO indicated last summer (GM June 2, 2023) that the project was “accelerating
towards a final investment decision later in 2023.”
Phase 1 is set to add a further 1.5 million mt/y of phosphate fertilizer
production capacity by 2026, he said. The company last year had been targeting
a 2025 completion.
The first plant in the Phosphate 3 project, a 1.1 million mt/y ammonia plant located at the Ras Al-Khair Industrial City facility on Saudi Arabia’s East Coast, started “official” commercial production in August 2022 (GM Nov. 4, 2022), although the first shipments from the new plant were made in June 2022 (GM June 10, 2022). The ammonia output is currently being used to cover existing sales contracts and merchant sales.
The second phase of the Phosphate 3 project is ultimately targeting an additional 1.5 million mt/y of production capacity, which, if fully realized, will take Ma’aden’s phosphate fertilizer production capability to 9 million mt/y.
Wilt also reported that the completion of the Vale transaction with Manara Minerals Investment Co. remains on track for the first quarter of 2024, subject to international regulatory approvals and customary closing conditions.
Manara Minerals Investment Co., a joint venture between Ma’aden and Saudi’s Public Investment Fund (PIF), in July last year signed a binding agreement to acquire a 10% stake in Brazilian group Vale SA’s Base Metals Ltd. unit, which produces nickel and copper (GM Aug. 4, 2023). The transaction is based on an enterprise value of $26 billion.