MagIndustries Inc., Toronto, said Feb. 1 that it has signed a Project Development Framework (PDF) with Chinese firm China National Complete Plant Import & Export Co. Ltd. (COMPLANT) with respect to the development of the $1.2 billion, 1.2 million mt/y Mengo Potash Project in the Republic of the Congo. Mag had been in discussions with another Chinese company, Sinohydro Corp. Ltd. (GM Sept. 28, 2009, p. 10); however, the exclusivity period with that company ended Nov. 30, 2009.
Under the PDF with COMPLANT, a schedule of milestones has been set up that could lead to a final agreement. COMPLANT Engineering, Procurement and Construction (EPC) would be the contractor for the project. Mag says COMPLANT’s undertaking of source debt financing for 100 percent of the EPC contract is very important. Yet to be ironed out are product compensation and sharing. COMPLANT will have the option to take controlling interest in the project, with Mag and the Republic of the Congo remaining as minority shareholders. The PDF allows six-month exclusivity to COMPLANT for the diligence, engineering, and negotiation phases.
“We believe that in COMPLANT we have found an exceptionally qualified partner for the financing and execution phase of the Mengo Potash Project,” said Bill Burton, Mag president and CEO. “They are a very highly resourced partner – technically, financially, and politically; they provide a very strong strategic fit with their current involvement in the potash industry and tremendous record of accomplishment in Africa; and as a public company themselves they understand our commitments and priorities.”
Mag said its strategic rationale for selecting COMPLANT was that it is a major Chinese EPC contractor with an international focus. Mag also noted that COMPLANT’s controlling shareholder, State Development & Investment Corp. (SDIC), is experienced in investment and production of potash, and that it has built and is now running a large portion of Chinese domestic potash production. Mag said SDIC has access to corporate and investment institutions for investment in potash, that it is very active in Africa, and that their top executives have personal knowledge of the Republic of the Congo.
COMPLANT, Beijing, trades on the Shenzhen Stock Exchange. SDIC is the largest state-owned investment holding company in China. At the end of 2008, SDIC had a workforce of more than 60,000 employees, with registered capital of US$2.4 billion, total assets of $25.7 billion, and shareholders’ equity of $8.3 billion.