By Suleiman Al-Khalidi
Mitsubishi signs deal for $300mn complex to produce phosphoric and sulphuric acid.
Jordan Phosphate Mines Company and Japan's Mitsubishi Corporation signed a deal to build a $300 million fertiliser complex to bolster the former's downstream push, industry executives said on Wednesday.
They told Reuters a memorandum of understanding (MoU) was signed in Tokyo this week to proceed with constructing the complex near the main Shidiya phosphate mine, in the south of the kingdom.
The complex will have the capacity to produce 10,000 tonnes daily of phosphoric acid and 3,000 tonnes of sulphuric acid from the Shidiya mine that has an estimated 1.3 billion tonnes in deposits of phosphate rock, with at least 810 million proven.
The project, due to be constructed by 2010, will bolster the fortunes of JPMC, the world's sixth biggest phosphate producer, to process its large phosphate rock reserves.
JPMC, with mining rights to more than one billion tonnes of phosphate rock reserves in Jordan, wants to exploit its three major mines of Hassa, Al-Abaid and Shidiya to achieve more value added forms such as fertilizers.
"This is part of JPMC's strategy to diversify downstream chemical and fertilizer production activities, thereby mitigating its potential exposure to changes in the world phosphate rock market," a Jordanian industry source familiar with the phosphate sector said.
"It will at the same time secure a market for a substantial proportion of its phosphate rock production," he added.
Industry executives said it was not certain if the latest project cancels an earlier plan to enter into joint venture with Indian Farmers Fertilisers Coop (IFFC) of India to produce a phosphoric acid plant from the large deposits of Shidiya.
A MoU was reached last January with the Indian investors to build a similar $350 million project to produce 15,000 tonnes daily of phosphoric acid, all for export to the fast growing Indian markets.
Two joint venture projects with Japanese and Indian firms are already operational in Jordan. A Japanese consortium comprising Mitsubishi Chemical and Asahi Industries already hold a majority 60% shareholding in JPMC's fertiliser complex in the Red Sea port city of Aqaba.
JPMC had also signed an initial agreement in May to build a $65 million fertiliser complex by 2009 with Bahrain-based Venture Capital Bank, an Islamic investment bank, and Jordan Arab Fertilisers and Chemicals Company.
The feasibility studies were underway for the project that will specialise in manufacturing fertilisers and chemicals such as sulphate of potassium, sulphuric acid, phosphoric acid and calcium chloride, investors said.
JPMC has seen a turnaround in its fortunes in the last two years after being financially troubled for over a decade.
JPMC's sales of rock phosphate were over six million tonnes last year with four million tonnes exported. The rest is processed as fertilisers in its joint venture plants.
Brunei Investment Agency last year bought a 37% stake in JPMC. Other major shareholders are Kuwait, which owns 9%, and Jordan's government pension fund holds 16%. - Reuters