Mosaic Enters Phosphate Joint Venture in Saudi Arabia
Mar 20th 2013 10:10AM
Updated Mar 20th 2013 10:16AM
Minnesota-based fertilizer producer Mosaic has scored a coup in Saudi Arabia, announcing Tuesday that it's entered into a pre-contract with Saudi mining and metals company Ma'aden, and with petrochemical firm Saudi Basic Industries Corp. (SABIC), preparatory to forming an integrated phosphate production joint venture in the Kingdom.
This JV would develop a mine and chemical complexes to produce phosphate fertilizers, animal feed, food-grade purified phosphoric acid, and sodium tripolyphosphate (a chemical used in detergents, and also as a food emulsifier) for sale to customers worldwide. Expected to begin operations in late 2016, the JV aims to produce approximately 3.5 million tonnes of finished product annually.
If formed, the parties anticipate dividing ownership of the $7 billion Wa'ad Al Shammal Phosphate Project with 60% being owned by Ma'aden, 25% by Mosaic, and 15% by SABIC. It would be built in the northern region of Saudi Arabia at Wa'ad Al Shammal Minerals Industrial City, and would include further expansion of processing plants in Ras Al Khair Minerals Industrial City, which is located on the east coast of Saudi Arabia.
The local parties would provide most of the capital to start up the venture. Mosaic would contribute primarily expertise in designing, building, and operating the facilities, plus up to $1 billion, invested over the course of four years. Mosaic would market approximately 25% of the production of the joint venture.
According to the Mosaic press release, the next step before the project gets off the ground will be for the companies to sign a definitive shareholders agreement. This could happen within three months.
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