Saturday, March 01, 2008 10:33:09 AM
Maaden to dominate fertiliser market
State mining firm expects to supply 20 per cent of $25bn market when Ras al-Zour complex opens.
Maaden Phosphate Company claims it will become the world's largest producer of diammonium phosphate (DAP) fertiliser when its complex at Ras al-Zour is completed, taking up to a fifth of the global market.
The plant is being built in two phases by a joint venture of Saudi Arabian Mining Company (Maaden) and Saudi Basic Industries Corporation (Sabic).
The first phase of the project, with capaciSaudi Basic Industries Corporation (Sabic).ty of 2.9 million tonnes a year (t/y), will have a major impact on the world market for phosphate-based fertilisers when it comes on stream in late 2010, says Maaden.
The second phase is set to be approved by the end of the month, giving the plant export capacity of at least 6 million t/y of DAP, or almost half the 12.2 million tonnes produced globally in 2006.
Based on market prices, the global DAP market is worth $25bn a year. The market for urea, the most commonly used fertiliser, is worth about $46bn a year.
"We expect to take a 15-20 per cent share from day one," says Steve Wilson, a spokesman for Maaden Phosphate Company. "The sulphuric acid, ammonia and phosphoric acid plants will be the largest [of their kind]."
The project could be able to undercut its competitors. "It is the only fully integrated phosphates project in the world and we have access to cheap natural gas and great economies of scale," says a senior project source.
Costs in Russia, a key rival, are set to escalate dramatically, with Gazprom set to raise sulphur prices more than sevenfold in 2008. Maaden, in contrast, will have access to cheap local sulphur.
"Maaden's sulphur will be cheaper than most," says Barrie Bain, director of Fertecon, a UK-based fertiliser consultancy. "But the phosphate rock will be expensive compared with Morocco and US producers who have their own rock. It depends on how Maaden accounts for the capital cost."
The project will bridge a significant DAP supply gap that has pushed prices up to $850 a tonne from just $250 a tonne at the start of 2007.
"The first phase of the project will tip the market into surplus," says Bain.
The $5.56bn project will require $3.9bn of debt from banks and export credit agencies. Syndication of the $1.9bn bank portion has begun, with financial close
by May.
The new output will affect Riyadh's regional competitors, notably Jordan, which produced 600,000 tonnes of DAP in 2006, Morocco, which produced 1 million tonnes, and Tunisia which produced 1.1 million tonnes.
Morocco's state-owned Office Cherifien des Phosphates will remain the world's largest exporter of phosphate products overall, including the production of phosphoric acid and another fertiliser, monoammonium phosphate.
The US is currently the world's largest DAP exporter, with 5.65 million tonnes exported in 2006. Russia was the second largest, with exports of 1.5 million tonnes. Tunisia, Morocco and Jordan make up the rest of the top five.
* Author: Richard Nield. Senior Writer - London
State mining firm expects to supply 20 per cent of $25bn market when Ras al-Zour complex opens.
Maaden Phosphate Company claims it will become the world's largest producer of diammonium phosphate (DAP) fertiliser when its complex at Ras al-Zour is completed, taking up to a fifth of the global market.
The plant is being built in two phases by a joint venture of Saudi Arabian Mining Company (Maaden) and Saudi Basic Industries Corporation (Sabic).
The first phase of the project, with capaciSaudi Basic Industries Corporation (Sabic).ty of 2.9 million tonnes a year (t/y), will have a major impact on the world market for phosphate-based fertilisers when it comes on stream in late 2010, says Maaden.
The second phase is set to be approved by the end of the month, giving the plant export capacity of at least 6 million t/y of DAP, or almost half the 12.2 million tonnes produced globally in 2006.
Based on market prices, the global DAP market is worth $25bn a year. The market for urea, the most commonly used fertiliser, is worth about $46bn a year.
"We expect to take a 15-20 per cent share from day one," says Steve Wilson, a spokesman for Maaden Phosphate Company. "The sulphuric acid, ammonia and phosphoric acid plants will be the largest [of their kind]."
The project could be able to undercut its competitors. "It is the only fully integrated phosphates project in the world and we have access to cheap natural gas and great economies of scale," says a senior project source.
Costs in Russia, a key rival, are set to escalate dramatically, with Gazprom set to raise sulphur prices more than sevenfold in 2008. Maaden, in contrast, will have access to cheap local sulphur.
"Maaden's sulphur will be cheaper than most," says Barrie Bain, director of Fertecon, a UK-based fertiliser consultancy. "But the phosphate rock will be expensive compared with Morocco and US producers who have their own rock. It depends on how Maaden accounts for the capital cost."
The project will bridge a significant DAP supply gap that has pushed prices up to $850 a tonne from just $250 a tonne at the start of 2007.
"The first phase of the project will tip the market into surplus," says Bain.
The $5.56bn project will require $3.9bn of debt from banks and export credit agencies. Syndication of the $1.9bn bank portion has begun, with financial close
by May.
The new output will affect Riyadh's regional competitors, notably Jordan, which produced 600,000 tonnes of DAP in 2006, Morocco, which produced 1 million tonnes, and Tunisia which produced 1.1 million tonnes.
Morocco's state-owned Office Cherifien des Phosphates will remain the world's largest exporter of phosphate products overall, including the production of phosphoric acid and another fertiliser, monoammonium phosphate.
The US is currently the world's largest DAP exporter, with 5.65 million tonnes exported in 2006. Russia was the second largest, with exports of 1.5 million tonnes. Tunisia, Morocco and Jordan make up the rest of the top five.
* Author: Richard Nield. Senior Writer - London
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