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Jordan Phosphate expands jv with top Asian firms

JV reduces dependence on exports of rock -CEO.

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October 7, 2010 3:34 by



Jordan Phosphate Mines Company , the world’s sixth biggest phosphate producer, has concluded joint venture deals with major Asian fertiliser consumers intent on securing long-term supplies, its chairman and CEO told Reuters.

The deals with Indian Farmers Fertilisers Co-operative Ltd, (IFFCO) and Indonesian fertiliser firms also would secure JPMC’s markets and will allow it to process more of its large phosphate rock reserves, Walid Kurdi said.

“It sets us in place. We have entered these latest joint ventures because they ensure long term supplies,” said Kurdi of the two projects, costing $840 million and now being implemented.

The two major downstream deals to produce 700,000 tonnes of phosphoric acid by 2015 will raise production of rock phosphate to nine million tonnes annually from a current output of six million tonnes, Kurdi said.

Both projects, consuming an extra three million tonnes of rock phosphate, will raise the amount of rock phosphate used in JPMC’s downstream projects to at least 60 percent of total output.

JPMC will keep exports of rock phosphates stable at their current 4 million tonnes level, Kurdi said.

JPMC, with mining rights to more than 1.346 billion tonnes of rock phosphate reserves, has in the last two decades expanded joint ventures with Indian and Japanese firms such as Mitsubishi Chemical searching for investment opportunities abroad to secure requirements to meet fast growing fertiliser demand.

Kurdi said the latest two projects maintain JPMC’s competitive edge in a changing global market where new producers like Saudi Arabia and Peru were expected to bring a surge of supply soon.

“One of the reasons for the joint ventures is to use more of our phosphate in the downstream industry, because with new producers emerging we don’t know what the future of phosphates exports would be,” Kurdi added.

“These new producers are going to make a big imbalance in all the industry in the whole world. That’s why we are starting to making adjustments as we cannot play alone.”

INDONESIAN PLANT

The $640 million project with IFFCO, the world’s largest fertiliser co-operative, backed by IFC and European Investment Bank loans, will secure 500,000 tonnes of phosphoric acid annually to India, the world’s biggest importer of phosphates. It will be ready for commissioning by 35 months, Kurdi said.

JPMC’s first foreign production facility abroad with Indonesia’s Petrokimia Gresik will produce 200,000 tonnes of phosphoric acid annually using one million tonnes of Jordanian phosphate rock.

The project, due for completion in 2014, at a cost of $200 million, paves the way for other projects with the Asian consumer keen to ensure long term supply deals with producers.

Another MOU with Indonesian state fertiliser holding firm Pusri outlines plans for a plant to produce 200,000 tonnes annually of compound fertilisers using Jordanian phosphoric acid.

“Our partner would have to buy from us and this maintains our markets. There will be a continuous supply of phosphates to our Indonesian partners,” Kurdi added.

A $95 million project in Jordan will be completed this year to revamp the fertiliser complex in the Red Sea port of Aqaba that will raise di-ammonium phosphate (DAP) output to one million tonnes from 650,000 tonnes. It already produces 320,000 tonnes of phosphoric acid.

JPMC has raised phosphate output this year, with production expected to rise to 6.2 million tonnes against 5.9 million tonnes last year to partially offset a 60 percent price fall since a peak that lasted until late 2008 driven by prospects of tight supply and demand conditions in India and China.

The longer-term outlook for fertiliser demand was bright as the global population grows and governments look for better yields from increasingly scarce arable land, Kurdi said.

“There will be a gradual pickup in demand because people are in need of fertilisers but it won’t be a doubling of demand as the agricultural land will increase gradually,” Kurdi said.

(Writing by Suleiman al-Khalidi; Editing by William Hardy)



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