Jordan Phosphate Mines Company Secures $110 Million Loan for Construction of Aqaba Terminal

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jordan Phosphate Mines Company (AFM:JOPH) (JPMC) (Amman, Jordan) has signed a $110 million loan agreement with Europe Arab Bank (London, England) and International Finance Corporation (IFC) (Washington, D.C) to finance a $240 million state-of-the-art terminal at the port of Aqaba. IFC is part of the World Bank (Washington, D.C), while Europe Arab Bank is a subsidiary of Arab Bank (Amman). As per the agreement, IFC and Europe Arab Bank will provide loans of $50 million and $60 million, respectively. The remainder will be arranged through JPMC's internal accruals. The agreement was signed by Walid Kurdi, chairman of JPMC; Marcene Broadwater, global manager of IFC; and Antoine Sreih, chief executive officer of Europe Arab Bank.

JPMC is the second-largest phosphate exporter in the world. The company is building the terminal at the southern industrial zone under a 30-year cooperation agreement with Aqaba Development Corporation (ADC) (Aqaba). The project is expected to help JPMC's strategic growth plans to expand its international reach. In the long term, the terminal will also assist in economic growth, infrastructure development, employment and tourism in the region. Sources have indicated that nearly 6 million tons per year of phosphate will pass through the terminal. The exports will be mainly to India and the Far East. The terminal is likely to begin operations by mid-2012. In 2008, JPMC signed a memorandum of understanding with ADC to build the terminal.

Established in 1953, JPMC operates three phosphate mining sites in Jordan. The mines, with combined reserves of 1.4 billion tons, are located at Al-Hassa, Eshidiya and Al-Abiad. Experts have indicated that nearly 60% of Jordan is covered with phosphate deposits that can easily be mined. JPMC is the only phosphate mining company in Jordan. JPMC, which produces about 7 million tons per year of phosphate rock, is the world's sixth-largest phosphate rock manufacturer. The company's fertilizer complex in Aqaba produces 14,000 tons of per year of aluminium fluoride, 350,000 tons per year of phosphoric acid and 650,000 tons per year of di-ammonium phosphate. Recently, the company signed a $200 million joint venture agreement with fertilizer company PT Petrokimia Gresik (Gresik, Indonesia) to construct a 200,000-ton-per-year phosphoric acid production facility in Gresik. The facility will also manufacture 600,000 tons per year of sulfuric acid. The project, which is expected to begin construction in mid-2010, will begin operations in 2013.

Phosphate is used extensively in the production of fertilizers. With food independence and security becoming a priority globally, the medium- to long-term demand for phosphate is expected to increase. According to the "Fertilizer Outlook 2009-2013," published by the International Fertilizer Industry Association (IFA) (Paris, France), after years of sustained growth, the global fertilizer sector witnessed a slump because of the recent economic slowdown. However, by 2013-14, the industry will recover with an annual average growth of 2.3%. By this time, fertilizer demand is expected to be 186.8 million tons per year.

Latin America, South Asia and East Asia will drive the demand growth, accounting for 75% of global fertilizer demand. While China is expected to witness an annual growth of 1.9%, demand for fertilizers in South Asia, especially India, will increase 3.9% annually. However, experts have observed that India's fertilizer subsidy scheme may impact the forecast. Western and Central Europe, North America and Africa will witness growths of 0.8%, 1.3% and 3.5%, respectively.

The demand for phosphoric acid is expected to increase at an average rate of 5.5% per year from 2009 to reach 44 million tons in 2013. The IFA report indicates that by 2013, global phosphate rock capacity will increase 30%, reaching 248 million tons per year.

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