30 April 2013 17:45 [Source: ICIS news]
LONDON (ICIS)--Commercial ammonia and urea production at the new $2bn (€1.52bn) Sorfert Algeria plant in North Africa will start "within weeks" as the state-of-the-art fertilizer facility awaits the final regulatory go-ahead to launch its long-awaited operations, parent Orascom Construction Industries (OCI) announced on Tuesday.
In a note accompanying its full-year 2012 financial results, the Egyptian subsidiary of Dutch-based OCI Nitrogen said it expects to receive "final regulatory approvals from the Algerian government to commence testing on Sorfert during the second quarter and enter into commercial production and commence exports within the coming weeks".
"All construction on both lines is now complete," OCI added. "Sorfert is expected to contribute to consolidated earnings during the second half of 2013."
In early March, a senior OCI executive told ICIS that a delay in the issuing of a government permit for the start-up of the plant's second ammonia line had caused the commissioning date to be pushed back. He confirmed the company had "signed long-term urea and ammonia supply deals with several buyers", but declined to provide further details.
The Arzew-based plant will initially focus on urea production, which uses ammonia as its key feedstock, although both nitrogen fertilizers should be available for export before the end of the year, the executive added on 1 March.
Separately on Tuesday, OCI revealed that the ammonia line at its Texas plant, OCI Beaumont, will undergo a debottlenecking in 2014 in a move that will boost the unit's ammonia output by 15% to 292,000 tonnes/year.
While no start date for the work was provided, OCI stated that the initiative is "scheduled for completion during the second half of 2014, with full financial impact during 2015". The company will spend $100m on the debottlenecking project, which also involves major maintenance on the plant's methanol line to boost methanol capacity by 25% to 875,000 tonnes/year.
Meanwhile, the financial impact of natural gas curtailments that have impacted ammonia and urea operations at subsidiaries EBIC-OCI and Egyptian Fertilizer Company (EFC) in recent months was illustrated sharply by the 61.7% slump in OCI's annual net income to $259.5m from $678.4m in 2011. Consolidated revenues slipped 0.4% year on year to $5.49bn.
The company's fiscal performance was hurt by a one-off $99.2m goodwill impairment for EFC due to cuts to natural gas supplies and a one-off $82m cost in "additional interest expense related to delayed interest payments on agreed to tax settlement with the Egyptian Tax Authority (ETA) for the years 2007-2010".
In a separate statement on Tuesday, OCI announced it had resolved a near year-long tax dispute with the ETA and will pay the government body almost Egyptian pounds (£E) 7.0 billion ($1bn) in 10 instalments from 2013-2017.
"OCI continues to hold its position that it did not violate any laws," the firm said, adding its directors did not want to enter into a "prolonged legal battle with unpredictable outcomes due to the prevailing political environment in Egypt".
"The ETA has determined there was no tax evasion by the company and is exonerating management and the company from any wrongdoing related to the transaction," the statement concluded.($1 = €0.76, $1 = £E 6.94)
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