06 June 2013 16:07 [Source: ICIS news]
LONDON (ICIS)--Poland's Zaklady Chemiczne Police (ZChP) is nearing a deal for the acquisition of phosphate deposits in Senegal, a source at the company said on Thursday.
The nitrogen phosphorus potassium (NPK) fertilizer producer could save as much as 50% on the prices it currently pays for phosphate feedstock, potentially leading to annual savings of tens of millions of euros, the source added.
Phosphate from the Senegalese deposits could cover up to half of ZChP's yearly demand.
“The transaction would be a clear positive for ZChP, as well as for its 66%-shareholder, [Polish chemical group] Grupa Azoty,” said Piotr Drozd, a chemical industry analyst at investment bank WOOD & Company.
Phosphate rock constituted about 23% of ZChP's energy and material costs, Drozd estimated.
“Integration into phosphate rock should, we believe, reduce ZChP's earnings volatility, moving the company down the cost curve,” the analyst added.
Around 70% of the world’s phosphate fertiliser producers are vertically integrated into rocks, and a similar proportion of the feedstock was sourced from North Africa and the Middle East, according to Drozd.
ZChP, located in Police in the far northwest of Poland, where it owns a seaport, has previously imported phosphate rock from countries including Morocco, Egypt, Algieria, Tunisia, Syria and Togo.
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