UpdateZChP eyes Africa ferts operation after Senegal phosphate deal

29 August 2013 17:35  [Source: ICIS news]

(updates with new content in paragraphs 1-6 regarding ZChP's plans to develop an Africa-focused fertilizer production and distribution centre in Senegal following its agrrment to acquire 55% of African Investment Group)

LONDON (ICIS)--Zaklady Chemiczne Police (ZChP) plans to build on its acquisition of 55% of a phosphate rock mining company in Senegal by opening a sulphuric acid plant in the country, the Polish multi-component fertilizer producer said on Thursday.

The plant, combined with phosphate rock supplies from the now ZChP-controlled African Investment Group (AIG), would then enable the company to make Senegal the centre of a planned fertilizer production and distribution centre for Africa, it added.

“With the running of the sulphuric acid plant, this country can certainly be our fertilizer production and distribution hub for other countries in Africa,” said Krzysztof Jalosinski, CEO of ZChP.

The acquisition provides cheaper phosphate rock feedstock that should enable ZChP to significantly reduce the prices of its phosphorous potassium (PK) and nitrogen phosphorous potassium (NPK) fertilizers, ZChP said.

The company added that it was pleased to now have its own vertically-integrated source of phosphate rock because in Europe the rock could only be obtained from one place, the Kola Peninsula in the far northwest of Russia.

Earlier on Thursday, ZChP announced that it would pay $28.85m (€21.64m) for its stake in AIG.

The $28.85m (€21.64m) payment for the stake would be split into four tranches: $3m upon the signing of the deal, $9.5m once 100,000 tonnes of phosphate rock have been mined and sold, $9.5m once phosphate rock sales have exceeded 200,000 tonnes and $6.85m once another mining concession has been granted and another 100,000 tonnes of phosphate rock have been produced, it added.

The vertical integration achieved through the AIG acquisition would save ZChP approximately zlotych (Zl) 30m ($9.35m, €6.99m) on phosphate rock purchases in 2014, ZChP forecast.

AIG holds licences to mine phosphate rock in Senegal’s Lam Lam and Kebemer regions, and ilmenite in the northwest African country’s Sund Saint Louis region, the Polish state-owned fertilizer and titanium dioxide (TiO2) producer said.

The mining company’s phosphate rock and ilmenite resources are estimated at 56m tonnes and 1.5m tonnes, respectively, it added.

The key question is the capital expenditure that will be required to launch production, which remains unknown,” Piotr Drozd, a chemical industry analyst at Prague-based investment bank WOOD & Company said in a note to investors on the acquisition.

ZChP is located in Police, a town on the Oder river and estuary, near Poland’s northwestern Baltic Sea coast.

The company, a subsidiary of the largest Polish chemical group Grupa Azoty, plans to use sea transportation in order to receive phosphate rock shipments from AIG.

($1 = €0.75, $1 = Zl 3.21 , €1 = Zl 4.29)

By: Will Conroy
+44 20 8652 3214

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