Industries Qatar takes full control of fertilizer major QAFCO in $1bn deal

LONDON (ICIS)–The board of Industries Qatar (IQ) on Sunday gave the green light to the purchase of Qatar Petroleum’s (QP) 25% stake in ammonia and urea giant Qatar Fertiliser Company (QAFCO) for $1bn.

The Doha-headquartered industrial giant said the move is “consistent with IQ’s strategy to build its presence and create value across the downstream sector.”

“This transaction specifically enhances the shareholder value by transforming IQ into a 100% owner of the world’s largest single site urea producer and expanding its footprints in a well-established fertilizer business, with a proven track record of operational excellence and market positioning, along with resilient cash flow generation capabilities, spurred by synergistic opportunities,” IQ said.

As part of the deal, QAFCO signed a new gas sale and purchase agreement (GSPA) with QP, running from 1 August 2020 until 31 December 2035, covering the gas requirements of QAFCO trains 1-6 and Qatar Melamine Company (QMC).

“In addition, and as part of the same transaction, IQ’s board of directors also approved QAFCO’s acquisition of QP’s 40% stake in QMC, effective 1 July 2020,” IQ added.

In early March, Norwegian fertilizer giant Yara agreed to sell its 25% stake in QAFCO to QP for $1bn.

QAFCO produces around 3.8m tonnes/year of ammonia at its Mesaieed site, of which some 80% is used as a feedstock for urea, and the rest exported to countries including India, Jordan and South Africa.

With urea production capacity of 5.8m tonnes/year, QAFCO exports around 14% of the world’s annual supply, with the prilled and granular crop nutrients exported to more than 20 countries.

QMC generates 60,000 tonnes/year of melamine from the region’s largest plant of its kind.

IQ noted that the oldest pair of QAFCO’s six ammonia and urea units face reliability issues given their age, and investment to improve operational efficiency at the units, which were commissioned in 1973 and 1979, may be required.

An extraordinary general assembly to obtain shareholder approval for the $1bn transaction will be announced in due course.