Poland’s ZChP aims to double phosphate mining output in Senegal

LONDON (ICIS)–Poland’s Zaklady Chemiczne Police (ZChP) is looking to double output at its phosphate rock mining enterprise in Senegal this year to a rate of 200,000 tonnes/year, the fertilizer producer said on Monday.

ZChP, a subsidiary of fertilizer producer Grupa Azoty, is to call on the expertise – and potential project financing – of Polish-based miner KGHM to help it better capitalise on the 55% stake in the African Investment Group miner it purchased in August last year, it added.

ZChP added in a statement, “Grupa Azoty wants to accelerate its investment in Senegal and KGHM is taking up an invitation to jointly extract phosphates for the production of compound fertilizers. In the near future there will be talks on the details of its involvement including possible project financing.” 

“KGHM has enormous potential in the exploration and extraction of raw materials for the fertilizer industry. We in turn have competence in the field of the marketing and logistics of such products internationally,” added Grupa Azoty CEO Pawel Jarczewski.

Further integration into phosphate mining should help Grupa Azoty improve depressed margins on the 1m/tonnes a year of multi-component fertilizers it produces, ZChP said.

Assessing ZChP’s progress with the acquisition, investment bank WOOD & Company said in a note to investors: “While we like the company’s upstream investment into phosphate rock, we note that the Senegal project now seems unlikely to meet our expectations.

“On the volume side, we were looking for 300,000 tonnes/year of Senegal-mined phosphate rock in 2014, which, according to management, does not seem achievable. On the pricing front, with current phosphate rock prices of $120/tonne vs. our full year-2014 forecast of $152/tonne and mining costs of $80-90/tonne, the net effect of the Senegal project, while still positive, is very likely to prove lower than we have anticipated,” WOOD added.

ZChP also mines ilmenite ore at its Senegalese mines for use as feedstock in its titanium dioxide (TiO2) production.