AMMAN -- Malaysia and Indonesia doubled their imports of Jordanian potash from 180,000 tonnes in 2005 to 360,000 tonnes in 2006, according to the annual report of Arab Potash Company (APC).
"This was due to resuming supplies to one of the major Indonesian (compound fertiliser NPK) producers and opening an additional sales channel in the Malaysian market," the APC said. "It is anticipated that APC's office in Kuala Lumpur will play a major role in strengthening this strategic status in the future".
Shipments to India declined last year due to sales stoppages during the second quarter of 2006 pending finalisation of price negotiations.
"Despite this stoppage, sales to India scored the second highest on record. APC strengthened its position there through its solid link with its main customers in India (IPL and Zuari) which was reinforced by logistic solutions and long-term agreements," the company said.
As for China, shipments dropped to half compared to 2005 due to delays in price negotiations. But APC expects its strong relations and long term agreements with its Chinese customers (Sinochem) "to result in enhancement of APC's share in this growing market in 2007 onwards".
2006 was a difficult period for APC's market in Europe as prices deteriorated, demand declined and competition increased because former Soviet Union suppliers reentered the market after exclusion for a period of time.
This led to a decrease in APC sales in Spain, Italy, Portugal, Belgium and Turkey, the annual report pointed out expecting the decline in demand to be long-term due to steep NPK productions and demand being focused in short seasons.
"A development expected to materialise in 2007 is the operation of two new potassium sulphate plants in Egypt, where the government is supporting efforts to improve balanced fertilisation and also promote the use of compound fertilizer NPK," the Arab Potash Company said in its 50th annual report.
"These new plants are expected to be supplied by the company. Sustainable growth is also anticipated in the oil drilling markets," APC added.
Overall, sales declined by 9.4 per cent from 1.81 million tonnes in 2005 to 1.64 million last year.
APC's consolidated gross revenues declined by 4.5 per cent from JD236.7 million in 2005 to JD226.6 million in 2006.
Consolidated net income was JD39.1 million last year, 10 per cent down from the JD43.1 million posted in 2005.
Provisions were allocated for the amount of JD20.3 million to face extraordinary potential losses of Kemapco and Jormag.
Shareholders equity increased by JD9.8 million to reach JD267.7 million.
Consolidated fixed assets increased from JD451.9 million as at the end of 2005 to JD472.5 million as at the end of 2006.
Long-term loans dropped in 2006 to JD48.9 million compared to JD59.5 million at the end of 2005.
The royalties to the Government of Jordan amounted JD12.4 million compared to JD14.4 million in 2005, a decrease of 16.4 per cent, representing 5.9 per cent of net consolidated states for the year 2006 against 6.4 per cent for 2005.
In terms of production, the output during 2006 declined by 130,000 tonnes, or 7.2 per cent from 1.83 million tonnes in 2005 to 1.70 million tonnes in 2006.
The board chairman attributed the fall to inefficiency of harvesting raw materials at solar ponds in addition to dike 18 salt pond's being out of service till the end of the third quarter of 2006, consequent to completing remediation of its dike.
At present, the company is focusing on the rehabilitation of dike 18 and the production expansion project, both of which have reached different faces of implementation.
The expansion, which aims at raising output to around 2.5 million tonnes annually, includes:
1- Modification of solar pond systems and construction of new carnallite ponds
2- New Safi warehouse project which will increase the potash storage capacity by about 60,000 tonnes
3- Extension of the Aqaba warehouse which will increase the storage capacity by about 70,000 tonnes
4- Construction of a new cold crystallization plant.
As of December 31, 2006, Arab Potash Company owned various interests ranging from 20 per cent to 100 per cent in seven companies with activities related to the potash industry:
i- Jordan Safi Salt Company (under liquidation)
ii- Numeira Mixed Salts & Mud Company
iii- Jordan Magnesia Company. A final judgment on the arbitration case is expected this month.
iv- Kemira Arab Potash Company. On 1/2/2007, APC entered into a share transfer and settlement agreement with Kemira whereby all the shares of Kemapco owned by Kemira were sold to APC for one dinar.
In addition, Kemira settled its share of Kemapco's third-party loans of approximately JD52 million, waived payment of Kemapco's loans to Kemira of approximately $29.6 million, provided a cash payment to APC and Kemaapco of $12.5 million and extended other technical and commercial services.
v- Jordan Bromine Company. In 2006, the company realised a JD21.6 million net profit.
vi- Jordan Dead Sea Industries Company.
vii- Nippon Jordan Fertilizers Company.
APC employed 1986 workers at the end of last year, most of them at the plants in Safi.
Shareholders are:
Potash Corporation of Saskatchewan (27.96 per cent), Jordan Government (Jordan Investment Corporation) (26.88 per cent), Arab Mining Company (20.08 per cent), Islamic Development Bank/Jeddah (5.16 per cent), Iraqi Government (4.71 per cent), Libyan Arab Company For Foreign Investment (4.06 per cent), Kuwait Investment Authority (3.94 per cent), other Arab governments (0.63 per cent), private sector (6.57 per cent).
By Samir Ghawi
© Jordan Times 2007
