RIYADH, 13 March 2007 -- Seeking to capitalize on the huge phosphate reserves in the northern area of Saudi Arabia, Saudi Arabian Mining Co. (Maaden) and Saudi Basic Industries Corp. (SABIC) signed a strategic partnership agreement here yesterday.
The agreement, signed by Dr. Abdallah E. Dabbagh, president and CEO of Maaden and Mohamed Al-Mady, vice chairman and CEO of SABIC opens the way for the two companies to create a strategic joint venture to mine, process and export phosphates as fertilizer and related products.
"The project caters for effective collaboration between these two leading companies," said Dabbagh. "Maaden will furnish technology and expertise in the phosphate industry while SABIC will provide technology and marketing expertise in the field of nitrogen fertilizers."
He noted that SABIC was, at 8 million tons per annum, one of the world's biggest producers of fertilizers and has built up a world-class global marketing network -- an important contribution to the joint venture. SABIC has 30 percent of the stake in the new deal while 70 percent of ownership is retained by Maaden.
Al-Mady said that the agreement was a leading step that should be followed by other initiatives to build national strategies and implement integration between the hydrocarbon and mineral sectors. It would, he said, "optimize the use of hydrocarbon and mineral resources nationwide to drive industrial development, increase contributions to the GDP and diversify national income resources."
The SR13 billion capital investment in the project, which comes a few months before the anticipated privatization of the government-owned Maaden, adds a substantial new area of business to Maaden's portfolio. Already, Maaden is working on a number of projects and this new addition to its phosphate project will be a significant step forward in the development of basic industries parallel to the oil based industries.
The project will directly produce 1,400 new jobs and indirectly create many more in the support and downstream industries.
Maaden has already signed four contracts to build an industrial complex which will be a center for the production of sulfuric acid, alumina and diammonium phosphate (DAP). Total production of DAP is estimated to reach 3 million tons per year in the fertilizer complex at the Minerals Industrial City in Ras Az-Zour, north of Jubail on the Gulf coast. The complex is scheduled to begin production in 2010 and will be one of the largest single phosphate fertilizer complexes in the world.
The new north-south rail link, financed by the Public Investment Fund, will be used to transport the raw materials from the Kingdom's northwestern area north of Al-Jouf to the Jordanian border. Currently extractable resources total 1.6 billion tons with reserves of another 1.5 billion.
Yesterday's agreement will reinforce the development of an integrated minerals industry and help in the exchange of technology and expertise. Maaden's strength lies in its combination of fully integrated mining industry, local availability of raw materials, cheap energy and easy access to target markets -- particularly China and India.
Parallel to the phosphates projects, Maaden continues to develop the Kingdom's bauxite resources and has invested SR13.5 billion in that area. The future development of large-scale aluminum production -- bauxite being the raw material -- is made more likely by plentiful deposits and access to cheap energy.
By Roger Harrison
© Arab News 2007
