Saudis plan phosphate exports

1 March 2005

RIYADH -- Saudi Arabia will start work within months on a 3 million tonnes a year phosphate mining project which it hopes will export fertiliser to world markets by 2008, state-owned minerals firm Maaden said on Monday.

Maaden made the announcement after receiving results of a 14-month study which it said showed its giant Al Jalamid Phosphate Project near Saudi Arabia's northern borders with Jordan and Iraq will yield healthy revenues.

"The bankable study has confirmed the feasibility of the project, with financial returns better than normally achieved for international large scale mining projects," Maaden said in a statement.

"Startup is planned for late 2008, following project financing in 2005," it said, adding that the completed fertiliser complex will be the largest fully integrated diammonium phosphate plant in the world.

The project is expected to produce 3 million tonnes of phosphate annually, generating 2.25 billion riyals ($600 million) in export revenues, Maaden said.

Work at the site, about 120 km (75 miles) southeast of Saudi Arabia's northern town of Turayf, will begin in the third quarter of 2005. Major engineering, procurement and construction (EPC) contracts will be awarded in the fourth quarter.

"This project (will) ... support the Saudi economy and increase GDP," Maaden president and chief executive officer Abdullah Dabbah said.

Saudi Arabia aims to build a 1,400 km (875 mile) railway linking its northern deposits of phosphate and bauxite with an industrial zone on the Gulf coast as part of its plans for an export drive in India and China.

It also plans to sell part of its stake in the state-owned Maaden in a first step towards gradual privatisation, part of the oil giant's wider efforts to speed up economic reforms, attract investment and ease dependence on petroleum revenues.

Maaden currently produces around 200,000 ounces of gold a year and has plans for a bauxite and aluminium project as well as the phosphate extraction.

Company officials say the firm will be restructured into separate units of gold, phosphate, bauxite and aluminium, and industrial minerals.

The first phase of privatisation will involve selling off shares in the gold production unit.

BY DOMINIC EVANS