Sabic said it will take a 30 per cent stake in a 13 billion riyal ($3.47 billion) phosphate project in Saudi Arabia.

This is Sabic’s fourth fertiliser project and its first that involves mining.
The joint venture with state-owned Saudi Arabian Mining Co (Maaden) will include a phosphate mine and processing plant producing three million tonnes per year of di-ammonium phosphate fertiliser, the two firms said. Maaden will take the remaining 70 per cent of the venture company.
Sabic was chosen as a partner for the project after consultations with five foreign firms, Maaden chief executive Abdullah Dabbagh said.
Sabic, the main shareholder in Saudi Fertilisers Co (Safco), would boost its fertiliser production by 900,000 tonnes per year to eight million tonnes with the project, Sabic Vice Chairman and CEO Mohamed Al-Mady said.
“Maaden wants to rely on Sabic’s expertise in the commercialisation of the product,” said Al-Mady, who added the project would target sales in the Americas, India, Australia and Africa.
Global demand for fertilisers has reached 150 million tonnes, growing three per cent per year, the firms said.
The complex, scheduled to go onstream by mid-2010, intends to exploit the kingdom’s 1.6 billion tonnes of recoverable phosphate reserves to produce fertilisers, they said.
The executives declined to give an estimate on the projected profit margin of the project.
“It will be one of the most cost-efficient in the world,” Dabbagh said, in an apparent reference to the availability of cheap feedstock.
The processing plant will be located in the Ras Al-Zour industrial zone on the Gulf coast, part of Saudi Arabia’s plans to reduce its reliance on the export of crude oil.
Maaden, which wants to raise up to $2.5 billion in an initial public offering this year, is also planning the country’s first aluminium smelter and alumina refinery, Dabbagh said in January.
The $7 billion project, also in Ras Al-Zour, will produce 650,000 tonnes per year of aluminium and 1.5 million tonnes of alumina, exploiting bauxite mines in the north of the country, according to Maaden statistics.
The phosphate plant will compete with rivals, including Morocco’s Phosphates Board (OCP), the world’s largest phosphate producer and top fertilisers supplier.
Sabic is considering other partnership opportunities with Maaden, Al Mady said, declining to elaborate.