Tasnee signs deal to sell Jazan smelter to Tronox

Tronox’s acquisition of Tasnee’s Cristal — announced in February 2017 — has faced regulatory hurdles. (Courtesy, Tronox)
Updated 10 May 2018
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Tasnee signs deal to sell Jazan smelter to Tronox

  • Option agreement follows technical services agreement for building of Jazan facility
  • Titanium dioxide pigments are used in paper, paints and plastics.

DECODER: Titanium dioxide is a naturally occurring substance, mined in countries including Australia, South Africa and Canada. Titanium dioxide pigments are used in paper, paints and plastics.


Saudi industrial conglomerate Tasnee has signed an option agreement to sell a 90 percent stake in its titanium smelter in the south western city of Jazan to US-based Tronox.

The deal comes as a merger agreement between Tronox and Tasnee-subsidiary Cristal remains mired in regulatory turmoil.

Under the terms of the option agreement, signed between Tronox and Tasnee subsidiary AMIC (co-owned by Cristal), the US-based chemicals giant will acquire 90 percent of the Jazan-based titanium slag smelter facility, which has the capacity to supply up to 500 thousand tons (kt) of titanium dioxide slag and 220kt of pig iron.

The option agreement follows a technical services agreement between the parties, which will see Tronox provide technical assistance to AMIC to facilitate the startup of the smelter. Upon reaching the sustained operations of the facility, Tronox shall exercise its option to acquire the stake.

As part of the option agreement, AMIC will create a Saudi-incorporated SPV and contribute its ownership interest along with $322 million of debt currently held by AMIC. Tronox has agreed to lend AMIC and the SPV up to $125 million for capital expenditures and operational expenses — which may be drawn down on a quarterly basis as needed — to facilitate the start-up of the facility.

“By combining slagger operations expertise of Tronox with that of AMIC under the Technical Services Agreement, we will work together to ensure the successful commissioning and ramp-up of this world-class smelter in Jazan,” said Tasnee CEO Mutlaq Al-Morished in a statement.

The smelter agreement occurs against the backdrop of Tronox’s drawn-out bid to acquire Tasnee subsidiary Cristal, first announced in February 2017. Regulators in the US and Europe have opposed the acquisition — which would make Tronox the largest titanium pigment producer in the world — fearing the move would reduce competition in the market.

Tronox announced an extension to the acquisition agreement in March, and aims to complete the transaction by end-June.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”