Maaden, SABIC sign $3.7bn loan deals

JEDDAH: Maaden Phosphate Company (MPC) and Saudi Basic Industries Corporation (SABIC) signed agreements in Riyadh yesterday that secured more than $3.7 billion to develop the substantial phosphate deposits at Al-Jalamid and utilize local natural gas and sulfur resources to manufacture diammonium phosphate (DAP).

“This loan facility along with the funds expected to be raised in Maaden’s forthcoming IPO moves us much closer to seeing this project become a reality,” Dr Abdallah Dabbagh, president and CEO of Maaden and chairman of Maaden Phosphate Company. “We have already begun construction of a number of plants at the Al-Jalamid and Ras Az Zawr complexes.”

The syndicated facilities comprise $2.06 billion 16 year conventional and Islamic facilities, a $200 million 16 year Korean Export Insurance Corporation covered facility, a $400 million 16 year facility provided by the Export-Import Bank of Korea, and a $100 million revolving working capital facility. Direct funding will also be provided by the Public Investment Fund for $1.067 billion and the Saudi Industrial Development Fund for $135 million. Dabbagh said that the signing represented a major forward step for the delivery of the phosphate project. “It is worth noting that these facilities were oversubscribed despite challenging market conditions,” he said.

The operation is being developed in a joint venture with SABIC, through a limited liability company called Maaden Phosphate Company (MPC) incorporated in Saudi Arabia. Yesterday’s signing follows the joint venture agreement between Maaden and SABIC that was concluded on September 15, 2007 and the incorporation of MPC in January 2008.

The project involves the development, design, construction and subsequent operation of two primary sites. The first is the Al-Jalamid mine site in the north of the Kingdom which will comprise a phosphate mine and a beneficiation plant. The second is the Ras Az Zawr site on the eastern coast of the Arabian Gulf approximately 90km north of Jubail.

This will have a fertilizer production facility consisting of DAP, ammonia, sulfuric acid and phosphoric acid processing plants. Each site will be supported by an appropriate industrial and social infrastructure and provide a substantial number of jobs in the area.

The total cost of the project will be in the region of SR20.70 billion ($5.52 billion) taking account of projected annual inflation and estimated financing costs and including engineering, procurements and construction costs of SR17.03 billion ($4.54 billion).