Ma'aden Phosphate Company (MPC), projected to be the world scale fully integrated phosphoric fertilizer producer, signed major financial agreements worth a total of SR15.46 billion at a marathon signing ceremony held in Riyadh Sunday. Dr. Abdullah Dabbagh, president and CEO of the Saudi Arabian mining company (Ma'aden) and chairman of Ma'aden Phosphate Company, a joint venture between Ma'aden and Saudi Basic Industries Corporation (SABIC) signed the documents of agreements with representatives of various banks and financial institutions. The financial agreements signed Sunday included the syndicated facilities comprised $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 (PIF) for $1,067 million, and the Saudi Industrial Development Fund for $135 million. The signing of financial agreements is considered as milestone of achievements for significant funding of the MPC, estimated to cost SR20.70 billion ($5.52 billion). The estimated cost was calculated taking into account of projected annual inflation and estimated financing costs including engineering, procurements and construction costs of SR17.03 billion ($4.54 billion). Over 75 percent of total capital costs have been contracted at a fixed rate under signed Lump Sum Turn-Key (LSTK) contracts for the engineering, procurement and construction (EPC) of a beneficiation plant, DAP, ammonia, sulphuric acid and phosphoric acid processing plants and certain supporting infrastructure. While 30 percent of total project costs will be funded by equity contributions from Ma'aden and SABIC in proportion to their interests in the project – 70 percent Ma'aden and 30 percent SABIC. Sunday's signing ceremony was for the syndicated debt element of the remaining project costs. After the ceremony Dr. Abdallah Dabbagh, said signing of financial agreements represented a major step forward for the delivery of phosphate project. “We are very pleased today to be signing these documents which represent a major forward step for the delivery of our phosphate project. It is worth noting that these facilities were oversubscribed despite challenging market conditions.” He said the loan facilities and the expected funds that the Ma'aden will raise through the forthcoming initial public offer (IPO) will take the phosphate project much closer to reality. “This loan facility along with the funds expected to be raised in Ma'aden's forthcoming IPO moves us much closer to seeing this project become a reality. As per schedule we have already begun construction of a number of plants at the Al-Jalamid and Ras Az-Zawr complexes,” he said. The banks and financial institutions that participated in the financing arrangements included Al-Rajhi Banking and Investment Corporation, APICORP, Arab Banking Corporation, Arab Bank PLC, Arab National Bank, HSBC, Bank Al-Jazira, Bank of Tokyo Mitsubishi UFJ, Banque Saudi Fransi, BNP Paribas, Calyon, Islamic Development Bank, Mizuho Corporate Bank Ltd, Riyad Bank, Royal Bank of Scotland, Samba Financial Group, Saudi British Bank, Saudi Hollandi Bank, Saudi Investment Bank, and Standard Chartered Bank. The financial advisors are Standard Chartered Bank and Riyad Bank and the legal advisors are Baker & McKenzie. MPC aims to be a world scale fully integrated phosphoric fertilizer producer that will exploit a robust phosphate deposit located at Al Jalamid in the north of the Kingdom and utilise local natural gas and sulphur resources to manufacture diammonium phosphate (DAP). Its work involves the development, design, construction and subsequent operation of two primary sites. The first at Al-Jalamid mine site in the north of the Kingdom, which will comprise a phosphate, mine and a beneficiation plant. The second is Ras Az-Zawr site on the eastern coast of the Arabian Gulf around 90 km north of Jubail with a fertiliser production facility comprising DAP, ammonia, sulphuric acid and phosphoric acid processing plants, each supported by appropriate industrial and social infrastructure. The operation is being developed in a joint venture with SABIC, through a limited liability company, Ma'aden Phosphate Company (MPC), incorporated in Saudi Arabia. A joint venture agreement was concluded on Sept. 15, 2007 by Ma'aden and SABIC and MPC was incorporated in January 2008. MPC will produce an estimated 2.92 million tonnes per year (MTPY) of granular DAP, plus approximately 0.44 MTPY of excess ammonia for export to the world markets. It is also anticipated that the Phosphate project will generate around 0.16 MTPY of excess phosphoric acid for sales in the domestic market. Ma'aden was established as a Saudi Arabian joint stock company in March 1997 and is currently 100 percent owned by the government. Its purpose is to facilitate the development of Saudi Arabia's non-petroleum mineral resources and to help diversify the Kingdom's economy away from the petroleum and petrochemical sectors. Ma'aden is engaged in the development, advancement and improvement of all aspects of the mineral industry, mineral products and by-products and related industries in Saudi Arabia. __
