Tata Chemicals expands African footprint

April 15th, 2011 - 1:32 pm ICT by IANS  

New Delhi, April 15 (IANS) Tata Chemicals Ltd’s (TCL) acquisition of 25.1 percent stake in a greenfield fertiliser project in the west central African country of Gabon has increased the Tata Group’s presence in Africa.

The $1.3 billion ammonia-urea fertiliser complex was being set up as a joint venture between Singapore-based Olam International Ltd and the government of Gabon.

TCL managing director R. Mukundan said: “TCL is delighted to partner with Olam and the Republic of Gabon to deliver value to all stakeholders.

“TCL has a significant presence in Kenya, South Africa and Morocco and this project is also in line with our focus to partner in the growth and development of Africa.”

With TCL acquiring 25.1 percent at a cost of $290 million, the share of Olam and the Gabon government in the project will reduce to 62.9 percent and 12 percent respectively.

This reduction will mean that the Gabon government’s equity investment in the first phase of the project will be reduced from $91 million to $19 million.

TCL will handle the project management during construction and will also take care of operations and maintenance once the plant is complete.

Olam International is a leading global integrated supply chain manager and processor of agricultural products and food ingredients.

Work on the first phase of the 1.3 million tonnes per annum (TPA) of urea has already commenced and the plant is expected to be commissioned in three years.

The operational capacity of the plant will be 2,200 tonnes of ammonia and 3,850 tonnes of urea per day. The combined capacity of the two phases of the project is to be to the tune of 2.6 million tonnes per annum.

Olam Group’s managing director and chief executive officer Sunny Verghese said: “We believe that together with Olam’s team, Tata Chemicals’ participation in the project as a strategic partner with substantial expertise in urea manufacturing, project management and execution will ensure successful implementation of the project on time and on budget.”

The TCL chief said the investment brings the strategic advantage of sufficient gas tied up at competitive fixed price for both the streams. “The feedstock is assured in terms of quality and quantity under a 25-year competitive fixed-price natural gas contract with the Republic of Gabon.”

The plant is expected to be one of the lowest cost urea manufacturing facilities globally. The government of Gabon has given a 10-year tax holiday after commencement of commercial production and a 10 percent concessional tax rate thereafter.

Mukundan added: “Strategically located near Gabon’s main seaport, it also enables efficient and cost effective material handling and proximity to target markets in Africa, North America, Latin America and India.

“Up to 25 percent of the production would be reserved for sales in India through the existing TCL network, subject to de-canalisation (de-regulation) in India.”

India imports a substantial part of its annual requirement of urea.

(Shubha Singh can be contacted at shubhasingh101@gmail.com)

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