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Yara Plans $2.5 Billion Gas-Based Fertilizer Plant in Africa

Yara International ASA (YAR), the largest publicly traded nitrogen-fertilizer seller, said it plans to build a $2.5 billion plant in west or east Africa once gas projects come on-stream toward the end of the decade.
Yara has held initial talks with governments in countries such as Tanzania, Angola, Ghana, Nigeria and Mozambique about building a “considerable and world-class” urea factory to produce for African and foreign markets, Chief Executive Officer Joergen Ole Haslestad said in an interview yesterday in Ethiopia’s capital, Addis Ababa.
“We would very much like to participate in greenfield fertilizer production developments,” he said. “This is probably three to four years down the road before it will materialize.”


Mozambique may become the world’s third-largest gas producer in 2018 after companies such as Eni SpA of Italy and Woodlands, Texas-based Anadarko Petroleum Corp. begin output from reserves estimated at 250 trillion cubic feet. Tanzania, which has the biggest reserves in east Africa after Mozambique with 46.5 trillion cubic feet, expects that figure to exceed 100 trillion cubic feet within the next two to three years, Energy Minister Sospeter Muhongo said in February.

 Yara acquired Brazil’s Galvani Industria Comercio e Servicos SA for $318 million last month to expand further in South America. It bought Bunge Ltd.’s operations in Brazil for $750 million in December 2012 and OFD Holding Inc. from Omimex Resources Inc. for $425 million in November last year.

“Obviously the west part of Africa is good for Latin America where have big operations,” Haslestad said about the export possibilities from the planned fertilizer plant. “So we can take advantage of that.”

Yara, based in Oslo, plans to add to its existing seven African bagging and warehousing facilities by opening a $20 million unit close to the harbor in Dar es Salaam, Tanzania’s commercial capital, in October. It plans a similar venture in Ghana once the economic situation improves in that country, Haslestad said.

The West African nation has turned to the International Monetary Fund for help in rescuing its currency, which has lost 37 percent against the dollar this year.

A decision on whether to proceed with potash extraction at Yara’s majority-owned project in northeast Ethiopia will probably be made early next year, he said. Production of sulphate of potash for export could then begin three years later from what would be a $1 billion project, according to Haslestad.

“There will be resources enough for having mining operations there for the next 30 to 40 years,” he said.

The company expects to see sales grow “gradually” in Africa, which is the world’s fastest-growing fertilizer market, he said.
By William Davison

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