Strong global demand for fertiliser on the back of high-er international food prices should mean big business for Jordan, which is a major producer and exporter of potash and phosphate rocks, key materials for fertilis-er production. While raw materials currently take up the bulk of exports, the country is also moving up the value chain by becoming an increasingly important manufacturer of intermediate fertiliser ingredients, notably phosphoric acid, with one Jordanian-Indian fac-tory already in place and two major new foreign-backed production facilities due to enter into production in the coming years. Jordan benefits from raw material reserves as well as its location, which makes it well placed to export to Asia, where some of the strongest demand growth is being witnessed.

LARGE REACH: Jordan is an important player in the world of raw materials for fertiliser production. In 2011 the kingdom was the fifth-largest producer of phos-phate rock, according to the US Geological Survey (based on estimates of Jordanian production), account-ing for around 3.2% of global production. The country is also thought to have the world’s sixth-largest reserves of the commodity. With regards to potash, Jordan was the world’s seventh-largest producer in 2011, account-ing for around 3.8% of global output.

POTASH: Potash production is carried out by the Arab Potash Company (APC), which has a concession for the exploitation of Dead Sea minerals until 2058. The firm has a total production capacity of around 2.4m tonnes per annum (tpa) and plans to expand this to 3.2m tpa. Actual production stood at 2.26m tonnes in 2011, a company record. Profits at APC grew by 84% in 2011, to JD299m ($420.5m), thanks to high global demand on the back of buoyant grain and – by extension – fertiliser prices. The firm’s profits for the first three quarters of 2012 dropped back to JD167.4m ($235.4m) from JD217.1m ($305.4m) in the same period in 2011, as potash sales decreased from 1.69m tonnes to 1.34m tonnes, although price rises helped to partly mitigate the effects of this decrease.

Total national crude potash exports for the first 11 months of 2012 were down 17.5% year-on-year (y-o-y), to JD438.15m ($616.3m). The drop in sales was reportedly in part the result of a cut in farming subsi-dies in India – which has accounted for around 30% of APC’s exports over the last two decades, and 24.6% in 2011 – causing farmers in the country to reduce their fertiliser purchases. Contract delays are also thought to have played a role in the sales figures.

Other major markets for the firm include China, to which it sold 462,000 tonnes in 2011 (up 47% y-o-y), or 20.7% of total output, and Malaysia, which purchased 269,020 tonnes (11.9% of total production), up 40%. Local sales of potash accounted for 9.2% of the firm’s total sales in 2011. Following its privatisation in 2003, the largest shareholder in APC is US company Potash Corporation of Saskatchewan (PCS), the largest pro-ducer of potash in the world, with a 28% stake, followed by the Ministry of Finance with 26.9% and the Arab Min-ing Company with 20%.

PHOSPHATES: Phosphate production is carried out by Jordan Phosphate Mines Company (JPMC). The largest shareholder in the firm is the Brunei Investment Agency via Kamil Holdings, with a stake of 37%; other major shareholders include the Jordanian Ministry of Finance (26.3%) and the Social Security Corporation (16%). JPMC operates three phosphate mines, the largest of which is Eshidiya mine in southern Jordan; the other two are the Al Abiad and Al Hassa mines. The compa-ny currently has an effective monopoly on phosphate production in the kingdom, having signed an agreement in 2006 that gives it exclusivity and the right to approve any new investments in the segment.

However, in March 2012 the government stated it would allow new investments, in line with recommen-dations by members of parliament. Crude phosphate exports for the first 11 months of 2012 stood at JD383.2m ($539m), down slightly from JD397.4m ($559m) in the same period the previous year, accord-ing to data from the Department of Statistics (DoS).

FERTILISER PRODUCTION: For the time being, the country exports significantly larger quantities of raw materials than of fertiliser itself; DoS data put exports of fertilisers at JD316.3m ($444.9m) in the first 11 months of 2012, down around 14% y-o-y. The king-dom’s energy deficit has been one of the constraints on the development of increased raw material pro-cessing and finished product exports. Nevertheless, the output of processed fertiliser ingredients and fer-tilisers is predicted to rise.

Several of the major existing and planned opera-tions in the segment are joint ventures with Asian firms, due to the fact that the majority of exports go to Asian countries. Among these is the Indo-Jor-dan Chemicals Company (IJCC), which operates a phosphoric acid plant near the Eshidiya mine, using phosphates from the mine as feedstock. The major-ity shareholder in the firm is India’s Southern Petro-chemical Industries, with a stake of 52.2%; JMPC also has a 34.8% stake in the firm and the Arab Invest-ment Company of Saudi Arabia has a holding of 13%. The plant, which has been in service since 1997, has a production capacity of around 224,000 tpa of phosphoric acid and 660,000 tpa of sulphuric acid.

Another fertiliser producer that is active in Jordan is Nippon Jordan Fertiliser Company, in which JPMC has a 70% stake; APC and Mitsubishi of Japan also have hold-ings of 20% and 10%, respectively. The firm produces nitrogen-potassium-phosphorus and phosphate ammo-nium fertilisers that are sold primarily to Japan.

In addition, JPMC owns a 25% stake in the Jordan Abyad Fertilisers and Chemicals Company, which was formed in 2007 to construct a new diammonium phos-phate fertiliser factory. Meanwhile, APC owns Kemira Arab Fertilisers and Chemicals Industries, known as KEMAPCO, which produces potassium nitrate (for which it has a production capacity of 150,000 tpa) and dical-cium phosphate (75,000 tpa).

NEW PLANTS: Production of intermediary products in particular is set to expand significantly in the near future as a result of new investments. One of the highest-profile of these is the Jordan India Fertilis-er Company (JIFCO), a phosphoric acid production joint venture established in 2008 by JPMC and India Farmers Fertilisers Cooperative (IFFCO), which was formed to build a plant that will use phosphate from the Eshidiya mines to produce phosphoric acid. JPMC has a 48% stake in the firm, while IFFCO – which is the largest fertiliser supplier in India, with 50m farm-ers as clients via 40,000 farming cooperatives – has a 52% share. The plant will have a production capac-ity of 445,000 tpa, will use around 1.8m tpa of raw phosphates annually and is scheduled to begin oper-ations in 2013. At least 70% of its output will be used by IFFCO for fertiliser production in India.

The total investment cost of the plant is expected to be $681m. The World Bank and the European Invest-ment Bank are both supporting the project with loans of $215m and $120m, respectively. The investment will create around 400 jobs in the factory itself, as well as 750 construction jobs during the building phase.

“The launch of JIFCO in addition to the presence of IJCC is a positive sign,” said Saleem Nabulsi, the busi-ness development manager at Chemical Supplies and Services Company, which has provided equipment to both facilities. “The fertiliser industry in Jordan is prom-ising, thanks to the availability of local resources and the increase in international demand.”

Underlining this potential, other firms are also look-ing to enter the phosphoric acid segment in the coun-try; in 2011 Saudi Arabia’s Al Hamdi Group announced plans to join the market, via construction of a 310, 000-tpa phosphoric acid facility at a cost of $1.4bn. The facil-ity, the capacity of which the company eventually intends to double, is due to open in 2014.

FAVOURABLE CLIMATE: A variety of factors are spurring such investment. Perhaps chief among these are forecasts for steady growth in fertiliser consump-tion in both the short and medium terms. For exam-ple, in December 2012 PotashCorp said it expected record global consumption and shipments in 2013 due to factors such as agronomic need and reduced inven-tory levels. While the firm described India – Jordan’s largest export market in the segment – as “the major source of market uncertainty”, it said it even expect-ed demand there to improve.

Meanwhile, the International Fertiliser Industry Asso-ciation has projected that global fertiliser demand will grow at an annual average rate of 2.1% between 2012 and 2017, with consumption supported by high inter-national crop prices. Demand for potash- and phos-phate-based fertilisers, which are important mainstays of Jordan’s fertiliser industry, is set to rise at an annu-al rate of 3.7% and 2.3%, respectively, compared to 1.5% for nitrogen-based fertiliser.

Jordan is also well situated to export to Asian coun-tries where demand is growing particularly strongly, due to its access to the Red Sea and beyond to the Indian Ocean via the Port of Aqaba. This shipping route gives it an advantage over some other major regional pro-ducers of fertiliser raw ingredients such as Morocco.