Mumbai: Aditya Birla Chemicals (Thailand) Ltd, the $350 million (Rs1,435 crore) chemicals flagship of the $25 billion Aditya Birla Group, is floating a majority-owned joint venture (JV) with a key supplier of phosphoric acid, Fangchenggang Grasun Co. Ltd of China. The JV, Aditya Birla Grasun Chemicals (Fangch-enggang) Ltd, will supply the essential raw material to Thailand’s largest and only producer of phosphates, which go into industrial and food products.
An Aditya Birla Group spokesperson said an agreement was signed earlier this year. “Aditya Birla Chemicals holds 75% stake in the venture and the rest is held by the Chinese partner,” the spokesperson said. Aditya Birla Chemicals has made an initial investment of $7 million in the JV. The transaction is likely to be completed in June this year.
The move is key to providing raw material security for the Thai company, which exports its products to Europe, New Zealand, and Southeast Asia. “China has large reserves of phosphorus which can be cheaply mined and processed into P4 (yellow phosphorus), using the abundant and inexpensive hydel power available in the areas around the Hunan province. We have also tied up with a local company to provide this P4 to the JV, which will ensure a stable source of raw material for the company we control,” said a senior group official who cannot be identified as per group policy.
Aditya Birla Chemicals will use the phosphoric acid supplied by the Chinese JV to produce phosphate salts. The Chinese partner’s 15,000-tonne manufacturing facility will be expanded to 50,000 tonnes over the next six months to enhance the captive source of supply to the Thai company to over 58% of its requirements. “The balance requirements will continue to be multi-sourced as before,” said the official. Aditya Birla Grasun Chemicals has also entered into a long-term supply agreement for phosphate rock with a local Chinese company.
Aditya Birla Chemicals has an 85,000 tonnes per annum phosphates plant in Samutprakarn, Thailand. The group also has Thai Peroxide Co. Ltd, which is a joint venture with a local company.