TCL buys 25% stake in urea complex in Africa for $290 mn

TCL buys 25% stake in urea complex in Africa for $290 mn

Mumbai/Singapore: Tata Chemicals Ltd (TCL) on Monday announced that it has acquired a little over 25% stake in the ammonia-urea fertiliser complex at Gabon in Africa for $290 million (nearly 1,300 crore).

The fertiliser complex, with a production capacity of 1.3 million tonnes per annum, is being set up through a joint venture between Olam and the Gabon government at an investment of $ 1.3 billion. In the JV, Olam had 80% stake while the Gabon government has 20%.

In a filing to the Bombay Stock Exchange, Tata Chemicals said it has “executed binding agreements to acquire 25.1% stake for $290 million as a strategic investor in stream 1 of a greenfield port-based ammonia-urea fertilizer manufacturing complex in the Republic of Gabon, Africa".

With Tata Chemical picking up 25.1%, the stakes of Olam and Gabon would reduce to 62.9 % and 12%, respectively.

Up to 25% of the output would be reserved for Indian markets for sales through TCL network subject to de-canalisation in India, the filing said.

“TCL has a significant presence in Kenya, South Africa and Morocco and this Gabon project is also in line with our focus to partner in the growth and development of Africa," Tata Chemicals managing director R Mukundan said.

Tata Chemical is the world’s second-largest producer of soda ash with a presence in India, Kenya, the UK and the US.

“TCL’s 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 and substantially derisk our execution of this Project," Olam Group managing director and CEO Sunny Verghese said.

According to Olam, of the estimated capital cost of $1.3 billion, 65% or $845 million is to be funded by non-recourse debt financing and the balance 35% or $455 million through equity investment by shareholders.

TCL has also business interests in manufacturing of salt, sodium bicarbonate or baking soda products, allied chemicals, industrial salt, sodium bicarbonate, fertilisers, pesticides, specialty nutrients and seeds.

According to the filing, the Gabon project comprises of a setting up of 1.3 MTPA of urea in the first phase (stream 1). There is an option to expand into another stream (stream 2) of 1.3 MTPA.

The plant is strategically located near Gabon’s main seaport and it enables efficient and cost effective material handling and proximity to large markets such as Africa, North America, Latin America and India.

The execution of Stream 1 project has started and it has a 36-month development and construction period. Its full operational capacity will be 1.3 MTPA (2,200 million tonnes of ammonia and 3,850 million tonnes of urea per day).