Maaden signs SR18.9bn financing deal for key phosphate project
JEDDAH: Saudi Arabian Mining Co. (Maaden) has signed a financing deal worth SR18.9 billion ($5 billion) with commercial banks and the Public Investment Fund to back its SR28 billion ($7.5 billion) phosphate production project in the Kingdom.
The project in the northern city of Waad Al-Shamal is a joint venture between Maaden, Saudi Basic Industries Corp. and Mosaic and is part of the Kingdom’s efforts to create a stronger industrial base beyond oil refining and export. Phosphate is commonly used in fertilizers.
Maaden said in a statement that the new complex would create significant value to shareholders.
A total of 16 local and international commercial banks, including Al-Rajhi Bank , Bank of Tokyo-Mitsubishi and BNP Paribas, as well as three export credit agencies and the Public Investment Fund (PIF) signed the financing agreement.
The loan agreement will last for 16.5 years and repayments will be made on a semi-annual basis from Dec. 31, 2018.
The scheme will have a production capacity of 16 million tons per year of phosphate concentrate, sulphuric acid, phosphoric acid, as well as plants to produce calcium monophosphate and calcium diphosphate, Ma’aden said previously, with phosphate production expected to start in late 2016.
The rest of the funding is expected to come in the form of equity loans from the project sponsors.
Maaden said in May it planned rights issue for SR5.6 billion ($1.5 billion) to support its expansion plans, although it didn’t specify how much would be used to fund the phosphate scheme.
HSBC is advising on the rights issue, as it did on the wider project financing.
Khalid Al-Rowais, Maaden VP for finance, said: “These financing facilities represent another milestone in the growth of Maaden and take the total fund raising by Maaden to almost SR75 billion since 2008.”
He said: “Commitments received from financial institutions were considerably in excess of the funds required, which is a testament both to the quality of the project itself and to the successful track record that Maaden has established in the financing market.”
The financing signed on Tuesday includes an SR7.5 billion financing facility provided by the Public Investment Fund, SR7 billion of financing facilities provided by Al-Rajhi Banking & Investment Corporation, Alinma Bank, Arab Petroleum Investment Corporation (APICORP), Banque Saudi Fransi, BNP Paribas, Export Development Canada, Islamic Development Bank, Riyad Bank, Samba Financial Group, Sumitomo Mitsui Banking Corporation, The National Commercial Bank, The Saudi British Bank and the Saudi Investment Bank. A further SR2.3 billion loan facility was signed by The Export-Import Bank of Korea (KEXIM).
In addition, KEXIM and Korea Trade Insurance Corporation (K-sure) provided loan insurance and guarantee facilities of SR2.2 billion ($575 Million) in respect of loan facilities being provided by HSBC Bank Middle East Limited, KfW IPEX-Bank GmbH, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, and the Bank of Tokyo Mitsubishi UFJ, Ltd.
Maaden announced that its affiliate Maaden Waad Al-Shamal Phosphate Company (MWSPC) signed financing facilities for long-term project finance loans with a consortium of 20 financial institutions for a total amount of SR18.9 billion.
MWSPC is a joint venture company formed by Maaden to develop the project with The Mosaic Company and the Saudi Basic Industries Corporation (SABIC).
Maaden, Mosaic and SABIC own 60 percent, 25 percent and 15 percent of the project respectively.
The financial institutions include the Public Investment Fund, financial institutions from both inside and outside of Saudi Arabia as well as the two Korean export credit agencies who have participated in the financing in support of Korean contractors participating in the construction of the project.
Funding has also been obtained from the Islamic Development Bank.
The financing facilities will be utilized to fund the development of MWSPC’s phosphate project which is being constructed at sites in Waad Al-Shamal and the existing Ras Al-Khair Industrial City.
As one of the largest and integrated phosphate fertilizer facilities in the world, it will double Maadens cost effective phosphate production and improve Maaden’s access to key global markets.
The estimated cost of the project is around SR28 billion, and production at the new facility is expected to commence in late 2016.
MWSPC will be a fully integrated, world-class phosphate production facility in Saudi Arabia, a JV of Saudi Arabian Mining Company (Maaden), The Mosaic Company and the Saudi Basic Industries Corporation (SABIC).
Maaden, Mosaic and SABIC will own 60 percent, 25 percent and 15 percent of the company respectively.