Jordan Phosphate up for sale

15 February 2002

Five international companies have been prequalified to advise the government on the privatisation of the debt-ridden Jordan Phosphate Mines Company (JPMC), an official of the executive privatisation commission told MEED on 11 February. Nineteen firms were canvassed for expressions of interest in June. The five shortlisted companies are expected to submit technical and financial proposals for the study by 20 February. The commission will announce a preferred bidder in May and the government hopes to be in a position to privatise the company by the end of the year, the official said (MEED 22:6:01).

The privatisation study is financed by a World Bank-administered grant from the US Agency for International Development. Under the scheme, the commission plans to offer a substantial shareholding and management control of the company to a private investor. Several other options include the division of the company into smaller units. Since it was established in 1935, JPMC has enjoyed a monopoly over the exploration, mining and marketing of Jordanian phosphates. It is the sixth-largest producer and fourth-largest exporter of the mineral in the world.

JPMC runs a wholly owned fertiliser complex in Aqaba, and has investments in three major joint ventures - the local Indo-Jordan Chemicals Company, the Karachi-based FFC-Jordan Fertiliser Company and the Nippon-Jordan Fertiliser Company, which has a production facility in the Aqaba special economic zone. The company set up a fourth joint venture in 1998 with Norwegian firm Norsk Hydroto build a phosphoric acid-manufacturing plant in Al-Sheidyah and a nitrogen potassium phosphate fertiliser plant in Aqaba. However, the estimated $500 million scheme was dropped when Norsk Hydro pulled out of the joint venture in early 2000. JPMC is understood to be in talks with several international companies about resurrecting the projects.

A series of spending cuts helped to boost the company's net income to JD 2.1 million ($3 million) in 2001, compared with a loss of JD 127.9 million ($180.4 million) posted the previous year. One of the issues propelling privatisation plans is a $100 million Eurobond which JPMC issued in 1997. The proceeds were intended to finance the construction of the Al-Sheidyah plant, but some $77 million was used instead to pay off the company's debts. The bond, which is traded on the Luxembourg Financial Market, matures in August.

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