Web Date: August 12, 2008
Agrium Strikes Deal With Egyptian Government
The Canadian fertilizer company Agrium has reached an agreement with the government of Egypt that resolves a dispute over a blocked Egyptian fertilizer project.
Agrium says it has been active in Egypt for the past four years laying the groundwork for the project, which is owned 60% by Agrium and one-third by the Egyptian government. Agrium says it has already invested $280 million in the project, which was expected to cost $1.2 billion.
The Egyptian government halted construction on the plant in April in response to local complaints about its potential environmental impact. Agrium says a review of the project by an Egyptian parliamentary committee found no environmental or permitting issues. The government subsequently proposed relocating the project, but Agrium insisted this was not an economically viable option.
Under the new agreement, Agrium will sell its stake in the Egyptian project to a local firm, MISR Oil Processing Co. (Mopco) and in exchange will acquire a 26% share in the combined entity. Mopco is completing construction of its own urea fertilizer plant near the Agrium site in the port of Damietta. Agrium will obtain a share of the output of that plant, expected to open later this year, and of additional urea facilities that Mopco plans to build by 2011.
“We are extremely pleased that we have been able to reach an agreement with the Egyptian government,” Agrium CEO Mike Wilson says. “As a foreign investor in Egypt, it gives us comfort to see such commitment on the part of the government.”
According to Agrium, construction of the future plants depends on Mopco’s successful arrangement of $1.1 billion in project financing.
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