Tata Chem joins Singapore firm to set up fertiliser unit in Gabon

Tata Chemicals will invest Rs 1,300 crore in a joint venture with Singapore-based Olam International for setting up an ammonia-urea fertiliser manufacturing complex in the Republic of Gabon, Africa.

Tata Chemicals (TCL) will acquire 25.10 per cent stake in the stream-I of the port-based greenfield project with Olam International owning 62.90 per cent and Republic of Gabon (RoG) the rest.

The three would also form sales and marketing joint ventures for selling the entire output of the project. TCL and Olam will hold 42.5 per cent stake each and RoG will own 15 per cent in the marketing joint venture.

The project would reserve up to 25 per cent of the output for sale in Indian markets through the Tata Chemicals network, subject to de-canalisation in India. The industry has urged the Centre to de-canalise urea imports as part of its efforts to eventually decontrol the sector.

The international manufacturers have a cost advantage over domestic companies as most of their plants are gas-based.

Capacity

The stream-I of the project consists of setting up a 1.3 million tonnes per annum (mtpa) of urea manufacturing facility with an option to raise it by another 1.3 mtpa in Stream II. The first phase is expected to go on stream in 36 months.

RoG would provide land to the project, sufficient gas at a competitive price under a 25-year competitive fixed-price contract and a 10-year-tax holiday on commencement of commercial production and 10 per cent concessional tax rate thereafter.

While the execution of stream-I has started, stream-II will be decided in 24 months, a Tata Chemicals press release on Monday said.

Proximity to port

“This plant is envisaged to be one of the lowest cost urea manufacturing facilities globally and is strategically located near Gabon's main seaport, which will enable efficient and cost-effective material handling and proximity to target markets in Africa, North America, Latin America and India,” the release said.

Tata Chemicals with its expertise to run fertiliser plants would provide the project management consultancy and operations and maintenance service on commissioning of the project.

Tata Chemicals' Babrala plant in Uttar Pradesh has an installed capacity of 864,600 tonnes of urea a year, which constitutes nearly 12 per cent of the total urea produced in India by the private sector. The company is also setting up a customised fertiliser plant there and has recently received Environment Ministry's clearance and consent from the State Pollution Control Board.

The Tata plant at Haldia in West Bengal produces crop nutrition such as di-ammonium phosphate (DAP) and NPK complexes, single super phosphate and various other chemicals. It has a capacity of over 1.2 mtpa. Besides India, the company has operations in the US, the UK and Kenya.

The company's shares were down 0.17 per cent at Rs 354 on Monday.

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