NDAMU SANDU
CHEMPLEX Corporation’s suitor, Uralchem JSC, plans to build a US$1.3bn fertiliser plant in Angola amid fears the Russian suitor could walk away from investing in Zimbabwe due to red tape by the government, Business Times heard this week.
In January, the Russian fertiliser giant Uralchem signed a memorandum of understanding (MoU) with the government of Zimbabwe to acquire not less than 50% shareholding in Chemplex during President Emmerson Mnangagwa’s trip to Moscow as he lured investors under the Zimbabwe is open for business mantra.
However, discussions have been moving at a snail’s pace, leading Uralchem to say it was waiting for a signal from the Zimbabwean authorities. Last month Uralchem produced a shocker when it signed a memorandum of understanding (MoU) with Grupo Opaia SA to produce ammonia and urea in Angola.
As part of the project, Uralchem plans to attract bank financing. The launch of the Angola complex is planned for 2023. Uralchem will be responsible for all issues related to the design, construction and promotion of the products. Grupo Opaia will be responsible for the approval of permission documentation, gas supply and site finding.
“The approximate amount of investment in the production will be US$1.2-1.3bn,” said Dmitry Konyaev, Uralchem deputy board chairman. “The planned production capacity of the complex is 1.2 million tonnes of urea. The construction of the plant will take 4 to 5 years. We hope that our cooperation with Grupo Opaia will be fruitful and we will be able to provide Angola and the neighbouring countries with quality fertiliser.”
Chemplex is Zimbabwe’s largest fertiliser and chemical manufacturing company which wholly owns Dorowa Mine and ZimPhos – the only producers of phosphates for fertilisers in the country. It also owns 50% of ZFC and 36% of Sable Chemicals.
If the Russian suitor were to walk away, it would be a slap in the face of Zimbabwe’s plans to attract foreign direct investment (FDI). FDI has been giving Zimbabwe a wide berth over the years due to policy inconsistencies and red tape, although government insists economic sanctions imposed by the West have played a huge part.
FDI inflows jumped to US$745m last year from US$349m in 2017 on the back of reforms. But Uralchem said it had confirmed its participation in the privatisation of Chemplex during a meeting between President Mnangagwa and Uralchem’s board, Dmitry Mazepin, on the sidelines of the Russia-Africa summit last month. It said the Zimbabwean authorities wanted a partner who would provide the technology.
“It is worth to say that over the past two months we have delivered US$20m worth of fertilisers to the country,” Mazepin disclosed.
Ben Kumalo, IDCZ general manager, told Business Times that the Group was waiting for shareholder guidance on how to proceed with the transaction. Asked about IDCZ’s chances as Uralchem had plans for Angola, Kumalo said: “We are not aware of Uralchem’s plans in Angola. However, regarding their chances of acquiring a shareholding in Chemplex, we would like to point out that we received several expressions of interest from both local and foreign companies and any one of these entities may be selected to partner the IDCZ in Chemplex.”
National demand for fertiliser is around 600,000 tonnes per year with 50% of this being NPK fertilisers and 50% top dressing AN and urea fertilisers. Kumalo said the demand was nominal, assuming adequate rains and adequate funding for fertiliser purchases. He said the local fertiliser industry, including the Chemplex Group of companies and others like Windmill, FSG (Superfert), Omnia, ETG, collectively have over 1.5m tonnes per year granulation and blending capacity for NPK compounds.
Given enough foreign currency for ammonia imports, Sable Chemicals can produce up to 120 000 tonnes, which represents almost half of the top dressing needed in the country.
“There is adequate capacity to meet demand but the major concern is poor liquidity among farmers amid high prices pushed by inflation as the Zimbabwe dollar depreciates,” he said, adding: “There is therefore a lot of reliance on large purchases by the government for the state-sponsored Presidential and Smart Agriculture (formerly Command Agriculture) schemes, as well as contract farming schemes by other corporates.”
Formerly a wholly-owned unit of AECI South Africa, Chemplex was bought by the IDCZ in 1990. The company wholly owns six operating divisions: ZimPhos, Dorowa Mine, GD Haulage, Chemplex Marketing, Chemplex Animal and Public Health (CAPH) and G&W Industrial Minerals.
