Singapore-based chemicals and fertilser-maker Indorama Corporation has signed a memorandum of understanding (MoU) with The Sovereign Fund of Egypt to explore investment opportunities in various industries, including fertilisers, phosphate extraction, mining, and medical fibres.
The MoU with Indorama aligns with Egyptian plans aimed at boosting private sector role in the economy. The country is grappling with hard currency shortages and is looking to privatise loss-making state assets in a desperate attempt to meet foreign debt obligations. Under a US$3bn financial support package signed with the International Monetary Fund (IMF) last December, Egypt vowed to lessen the state's presence in the economy and open up more opportunities for private companies.
As part of this policy, Egypt intends to divest stakes in 32 state-owned firms by early 2024, either through listings on the local stock exchange or private sales. Progress is evident, with the announcement of US$1.9bn worth of asset sales. Sale of assets include top state-owned firms such as Telecom Egypt; minority stakes in three oil and petrochemical firms - sold to Abu Dhabi's ADQ for US$800m; a US$700m hotel property divestment to real estate developer Talaat Moustafa; and the sale of Paint and Chemicals Industries to National Paints of UAE in a deal worth about US$25m.
Firms that may be target for Indorama include Helwan Fertilisers, Egyptian Propylene & Polypropylene, and Alamal Alsharif Plastics.
Indorama, which operates in countries such as Indonesia, India, Malaysia, Uzbekistan, Georgia, and Brazil, first entered the African market in 2006 with the acquisition of a former state-owned plastics resins business in Nigeria. Expanding its Nigerian operations, the company later founded Indorama Eleme Fertilizer & Chemicals, which focuses on urea production. Urea, made through a chemical reaction involving ammonia and carbon dioxide, has a high nitrogen content that promotes plant growth and enhances crop yields. With the capacity to produce approximately 2.8 million tonnes of granular urea annually, the facility primarily serves domestic fertiliser demand in Nigeria while also engaging in exports. In 2014, Indorama extended its reach to Senegal with the acquisition of Industries Chimiques du Senegal (ICS), a producer of phosphate fertiliser products.
Egypt is a major fertiliser producer, annually manufacturing 23m tonnes of various types of fertilisers; of this output, it consumes 10m to 12m tonnes, leaving a substantial surplus for export. The country has abundant natural gas reserves which is a key input in the production of nitrogen fertilisers. In 2022, Egypt's total fertiliser exports reached US$3.3bn, up 50.2% from US$2.2bn in 2021.
Egypt aims to transform the 461km Suez Canal Economic Zone into a hub for green hydrogen and ammonia manufacturing, partly to meet the needs of the fertiliser industry. With its wealth of renewable energy resources, robust industrial sector, and developed infrastructure, Egypt is viewed as an attractive market for green hydrogen production.
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