PHOSPHATE MARKET OVERVIEW
The global phosphate rock market size was estimated at USD 37 billion in 2022 and is expected to grow at a compound annual growth rate of 3.7% from 2022 to 2031 to reach USD 51.4 billion by 2031.
Asia-Pacific region led with more than 41% of phosphate market share in 2022.
China is the largest producer of phosphate rock, accounting for about 37% of the world’s total production in 2020.
According to the United States Geological Survey (USGS), global production of phosphate rock in 2020 was about 260 million metric tons.
The main use of phosphate rock is in the production of fertilizers, with approximately 90% of phosphate rock being used for this purpose.
Expanding application in animal feed industry, drives the phosphate market size
KEY PLAYERS, DEMAND, APPLICATIONS AND GROWTH
The key players operating in the global phosphate market are Jordan Phosphate Mines Company, Mosaic Company, Saudi Arabian Mining Company, Innophos Holdings Inc., Chemische Fabrik Budenheim, Nutrien Ltd., Israel Chemical Ltd. (ICL), Yuntianhua Group Co., Ltd., Incitec Pivot Limited, and Yara International ASA.
Asia-Pacific held the dominating position in phosphate market during the analysis
period of 2023 to 2032.
Fertilizer and feed are the major outlets for phosphates. Industrial phosphates are used in a broad range of end uses including food, detergents, personal hygiene, and
construction and account for only around 6–8% of global phosphate consumption.
The expanding industrial applications of phosphates are a significant factor driving the growth of the phosphates market. Phosphates find versatile use across various industries.
The growing demand for effective cleaning solutions, driven by increasing hygiene awareness and rising urbanization, is fueling the demand for phosphates in the detergent industry.
The expanding pharmaceutical sector, driven by factors such as population growth, aging demographics, and the prevalence of chronic diseases, is contributing to the increased demand for phosphates.
The growth of the construction and infrastructure sectors, along with the increasing demand for aesthetically appealing tiles, sanitaryware, and glass products, is driving the demand for phosphates in the ceramics and glass industries.
The expanding manufacturing and construction sectors, coupled with stringent safety regulations, are propelling the demand for phosphates in metal treatment and flame-retardant applications.
OMEC PROJECT
OMEC plans to design, procure, install, commission, and operate a plant to produce up to 330,000 MT. The plant will be located near AlRisha gas field at the delivery point of the natural gas supply.
OMEC proposes a project setup that utilizes advance and proven collection of technologies to build and integrated complex for the production of Super Rock Phosphate (SRP) with high value to the phosphate industry, starting from the two key raw materials in this location, namely; NG and Phosphate. Little or no chemicals or raw materials would be imported, to increase the competitiveness of the project. The project will be developed through key technology partners that have the best track record of performance and can supply the required commercial capacities of different plants.
OMEC is based on strong team of world-class expertise in the Phosphate exploration, mining, processing and manufacturing of phosphate Fertilizers Industries. With an accumulative international expertise exceeding 200 years of practice and know-how in; technology, engineering, projects and operations. OMEC’s technical leader Malik Akel has patented this project’s integrated concept in 2021. Which is a novel concept that applies in the case of remote phosphate resources like that in AlRisha with the availability of Natural gas.
ECONOMIC AND SOCIAL IMPACT
OMEC’s Project aims to enhance the value chain of fertilizer production in Jordan by pioneering the production of ammonia and urea fertilizer products in Jordan. Such an ambitious Project will enhance the value added in the Jordanian fertilizer industry by capturing more of the downstream value added.
OMEC aims to achieve the following objectives from this Project:
• Capturing more of the downstream value of the limited supply of natural gas produced in Jordan.
• Supplying quality fertilizer products to Jordanian farmers to enhance the yield of farmland and
contribute to food security.
• Exporting a part of the production and substituting imports of similar products which will contribute positively towards the balance of payment in Jordan.
• Creating jobs for qualified Jordanian workers directly and indirectly (in downstream industries and associated services) outside of the major cities.
We believe that this pioneering Project will have a profound effect on the chemicals and fertilizers industry sector in Jordan and we look forward to demonstrating this effect.
KEY SUCCESS FACTORS
For the planned project to be successful, the following key success factors must be met:
- Gas supply security and continuity – The gas supply is secure with reserve studies showing sufficient reserves and a drilling program undertaken by NPC to secure additional production.
- Taxation treatment – Tax exemption of 5 years from commercial operations if the plant is registered onshore. If registered in the free zone, the tax rate will be a flat 5% tax.
- Food security and import substitution – The products of the Project are needed in the region to meet the growing demand for fertilizers and to meet the needs for increasing food production. Locally and in neighboring countries, the presence of the Project in physical proximity to the markets for output will result in savings in time and shipping costs.
- Downstream integration – The presence of phosphate rock in the area near the plant allows for further downstream value addition. This can contribute to the financial viability of the Project.
- A growing market – The need for fertilizer is linked to feed security and the ability of farmland to produce the crops required to meet the growing human needs. This is an investment into a growing sector with growing demand.
Phosphoric acid (H₃PO₄), a dynamic chemical compound that serves as a catalyst for economic growth across industries, playing a pivotal role in agriculture, industrial manufacturing, and pharmaceutical sectors. Phosphoric acid, chemically represented as H₃PO₄, is a versatile and industrially significant chemical compound. With its unique properties and wide range of applications.
Phosphoric acid has established itself as a crucial ingredient in numerous industries. Its distinct chemical composition and characteristics make it a sought-after substance in various sectors. Its acidic properties and pH regulation capabilities play a pivotal role in diverse industrial processes, acting as catalysts and enhancing production efficiency. Additionally, phosphoric acid finds utility in dentistry as an essential etching agent during dental restorations.
OMEC’s production process will increase PA capacity, efficiency and quality of the final product.
RISK MANAGEMENT
Gas Supply Risk: We were informed that the gas reserves at Risha field are sufficient for the requirements of the Project. NPC is undertaking a drilling program that is anticipated to increase the proven reserve and the output of natural gas from the field. The reserve studies and the production profile of AlRisha field promise sufficient supplies of gas for the term of the supply contract.
Market Risk: The market risk of chemical fertilizer – especially urea – is limited by the pace of demand growth expected. Demand for fertilizers is expected to grow by a significant 6.5% CAGR through 2030. Therefore, we do not anticipate any prolonged decrease in the growth of demand for ammonia/urea during the life of the Project. Furthermore, at their current levels of demand, the local buyers of ammonia can easily absorb around all the planned ammonia capacity of the Project as raw material.
Technology Risk: The technology selected for the Project will be proven with a well-established track record of commercial operations in multiple locations around the region and the world. One of the key Project partners is SPEC, a well-established and experienced UAE-based EPC contractor with extensive expertise in hydrocarbons. SPEC has already engaged a reputable technology provider who may play an active role in the Project ensuring the highest quality and capability of the entire value chain. The Project team includes specialists in ammonia / urea and fertilizer production with extensive experience which will be brought to bear on the selection and implementation of technology as well.
Interest Rate, Currency, and FX Risk: The interest rate assumed for the debt part of the financing of the Project is 8% p.a., which is high compared to the risk profile of the Project. This was done as a part of the effort to be conservative in modeling the Project. The interest rates are expected to decrease from their current levels as inflation in the US appears to have been brought under control. We anticipate achieving more favorable terms of financing at the time of debt raising. The borrowing will be in US$ for the project financing which will match the currency of the gas purchase and the urea and ammonia sales. No significant FX risk is expected.
