MerchantBridge, a direct investment and private equity company focused on Middle East investments, has been awarded an existing cement plant contract under a 15-year lease in the Kerbala Governerate, 80 miles south west of the capital Baghdad.
The contract was awarded by the Government of Iraq’s Ministry of Industry and Minerals.
This transaction marks the largest privatisation and debt arrangement in Iraq (outside oil and gas), as well as the largest contract in the Middle East region so far this year.
The plant will go through a complete rehabilitation programme via an investment of USD200m and it is expected the facility will achieve production in excess of 1.8 million tons per year. By 2013 the rehabilitated plant could contribute approximately ten per cent of the total cement market in Iraq.
Lafarge is joint partner and will be operating the plant.
The plant is operating at 300,000 tons per year, which is well below capacity. Domestic production currently meets around half of the local demand, a trend which is expected to continue for the coming decade.
The current Kerbala project has already attracted investment interest from foreign direct investors, including the International Finance Corporation, the private arm of the World Bank, and France’s Proparco, which is 67 per cent owned by the French Development Agency.
Basil Al-Rahim, MerchantBridge’s chief executive officer, says: "Our strategy is to engage MENA investors and partner them on entering Iraq, the potential is huge. With projects such as the Kerbala plant, MerchantBridge is at the forefront of creating unique investment opportunities, from their inception, identification of partners, deal development and on right through to the end."
The Iraqi government has estimated USD180bn of investment is needed over four years to fulfil its reconstruction and infrastructure programme, targeting sectors that will create a heavy demand for cement.
