Cordiant Capital Inc (Cordiant), the Montreal based fund manager that specialises in loans to private borrowers in emerging markets, has committed a USD10 million loan to the Jordan-India Fertiliser Company (JIFCO).
The loan will finance the construction of a new USD186 million plant in Jordan, using phosphate rocks from local mines to produce phosphoric acid, a fertiliser, for the Indian market.
With the recent dramatic rise in the cost of basic foodstuffs in India, demand for fertiliser is increasing rapidly across the country. Demand for phosphoric acid is likely to keep rising in the longer term as the growth of the Indian middle class and their demand for higher protein content food put more pressure on food supply.
The plant’s strategic location near the Eshidiya phosphate mines and its proximity to Jordan’s only seaport will keep production and transport costs to a minimum, making the JIFCO Fertiliser very competitive.
The quantity of fertiliser used per hectare in India is only a quarter of that applied in developed economies, making Indian agriculture far less productive. JIFCO’s Fertiliser will be exported to thousands of Indian farmers, improving the productivity of agricultural production and contributing to ease India’s food shortage.
The project will also have a substantial developmental impact on the Jordanian economy as the construction and operation of the plant is expected to directly generate 600 to 1,000 new jobs in South Jordan where the average income is much lower than in the rest of the country.
The project is sponsored by the India Farmers Fertiliser Cooperative (IFFCO), a major institution that sources and distributes Fertilisers on behalf of 40,000 farmers’ cooperatives across India, and the Jordan Phosphate Mines Company (JPMC) who own and operate a large number of phosphate mines in Jordan.
Total global consumption of phosphoric acid, a key ingredient in fertilisers, is forecast to increase from 33.1 million tons in 2008 to 38.3 million tons by 2013 and to 54.7 million tons in 2028.
The Jordan-Indian plant will produce 1,500 tons per day (475,000 tons per annum) of phosphoric acid, a minimum of 70% of which will be exported to India and used as feedstock for IFFCO’s Fertiliser operations.
The new plant will also be equipped with state-of-the-art technology to convert the steam produced in the manufacturing process into electricity – enough to make the entire factory self-sufficient and for the excess to be sold to the national power grid. The plant will also recycle water, a rare commodity in the Jordan desert, with high efficiency.
David Creighton (pictured), President and CEO of Cordiant Capital, says: “This landmark project is a great investment opportunity offering our fund an attractive return and a very low risk profile. Demand for phosphate in India has been growing at a compound annual rate of 5% over the last 15 years and the trend is expected to continue.
“Long term growth in the demand for fertilisers makes this a sensible, low risk proposition for us.
“The plant will boost the living conditions and economic prospects in this part of Jordan while providing Indian farmers with access to a secured long term, low-cost supply of top quality fertiliser to help them to meet the booming demand for food.”
