On track to be a world leader

The Phosphate SBU manages our operations and business for two groups of products: phosphate fertilizers and niche industrial minerals. With our current and planned integrated value chains, we are well on our way to becoming a world leader in phosphate fertilizers.Our third production facility, to be implemented in phases, is expected to add 3 million tonnes per year of phosphate fertilizer products to our capacity by 2024. In South America and East Africa, two of the world most promising markets, Ma’aden achieved a 200 percent year-on-year sales increase in 2016. We were also able to increase our market share in India, the largest DAP market, by 4 percent compared to 2015.

Our goal of attaining a global leadership position in the phosphate fertilizer industry is built on the solid combination of:

• rich resources
• high quality production facilities
• low production cost and
• our geographic proximity to key markets.

Our integrated phosphate fertilizer value chain makes us one of the lowest cost producers of ammonia, di-ammonium phosphate (DAP) and mono-ammonium phosphate (MAP) in the world.

Our 2025 phosphate strategy rests on three pillars:

• maximizing value from our existing assets through operational excellence,
• capturing a significant share of the anticipated global growth in demand over the coming years and
• achieving further growth in our production capacity.

It is this foundation that led Ma’aden to the decision to develop a third world-scale project for the production of phosphate fertilizers. The new project was announced in December 2016.

Our third production facility, to be implemented in phases, is expected to add 3 million tonnes per year of phosphate fertilizer products to our portfolio. According to current estimates, the project will cost SAR24 billion and will attain full production capacity in 2024. The new project will be executed after completing feasibility studies and obtaining the required approvals.

The new project will be executed after completing feasibility studies and obtaining the required approvals.

The 2025 strategy and the newly announced project reaffirm Ma’aden’s goal of becoming a world leader in the phosphate fertilizer industry. That goal is already well on track with the performance of our current assets and projects underway.

Our current assets include the production plants of Ma’aden Phosphate Company (MPC) and Ma’aden Wa’ad Al-Shamal Phosphate Company (MWSPC).

MPC produced 2.723 million tonnes of phosphate fertilizers in 2016.

MWSPC has been building our second phosphate fertilizer production chain. This includes the Al Khabra mine, a beneficiation plant and phosphoric and sulfuric acid plants in Wa’ad Al Shamal in northern Saudi Arabia and ammonia and DAP/MAP/NPK plants in Ras Al Khair in the Eastern Province.

MWSPC is scheduled to start up in 2017 with DAP, MAP and NPK production with design capacity of 3 million tonnes of DAP equivalent fertilizer. Our plants are designed to switch between production of diverse grades of DAP and MAP depending on market demand.

MWSPC’s 1.1 million tonne ammonia plant, which started trial production in September 2016, began commercial production on January 1, 2017. As we produce ammonia in quantities higher than our feedstock requirements for DAP and MAP, we export the excess to world markets.

MPC’s ammonia plant is one of the largest single line ammonia plants in the world and received the ISO 50001 certification for efficient energy management in December 2016. The new standard is expected to yield higher levels of energy efficiency and reduce costs. MPC’s achievement will enable Ma’aden to apply the standard in other production facilities as well, contributing further to operational excellence. MPC had already received other certifications including ISO 9001, ISO 14001 and OHSAS 19001 in previous years.

Drop in prices
In 2016, the global phosphate market was under strong pressure. Prices for DAP dropped by more than 30 percent from 2015 levels, reaching its lowest since 2009. Ammonia prices dropped 31 percent.

Factors such as low input costs, seasonally weak demand, new capacities and low demand in the Chinese market moved prices to their lowest. Imports by India reduced by over 20 percent in 2016. The addition of new production capacity by global players was another factor that hit the market.

These factors had a significant impact on our financial performance. Although our plants produced 15 percent more ammonia and three percent more DAP, the impact of lower prices pulled down our revenues for 2016 by 24 percent.As the world population increases and the growing middle class adopts improved diet practices, the fertilizer industry is projected to grow annually at a rate of 1.8 percent over the next decade.

Despite the market challenges in 2016, Ma’aden was able to continue expanding its global presence. In South America and East Africa, two of the world’s most promising markets, Ma’aden achieved a 200 percent year-on-year sales increase in 2016. We were also able to increase our market share in India, the largest DAP market.

Our 2025 strategy recognizes that Ma’aden is uniquely positioned to increase its global market share steadily because of the world-class ore deposits in the Kingdom and our cost leadership.

The newly opened Al Khabra mine, which is located in Umm Wu’al adjacent to Wa’ad Al Shamal, will begin feeding the MWSPC beneficiation plants in 2017. We have applied the lessons learnt from the Al Jalamid mine operations to make Al Khabra a more cost-effective and efficient mine.

We are working hard to expand our product portfolio and the product development team at MPC produced the first trial batch of NP-S, a complex fertilizer containing nitrogen, phosphate and sulfur in 2016.

Affiliations and memberships
Ma’aden’s phosphate business is actively engaged in building strong relationships with international and regional trade bodies and industry associations such as:

• the International Fertilizer Association (IFA),
• the Arab Fertilizer Association (AFA), and
• the Gulf Petrochemicals and Chemicals Association (GPCA).

These affiliations and memberships help Ma’aden to be part of the global and regional industry efforts to adopt best practice in operations and sustainability and advocate measures that are important for the industry to serve its consumers and communities. They also offer diverse platforms for the industry to share management and technical knowledge.