The company behind a planned $3.5 billion urea plant near Collie hopes to secure financing from banks by early next year as it reveals a 25-year deal with coal supplier Griffin.
The company behind a planned $3.5 billion urea plant near Collie hopes to secure financing from banks by early next year as it reveals a 25-year deal with coal supplier Griffin.
Private company Perdaman Chemicals and Fertiliser, formerly North West Chemicals and Fertilisers, is led by Indian businessman Vikas Rambal, a former managing director of Pankaj Oswal's Burrup Fertilisers.
WA Premier Colin Barnett and Regional Development Minister Brendon Grylls today announced in-principle approval for the project, which will be built at Shotts Industrial Park near Collie.
Perdaman director corporate Andreas Walewski told WA Business News the company has already arranged private equity funding for the project and is in the process of securing bank debt.
The company plans to secure the bank debt by January or February next year.
Mr Walewski would not say how much the company was trying to secure from the banks but added that the break-up between equity and debt funding will be the same as other deals, with 20-30 per cent equity and the balance to be taken by debt.
The company is currently applying for environment approval for the project and hopes to start construction in the second quarter of next year.
Mr Walewski said Perdaman was right in the middle of construction talks with several companies from around the world, and will announce the engineering, procurement and construction contractor shortly.
He said some 50 companies heralding from countries such as the US, Germany, Japan and Australia had expressed interest for the construction phase of the project.
The project is expected to employ 1,500 during a three-year construction phase and provide 200 permanent jobs when operating.
Mr Walewski said the company had signed a 25-year offtake deal with Griffin, which will supply some 2.7 million tonnes of coal to the project each year.
He added that the company hopes to extend the Griffin contract which in turn could extend the current project life of 25 years.
All of the coal supplied will be gasified with some to be used to power the plant while most of it will be used for the production of urea.
Mr Walewski said the project will generate its own power and will not have to be connected to the grid.
The plant has capacity to produce 2 million tonnes of urea a year, with most, if not all, of that to go to the Indian government which has already signed an offtake deal, Mr Walewski said.
A number of other offtake talks are continuing.
The project is expected to employ about 1,500 people during a three-year construction phase and provide 200 permanent jobs when operating.
Exports from the project are expected to start in 2013 and will generate over $850 million each year in export earnings for Western Australia.
The company was looking at a number of options around Australia for the project location but chose Collie because of its close proximity to existing infrastructure.
The announcement is below:
Perdaman Chemicals and Fertilisers, a wholly owned subsidiary of Perdaman Industries today announced plans to construct a A$3.5 billion urea manufacturing plant at the Shotts Industrial Park in Collie.
Perdaman Industries is a Western Australian based multinational group with a current focus on urea production for local and international use.
With construction due to commence in early 2010, the Collie Urea plant will generate on average around 1,500 jobs during the three-year construction phase of the project and around 200 permanent jobs once plant operations begin.
Speaking at the official project launch in Collie, Perdaman Industries Chairman and Managing Director Vikas Rambal said that the construction and operation of the plant provides some much needed good economic news for both the Collie region and the state of Western Australia.
"The plant has the capacity to produce 2 million tonnes of urea per annum, and while we are looking at the opportunity to supply local markets, the majority will be exported for global use.
"This means the plant will generate in excess of A$850 million per annum in export earnings for Western Australia following the first shipment scheduled for 2013," Mr Rambal said.
Mr Rambal said that Perdaman plans to utilise environmentally friendly, best in class technologies that will transform sub-bituminous coal into urea by way of innovative and low emissions coal gasification technology.
"This is an exciting development for Collie. For example, we will be sourcing our coal requirements from Griffin's local operations and we are looking forward to consulting with the local community to ensure that they have a real understanding of the project as we work through the approvals process in the lead up to construction.
"We believe our project is exactly the type of initiative the Federal Government is keen to encourage as coal gasification represents a low-emission use of coal that is "sequester ready" for when carbon capture and storage becomes available on a commercial scale.
"If the community is serious about creating a low emission future for our coal resources, then this is a prime example of the type of new investment in the coal industry that this country can attract." he said.
Fertilisers are essential to meet the needs of an expanding global population and its increased demand for food. Of the fertilisers available today, urea is undeniably the most efficient. It is safe, clean, easily transported and economical to manufacture and apply.
"We believe very strongly that Western Australia, along with Perdaman Industries is now in an excellent position to help solve the worldwide shortage of fertiliser while adding value to Australia's existing coal resources," Mr Rambal said.
