Rambal updates $6.4bn urea project, future plans

Perdaman chair Vikas Rambal announced the company has placed almost $US1 billion of procurement orders for the $6.4 billion urea project.

Speaking at Business News’ Success & Leadership event this morning, Mr Rambal said engineering for the urea project would be 54 per cent completed by the end of this month.

Meanwhile, the overall project was almost 20 per cent complete, Mr Rambal said, with the site on the Burrup Peninsula being cleared and the urea plant's modules being built in India.

“We are already in the twelfth month of the project, so that shows the speed,” he said.

“On procurement … I think we have close to a billion dollars US; we have placed orders.”

The project has a total budget of $6.4 billion and is expected to be completed by 2027.

Perdaman, a private company in Perth, spent a decade working on the project before reaching financial close.

In early 2023, Perdaman secured debt funding from 12 commercial lenders and two government agencies.

The journey started when Mr Rambal moved to Australia 24 years ago as a young engineer.

“I'm so lucky that I'm sitting in the land of action, where I built on my young entrepreneur age,” he said.

“In a very early stage of my life, my dad showed me one thing: you don't have a balance sheet, but you have one thing; invest your time in yourself so that you can create something out of it.

“By twenty-seven, I had almost built two plants, and it's unheard of.”

Mr Rambal was bought out of his first Australian business, Burrup Fertilisers, in 2007 but decided to stay in Australia to continue his vision to develop a urea plant.

“At that time, when we decided that we will not take capital out and that we want to invest in this country, two things were in my mind,” he said.

“One, I want to convert a urea plant.

“When I was on the Burrup [Fertiliser] board as managing director, in a 2006 or 2007 meeting I presented to Yara, my partner at that time, that we should develop a urea plant in this country because this country imports two million tonnes every year.

“They all laughed and said it’s not possible.”

In April 2023, Perdaman’s urea project officially started construction in the Pilbara with support from Global Infrastructure Partners.

GIP committed to invest $2.1 billion for a 45 per cent stake in the project, but Mr Rambal revealed he also put in his own money.

“I'm thankful to GIP because it’s very difficult to put money in," he said.

“I also put in money, I put in around $300 million, but $US1.5 billion versus $300 million is chalk and cheese.

"But they [GIP] regarded my hard work. They said we believe in your vision and we want to make sure we give you enough money to complete. So I will always be thankful to them."

The project will be one of the largest urea plants in the world with annual production of 2.3 million metric tonnes.

Future plans

On top of the $6.4 billion urea plant, Perdaman is working to develop a solar power and hydrogen facility to reduce the carbon footprint of the urea plant.

It is understood this project would cost about $2.1 billion.

“That's another vision I have which I will convert as a rough idea to give you, is to produce hydrogen [but] not to export," Mr Rambal said.

“Exporting hydrogen is a difficult game. I'm going to produce hydrogen and using it [with] the urea plant to decarbonise; a simple project.

“That's the way people should think in this room to build a green project."

Mr Rambal claimed Perdaman would be building accommodation for its workers in Karratha, just like workers in his previous businesses.

"People living in Karratha right now, Burrup or Yara Fertiliser [workers], are living in houses built by me. Before I left, I built seventy-five houses for permanent staff to live there," he said.

“Because you can't build a ten billion dollar project or a twenty billion dollar project and you don't give proper houses to people to live, family to live.

“You have to build houses so I will build 100 houses."

Mr Rambal said he has hired people to help build a community in Karratha, to add food and beverage offerings and high-quality gyms to the area.

Obstacles

Mr Rambal said he had learnt the challenges of raising capital and trying to build a project the size of Perdaman’s urea plant in Australia.

“Because what investors are looking at is what risks you're taking,” he said.

“It’s very difficult … and a lot of big houses, with due respect, they don’t understand manufacturing.

“Manufacturing is not what people understand. This is where this country will shift now. I thought we were shifting in 2006 but I was wrong.

“At this time, I think people talk about hydrogen, ammonia, they’re all manufacturers.

“To do a manufacturing project in Australia, it’s a hard feat, there's so many approvals … but one thing is common, if you believe in vision, you have to back yourself with money.”

One setback Mr Rambal faced in his career was the failure of an earlier urea project he planned for Collie in 2012.

The project's coal supplier, Griffin Coal, owned by Indian conglomerate Lanco Infratech, pulled out of the deal and Mr Rambal found himself in a legal battle.

"We spent hundreds of millions of dollars in Collie," he said.

"Collie became my second home. I’m emotionally connected to Collie until now."

"Again, I was stuck with litigation. I must tell you, I'm a chemical engineer but if you ask me to read, state [legal] articles, I can tell you. So that was a big episode in my life."

Mr Rambal also blasted the sale of Griffin Coal.

“Because in India, where I’m from you don't sell national assets without protecting the domestic market," he said.

“I sincerely believe that was the wrong decision. This project should have been converted, there should have been 1,000 jobs and it pains me every day.

“I can tell you right now, it's not about losing money. Yes, I got a backup project and I did convert it, but the Collie community suffered for that decision."