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South Korea backs $3.5bn Collie urea plan

GIANT South Korean conglomerate Samsung Corporation has thrown its weight behind Perdaman Chemicals & Fertilisers' proposed $3.5 billion urea project at Collie by taking a small equity interest in the venture.

Samsung agreed to invest about $40 million to buy a 2 per cent direct equity interest in the landmark venture, which will use leading coal-gasification technology to convert sub-economic coal into high-value urea fertiliser.

The investment represents South Korea's single biggest investment in an Australian downstream processing venture, and comes two months after Samsung was also awarded the engineering, procurement and construction (EPC) contract for the project, in partnership with Indonesia's Inti Karya Persada Tehnik.

Perdaman manaing director Vikas Rambal said Samsung's investment was a major vote of confidence in the project that further underpinned expectations of achieving financial close by mid 2010.

"If a company like Samsung offers millions of dollars thinking that we are doing the right thing, then it makes it more bankable; that is the bottom line," he said.

The urea proposal has been steadily gathering pace in recent months.

Societe Generale has been appointed to arrange project finance, while Shell, Haldor Topsoe of Denmark and Dutch group Stamicarbon will provide leading-edge coal gasification technology.

Perdaman has also struck a 25-year agreement with Ric Stowe's Griffin Coal to supply 2.7 million tonnes of sub-bituminous coal a year in order to produce 2Mt of urea granules for export from 2013.

Mr Rambal said the strong third-party support for the venture should give the people of Collie great confidence in the project's development prospects.

"The point I want to stress to people in the community is that when big companies join hands like this, it means the project is really bankable," he said.

The project is expected to generate 1,500 jobs during construction and $850 million in export earnings annually once at full capacity.

While financial close is expected within 12 months, Perdaman also expects to finalise the equity structure of the project in the coming months. Perdaman will retain around 70 per cent of the project, with an off-take partner likely to take a direct 20-25 per cent stake.

Samsung executive senior vice-president Chang Soo Kim said the company's investment not only demonstrated its faith in the urea project, but also Samsung's "commitment to providing the way forward for future developments in Western Australia".

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