Mosaic expanded to a third country, and continent, its sources of phosphate rock by joining forces with Ma'aden, its Saudi Arabian rival, in a $7bn project to mine the ore, and convert it into fertilizer.

The US-based group said it had signed an outline agreement with Ma'aden, and chemicals group Saudi Basic Industries Corporation (Sabic), to develop a phosphate mine and processing plant producing some 3.5m tonnes of phosphate-based products, mainly fertilizers, a year.

Mosaic, the world's biggest phosphate group, with capacity for 10.4m tonnes a year, will inject up to $1bn into the site, which is expected to start operations in 2016, plus provide expertise.

In return, the group will receive a 25% stake in the joint venture, and the right to market 25% of the tie-up's phosphate output, besides expanding Mosaic's sources of ore beyond its heartland in Florida and Louisiana, and a joint venture in Peru.

'Diversify sources' 

The limitations to its current mining footprint were exposed three years ago when output at its South Fort Meade mine in Florida, representing about one-third of Mosaic's output, was temporarily halted following a lawsuit brought by conservationists.

Jim Prokopanko, the Mosaic chief executive, who said at the time that the group was continually evaluating new sites, said on Tuesday that the "cost-effective" Saudi projects would "enable Mosaic to further diversify our sources of phosphates".

The joint venture also "gives us improved access to key agricultural countries", he said, with Saudi Arabia offering easy access to markets such as India and, via the Suez Canal, the former Soviet Union and Europe.

Logistical factor

Ma'aden has long held plans to expand double the size of its operations, which currently have capacity for about 3m tonnes a year.

However, firing up the initial project has had its difficulties.

Mr Prokopanko told investors last month: "They have been trying to bring the plant up for two years now. I suspect it is going to take them on another year to get full operating capacity."

One of the problems for the existing site has been its distance of some 1,000km from northern Saudi Arabia, where phosphate ore is mined, and indeed where the joint venture will be based.

'Like hitting a brick wall'

Mr Prokopanko last month said that transporting the ore "from northern Saudi Arabia at the border of Iraq and Jordan to bring it down across blowing sand of the Arabian desert to their processing plant" had "really been a challenge" for Ma'aden.

"You get a clear track one afternoon and in the morning you have three feet of sand.

"Ploughing through sand isn't like ploughing through a snowdrift in the Canadian Rockies. You hit a sand drift you stop like hitting a brick wall, so they have had to build tunnels."

Mosaic shares closed 0.9% lower at $61.34 in New York.