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.
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
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.
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
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
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.