Olam Says Tata Chemicals to Invest in Gabon Urea Project
Tata Chemicals, the world’s second-largest soda ash producer, will pay $290 million for a 25.1 percent stake in the planned urea production facility, Singapore-based Olam said today in a statement. The project may generate more than $300 million in earnings before interest tax, depreciation and amortization a year, the statement said.
Attracting Mumbai-based Tata Chemicals, a fertilizer producer in India and Morocco, into the project comes as Olam expands its African assets with palm-oil plantations, sugar refineries and wheat milling to meet African and Asian demand for food commodities.
Tata Chemicals will acquire the stake from Olam and the Gabon government, which owns 20 percent of the project that’s due to make 1.3 million metric tons of urea soil nutrient a year, with a potential to double the output. The stakeholders will fund 35 percent of the initial investment, with the rest coming from debt financing, Olam said.
Olam will hold 62.9 percent in the urea project and the Gabon government 12 percent after Tata Chemicals completes the investment, according to the statement. The urea plant, which will target clients in the U.S., Latin America and Africa, may acquire new partners to help with sales, Olam Chief Executive Officer Sunny Verghese said today on a conference call.
“We’ll definitely bring in additional partners for marketing,” Verghese said. “We’re unlikely to bring in other equity partners.”
Olam agreed to invest 413 billion CFA francs ($890 million) in a palm-oil project in the country, Gabon’s Ministry of Agriculture said last week.
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