Marubeni acting to secure phosphate rights in South America

Date:09-26-2011

Marubeni Corp. said that it has entered extensive discussions with a local company to participate in this company’s new phosphate-ore development project in South America.

In return for an equity investment, anticipated to be on the scale of tens of billions of yen (hundreds of millions of dollars), the Tokyo-based trading company will obtain ownership interests and off-take rights to the project’s products to market globally. It expects to initially sell the phosphate ore, which is a source of phosphorus, a fertilizer raw material, and then proceed to implementing projects in phases to manufacture derivatives like phosphoric acid and diammonium phosphate.

The move is the second in the regional for a Japanese company after Mitsui & Co.’s investment in Peru. It will allow Marubeni to develop a fertilizer value chain that is fully integrated, from the upstream production of raw materials to the downstream sale of fertilizer products by distributors that it owns in the US and Europe.

Global phosphate-ore resources are unevenly concentrated in China, the US and North Africa. The US prohibits their export while China, currently the biggest supply source, controls shipments, threatening supply stability, so the securing of sources other than China is a priority. After South America, Marubeni is aiming for off-take rights in North Africa.

The company will also push for early acquisition of off-take rights to potassium, another fertilizer raw material, which is now almost exclusively supplied by Canada and Russia, and it plans to secure new sources of ammonia as well.