INDUSTRY INSIGHT

Positive long-term outlook for fertilizers fuels Ma’aden’s phosphate growth plans

Darren Davis, President and CEO, Ma’aden and a speaker at the Annual GPCA Forum, discusses current challenges facing the worldwide fertilizer industry, the company’s rapid phosphate production growth, and its strategic expansion plans.

 

The worldwide fertilizer industry plays an essential role in helping farmers to feed the global population. The agricultural sector is in a period of transition due to climate change, the circular economy, new technology, and changing consumer demand. How can the fertilizer industry adapt to these changes and seize the opportunities they offer?

Davis: Fertilizers play an essential role in boosting crop output and contributing to stable food supplies around the world, as the demand for protein-rich food increases along with the global population growth. As such, the fertilizer industry’s most pressing objective is to rise to the challenge of significantly increasing its production capacity. Investments in technology, innovation, and operational excellence are important components of what we are doing at Ma’aden to meet that demand for growth. We expect to increase our production capacity from 6 to 9 million metric tons of phosphate fertilizers by 2025, once our USD 6-billion ‘Phosphate 3’ project in Wa’ad Al Shamal in the North West of Saudi Arabia—which is under construction—is complete. This mega-project will further solidify Ma’aden’s and Saudi Arabia’s position as a major contributor to global food security by making the Kingdom the world’s second-largest fertilizer exporter.

What are the main challenges facing the fertilizer industry in the Middle East? And how are companies such as Ma’aden meeting them?

Davis: The challenges facing the regional fertilizer industry are the same as in other markets around the world. Demand is impacted by issues like climate change, drought, and food security. Where the regional players such as Ma’aden can make a difference is creating higher-quality and sustainable products to keep up with the growing demand and ensure long-term growth. This shift will not only enable regional producers to become more competitive on the international market but will also drive demand in their domestic markets.

Our phosphate business has won global recognition for the sustained growth in our market share and for product quality that offers a very low level of impurities, protecting the environment and human health. Through continued expansion and strategic investments, we were able to achieve record output levels in 2018 and we are primed for further growth. Moreover, Ma’aden is fully committed to sharing best practices and learning with regional players, an objective the GPCA has greatly helped to support through its events.

Your presentation at the Annual GPCA Forum focuses on ‘channels for local and international growth.’ What is Ma’aden doing to streamline the supply chains between its production sites and consuming markets in emerging economies?

Davis: When I joined Ma’aden in 2012, we had only just launched our first phosphate project. Today, we have the world’s third-largest phosphate business with a production of 6 million metric tons of phosphate fertilizers per year. One thing that sets Ma’aden apart is our phosphate industry infrastructure in the Kingdom. Our phosphate downstream superhub at Ras Al Khair on the east coast has a major port, facilitating export operations. It is connected directly to our mines in Wa’ad Al Shamal via a 1,400 km railway, streamlining phosphate extraction and conversion into export-ready fertilizer products for our customers around the world.

As I mentioned, our business strategy is focused on operational, commercial, and capital excellence. We are exploring new ways to use technology to increase productivity, reduce downtime, and understand processes better and look to expand our geographical footprint.

 

What are Ma’aden’s plans for international growth through investment and acquisitions abroad? Which markets are currently being focused on in particular, and where does the company see the most potential for long-term return on investment?

Davis: Earlier this year, we completed our first international acquisition through the 85% share purchase of Mauritius-based fertilizer distribution group Meridian, as part of our goal to build global distribution channels for fertilizer products and increase our exposure to African markets. The long-term outlook for fertilizers is positive, with demand expected to grow at 1.8% CAGR (Compound Annual Growth Rate) until 2030. In order to capture this growth, we are focused on consolidating our strong position in South Asia and increasing our market share in Africa and South and Latin America. I believe that Ma’aden can increase its market share and meet the demands of these markets with our diversified phosphate products.

Ma’aden is engaged in a large expansion of its phosphates capacity. What is the significance of this project in the company’s overall strategy and the wider Saudi Arabian economy? What other expansion projects are being planned or under consideration?

Davis: Ma’aden is leading Saudi Arabia’s contribution to achieving global food security in line with the UN’s Sustainable Development Goals. Our vision is to become a globally leading player in phosphate trade. Our phosphate business consists of three mega-projects in Saudi Arabia primed to meet our long-term goals: Ras Al Khair, a phosphate and bauxite ore superhub; Wa’ad Al Shamal – the center of the Saudi phosphate industry; and Phosphate 3, under construction and which will expand existing operations in Wa’ad Al Shamal. Our mega-projects in the sector will play a pivotal role in the growth of the Saudi mining industry and in industrial diversification by providing significant downstream investment opportunities. With the Kingdom’s natural phosphate deposits in the north of the country, access to sulfur and natural gas for processing, and proximity to promising markets in South Asia and East Africa, we are well-placed to serve the globally growing need for fertilizer products.