Egypt’s plans to relocate the “EAgrium” ammonia-urea joint venture project on that country’s Mediterranean coast are “not a viable option” for the Calgary fertilizer firm.
And the company, which otherwise is enjoying record revenues due to high fertilizer demand worldwide, warned that it now might have to write off the US$280 million it’s invested in the venture so far.
Agrium announced June 20 that the Egyptian People’s Assembly, with indications of approval from Prime Minister Ahmed Nazif, has voted to recommend relocation of the EAgrium plant to “an unnamed location.”
“Agrium has previously stated, and remains of the opinion, that movement of the facility from the existing industrial-zoned site would require new financing, permitting and the negotiation of new engineering, procurement and construction contracts, and that it is not a viable option,” the company said in a release Friday.
According to Agrium, Nazif has offered two options to resolve the problem: either Egypt will buy out Agrium’s investment in the project, or Agrium can take a share of a government-owned nitrogen fertilizer plant, now being commissioned next to where EAgrium was to be built.
Agrium said it “will be evaluating all options” but added it will be “aggressively pursuing full recovery of its costs, equity contribution and future lost profits.”
EAgrium was a joint venture between the Calgary company, three state-owned Egyptian energy companies and a Saudi Arabian investment firm.
Their proposed fertilizer plant was sited in an industrial-zoned area, but according to news reports, local opponents claimed the project could put a nearby beach resort at risk. The Canadian Press news agency quoted an Agrium spokesman on Friday as saying the dispute appeared to be a “political land issue.”
Due to delays on permitting and other issues, construction had been stopped at the EAgrium site since April 21, the company previously said.
The People’s Assembly, Egypt’s house of parliament, had already ratified the report of a government fact-finding committee, which stated that EAgrium “satisfied all of the requirements of Egyptian law in acquiring the necessary permits and approvals to construct the EAgrium project on land zoned for industrial projects,” Agrium said Friday.