Egypt’s new powerhouse

A couple of months ago it was announced that Egypt’s Orascom, via its Dutch subsidiary OCI Nitrogen, had bought a 50% stake in the Pandora ammonia and methanol project in Texas. In conjunction with Deo van Wijk’s Janus Methanol, which holds the other 50%, the company will rehabilitate the old Beaumont methanol plant, with 250,000 t/a of ammonia production due to re-start by the end of this year, and 750,000 t/a of methanol production next year. The move is yet another sign that Orascom is now a major player in the global basic chemicals market, branching out with this purchase from nitrogen products into the methanol market.

It is only one of a flurry of developments in the past few years. Beginning with the purchase of the Egyptian Fertilizer Company in 2007, with 1.2 million t/a of ammonia-urea capacity at Suez, Orascom has also taken positions in Egypt Basic Industries Corporation (60%) with ammonia and now downstream ammonium sulphate capacity, Notore Chemicals in Nigera (a 23% share, later cut to 13.5%) – where another ageing ammonia-urea plant is being rehabilitated, Sofert in Algeria (51%), with a 1.1 million t/a urea plant now commissioning, and last year the company attracted worldwide attention with its 100% purchase of DSM Agro. It was also named as a bidder for Brazil’s Copebras in 2009, and more recently has also been in the frame as a potential purchaser of the Burrup Fertilizers Plenty River ammonia plant in Australia. While commenting on the Beaumont purchase CEO Nasser Sawiris said that the company is also considering a bid for BASF SE’s nitrogen fertilizer unit at Antwerp. In just four years the company has come seemingly from nowhere to become one of the top ten nitrogen fertilizer producers in the world, and it seems to have an appetite for more. March this year saw agreement with Maire Tecnimont, now owners of Stamicarbon, on project developments in sub-Saharan Africa.

The company can trace its origins to 1950, and remains 55% run by the Sawiris family that founded it. The group’s portfolio includes Orascom Telecom Holding – one of the largest operators in the Middle East, Orascom Hotels and Development, Orascom Technology Solutions, and Orascom Construction Industries (OCI) – the latter is the arm that has been responsible for the group’s move into nitrogen fertilizer production. The group has been widely recognised as one of the most dynamic companies in North Africa, as evidenced by its rapid expansion into nitrogen fertilizers and now methanol. The latest acquisition in Texas pushed OCI shares to 253 Egyptian pounds, valuing the company at $8.8 billion, while profits for Q1 2011 were up 77% on last year at $206 million on the back of higher ammonia and urea prices, and seemed unaffected by the turmoil in Egypt earlier in the year. OCI makes most of its money in Europe and North America now, with less than 10% from North Africa. Industry commentators have noted that the group’s investments have been canny ones, backed by low gas price contracts in Egypt - although there have been warnings that Egyptian gas prices may be set to escalate soon.

A few years ago, as traditional European and North American chemical producers continued to exit the basic chemicals sector, the assumption was that production would devolve either to large integrated oil and gas companies or to state-run firms in the developing world. However, Orascom is a symbol of the new dynamism and confidence of private companies based in Russia, the Middle East and North Africa, China, Brazil and other industrialising regions. It will be fascinating to see where they move next.