H.E. Jamal A. Al Sarayrah, Chairman of the Board of Arab Potash Company (APC), outlines his company's work in Jordan.
The Arab Potash Company is one of the first and most successful examples in attracting foreign direct investment to the Kingdom. Today APC is one of the Jordan's biggest exporters, one of the largest earners of foreign currencies, and one of the largest providers of work opportunities in the private sector, with a workforce of 2,206 employees at the end of 2013 plus 287 employees in its subsidiary and affiliate companies. Most of these employees come from local communities in Jordan's highest concentration of pockets of poverty and unemployment.
At the same time, APC pays around 60% of its annual profits to the Treasury in the form of profit dividends, corporate tax, royalties, road tax, port fees, rent of land, and scientific research fees. In 2013 this amounted to nearly JD 78 million (US $ 111 million).
It is well known that political turmoil and instability are bad for business because of their negative effects on the confidence of potential investors and trade partners. However, Jordan is fortunate in that its wise and far sighted leadership has succeeded in steering a safe course through the troubled waters of the Middle East. Jordan is and will remain, God willing, an oasis of stability and a beacon for progress in the region.
APC dykes are located in a complex geological environment and are subjected to various ‘ground-bounded’ risks. Therefore APC Dykes are considered as a “living structures” as they are subjected to constantly changing boundary conditions. We monitor continuously the conditions of our dykes, and perform maintenance when necessary and prudent.
The challenges that face the construction at Dead Sea area can be summarized as follows:
Until 2008, APC had one of the lowest cost of production per ton among potash producers. Since then production costs rose considerably as follows:
These sharp rises have now laced APC among the highest cost of production producers in the world, which inevitably makes it challenging for the Company to maintain its competitiveness.
The Arab Potash Company was established on 7th July 1956 as a pan-Arab public shareholding company to extract potash from Dead Sea minerals. As such it was one of the first joint Arab economic projects. In 1958, the Government of the Hashemite Kingdom of Jordan granted APC exclusive rights to extract manufacture and market minerals from the Dead Sea until 2058.
In 1976, the project began tests and experiments to determine the parameters of various technologies and ideas and in 1979 construction work started on the project, which was completed in 1982.
A major engineering challenge was to build the dykes on the unstable sea bed. Sixteen million cubic meters of earth material were displaced in the process of building about (117) kilometers of seepage proof dykes eight meters wide at the top. More dykes were added later.
In 1983, APC began production at an initial total capacity of 1.2 million metric tons of product. Production capacity was later optimized to reach 1.4 million tons at the end of the eighties.
In 1988, APC posted its first profit and began plans to diversify production by studying Bromine and downstream products.
In 1994, construction of a second plant of a 0.4 million ton capacity at a cost of US $ 120 million brought up total production capacity to 1.8 million tons.
In 1997-99, APC started work on bromine and derivatives plants and potassium nitrate, magnesia and salt, at an investment of about US $ 500 million in the downstream industries. It signed JV agreements with Albemarle of The United States for the bromine complex and Kemira of Finland for the potassium nitrate complex in Aqaba.
In 2003 PotashCorp (Potash Corporation of Saskatchewan) bought 28% of APC shares from the Government of Jordan. Sales surpassed 2 million tons for the first time.
In 2004 construction began on the second cold crystallization unit at an investment of USD 450 million to bring capacity to over 2.4 million tons. In the same year, APC opened its first overseas sales office in Kula Lumpur- Malaysia.
In 2007 APC became 100% owner of Kemapco after buying Kemira of Finland’s shares in the Company which produces 120K of the high value nutrient (potassium Nitrate)
In 2010 the new cold crystallization plant was inaugurated by His Majesty King Abdullah and APC reached an official potash production capacity of 2.45 million tons. As part of the expansion, The Aqaba Warehouse became the largest Potash Export terminal in the world with a capacity of 300,000MT.
Jordan Bromine Company (JBC) was incorporated in January 1999 as Joint venture between Arab Potash Company and Albemarle Corporation, registered as a private Free Zone Company located at Safi South of the Dead Sea in June 2000.
JBC with its diversified range of its high-quality and safe products reaching more than 30 countries Globally, managed successfully through engineering chemical solutions to deploy its products to diverse industries and sectors that include agriculture, construction, pharmaceuticals, electronics, cosmetics, food production and processing, textiles and plastics among others; we successfully contribute to global markets
JBC is committed to long-term growth and excellence through customer and supplier partnerships, creating value for all.
Our shareholder Albemarle Corporation viewsits partnership with Arab Potash Company as being strategic and further strengthens JBC's Global position as a key bromine producer.
This is an agreement negotiated and signed by private companies: APC and Jordan Bromine Company on the one hand, and U.S.-based Noble Energy on the other. The benefits of this agreement will be lower production costs and higher competitiveness for APC and JBC, which will enable us to continue as Jordan's highest private-sector earner of hard currency, in addition to our financial contributions to the national Treasury. The agreement will also protect the interests of our 2,176 employees, and sustain our CSR programs.
Ultimately, as a major Jordanian public shareholding company, APC has a responsibility to its shareholders, employees and community. This deal is essential for maintaining our market competitiveness.
The shift from heavy fuel, which is used at present, to the less expensive and more eco-friendly natural gas, which we expect to start receiving in 2016, is projected to produce total cost savings of JD 235 million, or average savings of JD 11 per ton of potash produced. This is essential to maintain our long-term operations and growth as Jordan’s largest private-sector earner of hard currency, one of the largest contributors to the Treasury, and one of the largest private-sector employers in the country, particularly as we cope with the drop in global potash prices.
The first cold crystallization plant (CCP1) was built in 1994 with a total capacity of 400,000 tons per year. The plant operates under ambient conditions without the need for steam (which is used in the old hot leach plant). The plant is built of carbon steel because the ambient process temperature eliminates the need for noble metals such as inconel, monel, or titanium, which makes the CCP plant operating cost much lower than the hot plant. The plant was upgraded to produce more than 500,000 TPY, and in 2008 production reached 572,377 TPY.
The second cold crystallization plant (CCP2) was built and put into operation in September 2010 to give a total production of 450,000 TPY. The new plant is similar to CCP1, but it encompasses certain areas of modified processes and advanced technology. The modifications tackle the areas of crystallization, flotation, screening, leaching and others. An advanced control system (DCS) was incorporated to facilitate control of the production process. Highly efficient dust collection systems were included in the new plant to ensure minimum dust emissions into the surrounding environment. A new compaction plant was also installed to produce more than 250,000 TPY of high quality granular potash. The new compaction plant comprises a post-treatment unit intended for enhancing the quality of granular potash. The plant has demonstrated that it can achieve design capacity of 450,000 TPY.
In 2012, APC evaluated several scenariosfor possible future expansion. One scenario was to increase its capacity to 3.2 million TPY, but any expansion decision would be guided by the state of the market and cost of production.
At present APC's main focus is to minimize the cost of production in order to enhance the Company's international presence. One major initiative in this area is to replace the burning system for our boilers and dryers, from heavy fuel to natural gas, which will produce a considerable reduction in production costs. APC also considers generating all its electricity from gas. Another initiative is to reduce the cost of water by financing the construction of Wadi Ibn Hammad Dam at a cost of JD 26 million (ca US $ 37 million) to harvest four million cubic meters of rain water, which would address some of APC's needs and help provide drinking water for local communities.
Also as part of its work to expand production capacity, APC is conducting a site investigation of the collapsed dikes around the SP0B pondto determine the most cost-effective way to make use of this pond, which would increase potash capacity by approximately 180,000 TPY. Preliminary results of this study are expected in late 2014.
The Aqaba Warehouses is sufficient at the present rate of production. It consist of the following facilities:
Upon completion of the Aqaba Port new jetty and rehabilitation of the existing one, APC will achieve the following strategic goals:
Moreover, construction of the new jetty and rehabilitation of the existing one will solve a number of operational and technical problems with the current , mainly:
APC's first priority is to provide its employees with a safe, healthy, and rewarding working environment. As a result the Company reviews and updates its safety procedures regularly and holds awareness sessions to spread the culture of safety among it workers. These efforts are successful as this year we have celebrated 4 million working hours without time lost injuries, which are injuries that require workers to take time off for treatment.
As far as rewards are concerned, APC's average monthly salary amounts to JD 1,635, which is above the national average. Human resource studies conducted indicate that APC workers are paid well above the national average, at a level compatible with salaries paid in Gulf countries. The incentives package provided by APC includes:
APC is a major contributor to the development of local communities through its active CSR program, which amounted to JD 10 million (US $ 14 million) in 2012 and 2013. In this program APC focuses on translating the vision of His Majesty King Abdullah II Ibn Al Hussein, that the first "priority is a better life for all Jordanians" into reality by supporting local communities and working to address their needs in ways that raise local living standards and contribute to improving services provided in different sectors, in the aim of achieving social balance and sustainable development.
To fulfill this outlook, APC supports projects in all parts of the Kingdom in in the key sectors of water and sanitation, health services, education, building public facilities, professional and labor association activities, social welfare, welfare package campaigns, sports federations and clubs, municipal services, restoration of mosques and churches, and fighting poverty
APC has carried out several studies such as Initial Environment Evaluation (IEE) to evaluate the impact of potash production and possible expansion on the surroundings. Items considered included increase of emissions, truck trips to Aqaba, expanding potash storage facilities at Aqaba, and technical studies to determine the best ways to reduce the stack emissions to comply with international standards.
In general, potash production is considered to be one of the safest activities in industry and its impact on the environment is limited. Activities involved with the production are well controlled and impacts are measured through multiple procedures and periodic measurements that comply with the requirements of the Ministry of Environment and the international environment standards (ISO 14001) that is granted to us by Lloyds Register.
Environmentalissues at our plants and facilities are summarized as follows: