Orascom Construction Industries announced plans for the development of an integrated nitrogen based fertilizer plant in the Aҫu Superport industrial complex in Brazil with Rio de Janeiro based EBX Group. The complex is expected to operate at a capacity of 3 million tonne per annum of nitrate fertilizers. Total project value is c. USD 3.0 billion and will be funded by a consortium of Brazilian and Egyptian banks. The two parties aim to enter into a binding JV agreement though a potential structure has not yet been disclosed.

Strategic location:
Aҫu Superport is a private mixed used port terminal which will be completed in 2012 and an industrial complex. It is located in a strategic site in the north of Rio de Janeiro in proximity to more than 85% of Brazil's known oil and gas fields.

Tangible capacity impact:
According to management, LLX, the logistics arm of EBX Group will develop the complex and OCI will take part in project management. Construction will commence mid next year and is expected to be completed in FY 16e with full commissioning in FY 17e. The plant is expected to take OCI fertilsers capacity to over 10.0 million tonne per annum.

Initial view positive:
Brazil is the second largest fertilizer market in the western hemisphere, after the US, (ii) heavily reliant on imports, (iii) experiencing superior demand growth relative to China and India. The complex in which the plant will be located afford access to major agricultural regions in Brazil. Though no clarity is yet available on natural gas feedstock cost, we see a USD 200 million increment to group EBITDA assuming natural gas cost at a 15% premium to current spot and a selling price of USD 500 per tonne.