Documentof The World Bank
FOR OFFICIA L- USE ONLY
AM/ 3/7Z-JO Report No. 8190-JO Public Disclosure Authorized
STAFF APPRAISAL REPORT
HASHEMITE KINGDOMOF JORDAN Public Disclosure Authorized
INTEGRATEDPHOSPHATE PROJECT
JANUARY8, 1990 Public Disclosure Authorized
Industryand Energy OperationsDivision CountryDepartment III Europe,Middle East and North Africa Region Public Disclosure Authorized
This document has a resticed disibution and may be used by recpints only In the performance of their offiiul dutHs Its conteus may not otherwise be dicosed without Wodd Bank authorizaton. HASHEMITEKINGDOM OF JORDAN
INTEGRATEDPHOSPHATE PROJECT
CURRENCYEQUIVALENTS
Currency Unit - Jordan Dinar (JD) JD 1.00 - US$1.54 JD 0.65 - US$1.00
FISCALYA
January 1 - December 31
WEIGHTSAND MEASURES
1 cubic meter (m3) - 1.308 cubic yards 1 metric tonne (t) - 2204.6 pounds 1 metric tonne (t) - 1,000 kilograms (kg) 1 kilometer (km) - 0.62 miles
ABBREVIATIONSAND ACRONYMS
ARC - Aqaba Railways Corporation BCM - Bank Cubic Meter DAP - Di-ammonium Phosphate JEA - Jordan Electricity Authority JFI - Jordan Fertilizer Industries JPMC - Jordan Phosphate Mines Company, Ltd. MIS - Management Information System mt - million metric tonnes mtpy - million metric tonnes per year ROM - Run-of-Mine t - Metric Tonne TCP - TricalciumPhosphate TPC - The Aqaba Port Corporation tpy - Tonnesper Year FOR OMCIAL USEONLY HASHEMITEKINGDOk OF JORDAN
INTEGRATEDPHOSPHATE PROJECT
STAFF APPRAISALREPORT
TABLE OF CONUENTS
I. INTRODUCTION...... 1 A. Background 1 B. Bank Role and Sector Lending Strategy .1 C. Rationale for Bank Involvement. 2
II. THE JORDAN PHOSPHATEMINES COMPANY, LTD. (JPMC). 3 A. History. 3 B. Organizationand Management. 3 C. Manpower and Training. 4 D. Current Operations. 5 E. Markets and Marketing. 8 F. Sector Development...... 12 G AccountingArrangements and Audit...... 13
III. THE MARKET FOR PHOSPHATEROCK AND PHOSPHATEFERTILIZERS ...... 13 A. PhosphateFertilizer World Demand/Supply...... 14 B. World PhosphateRock Demand/Supplyand World Trade...... 15 C. PhosphateRock and FertilizerPrices ...... 17 D. The Market for JordanianPhosphate Rock and Fertilizer.... 18
IV. THE PROJECT - INTEGRATEDPHOSPHATE PROJECT . . 20 A. ProjectObjectives .. 20 B. Phasing of Shidiya Developmentand Sector Strategy .. 20 C. Project Description .. 21 D. Detailed Features .. 22 1. BeneficiationPlant ...... 22 2. FertilizerPlant Rehabilitation...... 25 3. InfrastructureDevelopment at Shidiya...... 25 4. Manpower...... 27 5. EnvironmentalImpacts ...... 28 6. TuchnicalAssistance ...... 30 7. Project Costs...... 30 8. FinancingPlan ...... 32 9. Procurement& Disbursement...... 33 10. ProjectManagement & Implementation...... 35
This report was preparedby Messrs. C. Wardell (ASTEG)and R. A. Mertz (EM3IE),with the assistanceof Messrs. L. Borin and M. A. Pearson (EMTIE), L. Pritchett (CECTP)and J. Cape (Consultant),and word processingassistance was provided by Ms. M. Cuffley (ASTEG).
This document has a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. V. TRANSPORTAND PORT INFRASTRUCTURE .. 37 A. Land TransportArrangements ...... 37 B. Aqaba Port...... 38
VI. FINANCI ANALYSIS ...... 39 A. Past and Present FinancialPerformance ...... 39 B. FinancialProjections .. 42 1. MiningUnit ...... 43 2. FertilizerUnit ...... 47 3. JPMC ConsolidatedFinancial Position ...... 52 C. FinancialRates of Return and SensitivityAnalysis .. 55 1. BeneficiationPlant Component...... 55 2. FertilizerPlant RehabilitationCompouent ...... 57 D. ProjectRisks ...... 59
VII. ECONOMICANALYSIS ...... 60 A. EconomicRat.e of Return and SensitivityAnalysis .. 60 1. BeneficiationPlant Component...... 60 2. FertilizerPlant RehabilitationComponent ...... 62 B. ForeignExchange Balance and Employment . . 63
VIII. AGREEMENTSTO BE REACHED...... 63 Recommendation...... 64
ANNEXES
2-1 JPMC OrganizationChart .65 2-2 JPMC Rock Export Sales.66 3-1 PhosphateFertilizer Long-Term Supply/Demand .67 3-2 PliosphateRock Future Demand.68 3-3 PhosphateRock ProductionForecasts .69 3-4 PhosphateRock and DAP - Price History and Forecasts.70 3-5 PhosphateRock Import and Export Levels.72 3-6 PhosphateRock Export Shares and RegionalRock Imports.73 4-1 JPMC TentativeProduction/Export Plan .74 4-2 BeneficiationPlant - TCP Weight Balance.75 4-3 BeneficiationPlant - Water Solids Balance.76 4-4 BeneficiationPlant - Flow Diagram.77 4-5 BeneficiationPlant - ArrangementDrawing .78 4-6 ProcurementSchedule .79 4-7 DisbursementSchedule .80 4-8 JPMC - ConstructionOrganization Chart .81 4-9 ImplementationSchedule .82 6-1 JPMC HistoricalFinancial Statements .83 6-2 ConnolidatedFinancial Projections .87 6-3 BeneficiationPlant - FinancialRate of Return Analyss .90 6-4 FertilizerPlant - FinancialRate of Return Analysis.93 -iii-
ANNEXES(Cont'db
7-1 BeneficiatlonPlant - EconomicRate of Return Analysis...... 94 7-2 FertilizerPlant - EconomicRate of Return Analysis . . 97 7-3 BeneficiationPlant - ForeignCurrency Balance . . 98 7-4 FertilizerPlant - Foreign CurrencyBalance . . 99 8-1 DocumentsAvailable ln the Project File ...... 100
IBRD 21619 IBRD 21620
Industry and Energy Operations Division Country Department III Eurcpe, Middle East and North Africa Region January, 1990 viv- HASHEKITEKINGDON OF JORDAN
INTEGRATEDPHOSPHATE PROJECT
IOAN AND PROJECT SUMNARY
aorrow4Fr: Jordan PhosphateMines Company, Ltd. (JPHC)
Amount: US$25 million equivalent.
'lerms: 17 years, including5 years of grace, at standard variable interestrate. JPMC will bear the foreign exchange and interestrisk.
Project Description: The Project is an importantsecond step in the developmentof the Shidiya phosphatedeposit, which will enable Jordan to increase its export of phosphaterock and to increase foreignexchange earnings. It will also rehabilitatethe fertilizer plant at Aqaba.
The project will financebeneficiation plant equipment,including a washing and flotationplant; phosphateore and producthandling, storage, reclaim and loading facilities;townsite expansion; industrialinfrastructure, including power distributionand water supply;and fertilizerplant equipment. The Project'stechnical assistance component will ensure effectiveproject management of the fertilizerplant rehabilitation.
EstimatedCosts: Local Foreigzn Total ------(US$ million)------Millsite Equipment 7.1 39.6 46.7 Support Equipment 1.1 4.8 5.9 Fert. Plant Equipment 3.7 21.1 24.8 Civil Works & Infrastructure 10.4 12.8 23.2 Dust Control Equipment 0.3 2.2 2.5 Engineering& Tech. Assist LZ 1.2
Base Cost (October1989 Prices) 24.8 8.5 106.3
PhysicalContingencies 1.4 9.2 10.6 Price Contingencies 6.2 10.3 16.5
InstalledCost 32.5 101.0 133.5
IncrementalWorking Capital 0.7 15.5 16.2
Project Cos !/ 332116.5 149.7
InterestDuring Construction 0.0 12.0 12.0
Total FinancingRequired 128.5 161.7
/ The Project is exempt from import duties and taxes. -V
FinancpiDPlan
LQ£1 Egreignotal ------(US$ million)-
Arab/KuwaitFund Loans 9.5 61.2 70.7 IslamicDev. Bank Loan 9.0 9.0 IBRD Loan - 25.0 25.0 JPMC . 351
Total Financing 128.5 161.7
EstimatedDisbursements of Bank Loan:
Bank -FY 1991 19 ma 19 1995 ------US$ million----- Annual 2.2 6.7 8.1 4.8 3.2 Cumulative 2.2 8.9 17.0 21.8 25.0
Economic Rate of Return: 26% - BeneficiationPlant Component 28% - Fertilizer Plant Component INTEGRATEDPHOSPHATE PROJECT
1. INTRODUCTION
A. hackmwi
1.1 The Jordan PhosphateNines Company Ltd. (JPMC),in which the Government of Jordan is the majority shareholder,has requesteda Bank loan of US$25.0 million equivalentto help finance the IntegratedPhosphate Project. Phosphate is the most important of Jordan's mineral resourcesand provides substantial foreign exchange earnings (US$211 million gross in 1988) through the export of phosphaterock and therebymakes a substantial contributionto Gross National Product (GNP).A portion of p1osphateproduction provides feed to JPNC's Industrial(fertilizer plant) Complex at Wadi II on the Gulf of Aqaba coast and the export of fertilizerproducts and aluminiumflouride by-product yield additionalforeign exchange earnings (US$142million gross in 1988). The project has two components,the second stage developmentof the Shidiyadeposit, which containsvast reserves of phosphaterock, and rehabilitationof the fertilizerplant at Aqaba. The projectwill increasephosphate rock production at Shidiya from the 1.75 million tonnesper year (mtpy)planned under the ShidiyaPhosphate Nine Project (Loan 2902-JO),to 3.23 mtpy by 1996; and will provide replacementtonnage for the decliningphosphate production at existing mines (whichare reaching the end of their economic life) while permittinga gradual increasein the level of phosphaterock exports from a planned level of 7.0 mtpy in 1996.to 8.2 mtpy in 2000. Rehabilitationof the fertilizerplant at Aqaba will raise the level of DAP (diammoniumphosphate) and phosphoricacid exportsto 740,000 tonnes and 59,000 tonnes P205 equivalent,respectively, by 1994.
B. Bank Role and Sector Lending Strategy
1.2 The Jordanianeconomy suffered seriousreversals in 1988. GDP fell by almost 3.5% in real terms. This declinewas accompaniedby a further deteriorationin the overall fiscal situation,with an increase in the budget deficit (after grants) to nearly 14.5% of QDP. The balance of payments also worsened. Large overall deficitsled to a depletionin official reserves and there have been arrears on external payments. The underlying weakness of the balance of payments, coupled with speculative pressure on the JD, led to the first round of devaluations in late 1988. The economic situation in 1989 turned out to be considerablymore difficultthan was expectedearlier in that year. The signs of increasedinvestment activity in late 1988 were not been borne out during 1989; consequently,there will be no growth in output. The budget deficit, although less than in 1988, will remain large (11.4% of GDP). The balance of payments was considerably tighter and necessitated a further sharp devaluationof the JD in July 1989. - 2 -
1.3 The Government responded to this situation by makingsignificant adjustments: floating the JD (with a substantial depreciation in real terms vis- a-via the US Dollar); liberalizing the financial markets; implementing measures to deregulate industry; and introducing an austerity budget for 1989. These measures are in line with the thrust of Jordan's recent Five-Year Plan, under which the Government has, by and large, pursued liberal, outward-looking policies and promoted private enterprise. However, the situation require. a continuation of reforms to lay the basis for balanced growth on a sustained basis and to restore confidence in the economy. With the assistance of the Bank and the IMF, the Government has adopted a structural adjustment program designed to (i) reduce macroeconomic imbalances, (ii) generate growth by expanding and diversifying exports, and (iii) protect the poor during the adjustment period. The Government's program is being supported by an IMF standby program which was approved in mid-July 1989, and rescheduling by the Paris and London Clubs. The Bank is supporting the Government's program by the Industry and Trade Adjustment Loan, presented to the Board in December 1989, which irnvolves measures to complement the program agreed with the IMF and ensure a competitive and stable macroeconomic framework; improve and rationalize the trading environment in the economy; increase the efficiency and comp .tiveness of the industrial sector in Jordan; and develop policies to protect the economically-disadvantaged during the reform period. 1.4 Bank assistance in the industrial sector has, hitherto, consisted of a pilot Engineering Credit (1975) in the Potash sector, a Potash Project (1978), an Energy Development Project (1983), several Power Projects, a second Potash Project (1986), and a Phosphate Mine Project (1988). IFC's involvement in Jordan has been in the production of ceramic tiles, phosphate fertilizers, and bricks, and in the developmen' of he Ammancapital market. The Bank's further involvementin the phosphate sectol' - to help increase pnosphate rock and fertilizer production and exports, expanding utilization of the country's major natural resource and foreign exchange earner - is, therefore, within the Bank's country and sector lending strategy.
C. Rationale for Bank Imolvement 1.5 During the 1981-87 period, the Bank provided extensive technical and economic advise to continuously assist the Government and JPMCto monitor project preparation and to identify an optimal configuration for the development of the substantial Shidiya phosphate deposit. This culminated in the definition of an initial mine development phase, the Shidiya Phosphate Mine Project - Loan 2902 JO, of manageable financial proportions and involving minimum market risk. More recently, the Bank has provided further technical, economic and strategy advise to assist further sector development and rationalization and institutional development. 1.6 The Bank has been requested by JPMCand the Government to continue to provide extensive technical, economic and strategy advice to assist the development of the phosphate sector. Under the previous loan, the Bank assisted JPMC to (i) initiate mine development at Shidiya in a low-cost, low-risk manner; (ii) initiate rationalization of the phosphate sector; and (iii) address the need to rehabilitate the financially troubled fertilizer plant. The Jordanian - 3 -
authorities regard the Bank as a unique source of technicaladvice and financial support for JPMC in this crucial transition period. Following the merger with JFI, JPNC is trying to resolve complex technical problems at the fertilizer plant and to introducemodern beneficiationtechnology to improveefficiency and the economicsof mine operations. The Governmentis also consideringmerging the aillng Aqaba Railway Corporationwith JPMC, since it is the railway'sonly customer. At this criticaljuncture, the Governmentand JPMC have requested continuedBank involvementto ensure (i) the systematicintroduction of complex phosphatebeneficiation technology into Jordan and a rationalproject design, (ii) the further developmentand integrationof Shidlyaphosphate rock productionwith decliningproduction from traditionalmine areas, and (iil) the systematicrehabilitation of Jordan'sfertilizer sub-sector. The proposed project is consistentwith the Bank's lending strategy,which includessupport for export-orientedprojects. IFC has not shown any interest in participating in the project, in view of the still public sector nature of the company,and IFC's earlier withdrawalof equity from the fertilizerunit of JPMC. Bank participationwould fill the gap in the financingplan after the support availablethrough cofinancingand an appropriatelevel of JPMC generatedfunds have been taken into account.
1.7 The project was appraisedin June/July1989, by a mission consistingof Messrs. C. Wardell, R. A. Mertz, L. Borin, and M. A. Pearson, (Bank) and Mr. J. J. Cape (consultant).A post-appraisalwas undertakenin October/November1989 by Messrs. C. Wardell and J. J. Cape.
II. IHE JORDANPHOSPHATE MINES COMPANYLTD. (JPMC)
A. Jistory
2.1 Phosphatedeposits were discoveredin Jordan in 1908. JPMC was formed in 1953 with a capital of JD1.O million to exploit the phosphatedeposit at Ruseifa,north of Amman. In the early 1960's mining commencedat El Hassa, south of Amman and in the late 1970's the El Abiad mine was opened, adjacent to El Hassa. In 1988, the Shidiyamine was opened with Bank assistance(Loan 2902 JO) and is currentlyunder implementation.The share capital of JPMC has increasedseveral times and, followingthe absorptionof Jordan Fertilizer Industries (JFI) in early 1986, and the share issue floatedfor the purpose of financingthe Shidiya PhosphateMine Project in 1988, reachedJD98.9 million at end 1988. Followingthis share issue, the company is owned 38% by Governmentof Jordan, 20% by the Jordan Social SecurityPund, 20% by the 'overnmentof Kuwait, and 21% by numerous JordAnianand Arab individualand private institutional shareholders.
B. Organizationand Management
2.2 JPMC's basic organizationstructure and accountabilityto the Government remains unchanged since the first loan. The Board of Directors has been expanded to incorporate representatives of the Government of Kuwait. Following integration of the mining and fertilizerunits, the organizational -4- structure has been expanded to effectively manage and operate the enlarged company activities (A.nnex 2-1). JPMCmanagement continues to operate the company on a commercially oriented basis and is satisfactory and efficient. The ManagingDirector retains full charge of operations, livestment and borrowing, foreign currency management, finance and personnel management. 2.3 JPMChas successfully reorganized itself into an integrated company and while the production (mine and fertilizer) units maintain their necessary operational and managerial autonomy, the marketing, finance, administration, internal audit, corporate planning and budget functions are now integrated. The company's management information systems have been improve' following the acquisition of JFI and now form a commonbasis for the mining and fertilizer units. Under the technical assistance component of the first loan, JPMC is continuing to upgrade corporate, production, and financial planning in a satisfactory manner.
C. Narnower and Training 2.4 JPMCemploys 4001 personnel, 397 at the Ammanheadquarters, 3607 in mining, 700 at the fertilizer plant at Aqaba, 61 at the Ruseifa research center, and 146 at Aqaba port. The table below gives a breakdown of the employee areas.
Jordan - JPNC naimower (as of November1288) AmmanHeadquarter Staff 397 El Hassa Mine and HousingComplex 1,612 El Abiad Mine 721 Shidiya Mine 127 RuselfaMine (abandoned) 247 Fertilizer Plant 700 Ruseifa Research Center 61 Aqaba Port Staff 146 Total 4,001 Source: JPMCFeasibility Study, November 1988.
2.5 The quality of the workforce remains high at all levels and labor relations are good. Personnel management is centralized but the Managing Director uses this freedom effectively and individual performance is highly motivated at most levels. JPMChas a team of qualified and experitnced managerial, operational and marketing personnel, engineers, technicians, skilled and semi-skilled workers and the existing mine and fertilizer operations are highly productive. The JPMCmanagement and staff have quickly and effectively adapted to the expanded company responsibilities. 2.6 JPNC has not faced difficulties in recruiting personnel at all levels and there remains a more than adequate supply of skilled labor interested to join the company, both those returning from the Gulf States as well as engineers/technicians from JPMCtraining centers and polytechnics in Jordan. JPMCsalary levels remain competitive with commercial companies in Jordan. -5-
2.7 Over the 10-year 1977-86period, Jordan increasedits annual phosphate mine productionat an average rate of 158 and tripled its exports of phosphate rock (see table below). Jordan remains the fifth largestphosphate rock producer after the USA, the USSR, Morocco, and China, and the third largest exporterof phosphaterock after Morocco and the USA. In 1987 and 1988, Jordan reduced its dine production in order to reduce levels of stocks (that had risen to a level approaching3.0 million tonnes)to manageablelevels. At the same time, Jordan increasedonly marginallythe level of rock made availableto export markets in a successfulattempt, togetherwith other leadingworldwide phosphaterock producers, to reduce world phosphaterock overcapacityand to strengtheninternational prices.
Jordan -_Phosphate Rock Productionand Exports1977-88 ('000 tonnes)
Yea: Production Dxport Domestic Sales 1J 1977 1,771 1,794 - 1978 2,493 2,159 - 1979 2,845 2,728 - 1980 3,907 3,612 - 1981 4,244 3,523 1982 4,390 3,520 229 1983 4,748 3,701 616 1984 6,263 4,695 679 1985 5,920 4,610 841 1986 6,200 5,300 941 1987 5,719 5,541 905 1988 5,687 5,811 1,017
1/ Feed to the JPMC (formerlyJFI) FertilizerPlant.
SRurce:JPWC Annual Reports and November 1988 FeasibilityStudy
2.8 Mlnes. JPMC currentlyoperates three open-pit mines - El Hassa, El Abiad, and Shidiya. The productiondesign capacitiesof the El Hassa and El Abiad mines are 4.1 and 3.0 mtpy, respectively. The Shidiyamine which is currentlybeing implemented(Loan 2902-JO)will produce0.30 mt phosphaterock product in 1989, increasingto 1.00, 1.50 and 1.75 mtpy in 1990, 1991 and 1992, respectively.This productionis from the high grade 73/75 TCP1/ A2 phosphate bed which can be marketed following simple dry screening provided under the first loan. The design capacity of the mine is 3.23 mtpy including development of low grade A.l and A3 ore beds which can be marketed only following wet beneficiation (see paras. 4.11-4.17).
I/ TCP - tricalciumphosphate (equivalent to BPL - Bone Phosphate of Lime) is equivalentto 0.46 units of P205. - 6 -
2.9 The E1 Hassa and El Abiad mines produce two grades of rock, Standard or S Grade (70/72 TCP- after simple screening and drying of higher quality run- of-mine ore) and Concentrate or C Grade (73/75 TCP - a washed product from wet beneficiation). The 1988 ratio of productionwas 56:44, S to C grade. Productionfrom the initialmining operationat Shidiyawill be minimum 73/75 TCP, followingdry screening.
2.10 Mining at E1 Hassa and El Abiad has traditionallybeen by mobile (truck and shovel) equipment. JPMC continue to employ local contractors effectivelyto supplementits own mobile equipmentfleets. The overall strippingratio at El Hassa/ElAbiad continuesto deteriorateannually as remainingore bodies lie at greater depth. The overallstripping ratio for operationsin 1988 was 10.5 m3 of )verburdento 1 m3 of phosphaterock. To reduce unit excavatingcosts, JPMC has been increasingeffectively its dragline fleet and this has not only reduced unit mine operatingcosts but also has facilitatedthe extractionof phosphatethat could not be recovered economicallywith traditionalmine equipment. Mining at Shidiya commenced under the first loan in 1989, with the transfer of a small fleet of mobile equipmentfrom existingmines and has been progressivelysupplemented by mobile and auxiliaryequipment under the first loan, procurementof which is completed. Erection of the two draglinesto be financedunder the first loan and which will be the primary overburdenremoval equipment, commenced June 1989 and these units are expected to be in serviceOctober 1990, as scheduled.
2.11 ABenefLciatio.At El Hassa and El Abiad, ore is trucked and conveyed to crushing/screening stations and then conveyed to beneficiation plants. Screened undersize (70/72 grade) is dried to produce S grade rock product. Undersize (66/68 grade) is fed to log washers, slurrifiersand wet screens. Undersize from the wet screens is agitated and fed to hydrocyclones,where overflow (shimes)are rejectedand underflowfed to centrifugesto produce phosphatecake. Cake moisture is reduced by drying to produce 73/75 C grade phosphateproduct. At Shidiya,A2 ROM ore is trucked to a mobile crushing/screeningplant where it is sized, producinga dry (less than 2% moisture)minimum 73/75 rock product.
2.12 FertilizerODerations. JPMC fertilizerproduction is locatedat the Industrial Complex at Vadi AI. Aqaba. The plant was engineered and constructed under a turnkey contract by the former Jordan FertilizerIndustries (JFI - now absorbedby JPMC) in 1981/82. The plant was designedto produce 740,000 tpy diammoniumphosphate (DAP) and 59,000 tpy 2/ phosphoricacid for export. Plant operationswere beset by technicaldlfficulties from the outset. The plant was to consume 1.3 mtpy 73/75 phosphaterock at full production. Followingthe technicaldifficulties, rock feed was adjusted to a mix of 70/72 and 73/75 grades. DAP is the principalfertilizer product. A small quantity of excess phosphoricacid is exported,as is the aluminiumfluoride, a process by- product. Export levels are tabulatedbelow.
2/ Tonnes of P2 05, at 54S concentration. - 7 -
Jordan- FertilizerProduct SEort DAP 1/ Phos. Acid Al. Flouride (.000tonpes) 1983 365.1 - 1984 548.4 - 1985 508.8 18.0 6.4 1986 558.9 16.0 12.5 1987 565.5 10.0 11.0 1988 626.4 7.7 16.2
I/ Design Capacity - 740,000tpy Source.JPMC Annual Reports and 1988 FeasibilityStudy
2.13 The plantis currentlyoperating at about 74* of design capacity, compared to a typical capacity utilization of 90-95% at most worldwide fertilizer plants. Although during initial years of operation, JFI staff were in an unavoidable learning process in a totally new and sophisticated industrialcomplex, operational and maintenanceprocedures are now satisfactory and managementof the plantby JPMC is efficient.Markets and marketinghave not and do not representany limitationat projectedproduction levels (paras. 3.4 and 3.21).
2.14 The plant continues to be constrained by technical difficulties and deficiencies and cannot be expected to reach higher than about 75% capacity utilization on a sustainable basis, without debottlenecking of the facility. Technical problems are mainly concentrated in the phosphoric acid plant. This plant is one of the largestsingle-train units operating in the worldand has been designed on the basis of a relatively high grade Jordanian rock feed. Although the quality of the rock feed has been adjusted, there appears to be no relationship between the lower quality feed and past or present low production performance.Output limitations are principally(i) shortfallsin plant design,which limit achievable name-plate capacity; (ii) overestimated operatingfactor assumptions for the varioussections of the phosphoricacid plant;and (iii)designed inadequacies and restrictionsin the plant'scooling pond facility.The combinationof thesefactors is the over-ridingreason for the plant'sinability to reachdesign output levels. In particular,(i) the reactionsection is undersized;tests undertaken by JPMC indicatethat the reactionvolume should be expandedby at least80% to producethe required amountand concentrationof filteracid (on an instantaneousbasis); (ii) the intermediatefilter acid storagecapacity is limited, with a residencetime insufficientto permitproper acid desaturationand cooling;(iii) the concentrationsection capacity is basedon a high operatingfactor and thereis inadequateevaporative capacity to offsetthe low concentrationof the filter acid; (iv)the concentratedacid storagecapacity is limitedand the purificationprocess (for export acid) poses operational difficulties; and (v) the cooling capacity of the cooling pond loop is insufficient - the pond water return temperature is too high, restricting the condenser capacity and the productionrate. - 8 -
2.15 In addition, JPNC faces certain problems in the selection of materials and equipment.The selectionof graphiteblock exchangersfor the dilutionof sulphuricacid and for the concentrationof phosphoricacid, althoughwidely adoptedin similarplants worldwide, have not provedentirely satisfactory for process reasons and considering the in-house capability to properly maintain such sophisticated equipment. 2.16 The downstream DAPplant could produce at design capacity if restrictions to phosphoric acid concentration and storage were removed. Some mechanical improvements are necessary to reduce productioncosts and improve productquality, particularly the granulesize rangeand cakingtendencies. No problemsexist in the sulphuricacid plantwhich appearscapable to supply110% of designcapacity. 2.17 Infrastructr. Water supplyfor potableand industrialuse at the three existing mines is tapped from wells and is more than adequate. Electric power is provided from the grid of the Jordan Electricity Authority (JEA). JEA have completed installation of transmission lines to, and a sub-station at Shidiya and the lines were energized in October 1989. Workshop and warehouse facilitlesat El Hassa and El Abiad provide comprehensive maintenance and spare partsfacilities that securehigh levelsof mine equipmentand beneficiation plantavailability that are comparable to any international standards. Provision for consignment stocking of mine equipment spare parts at Shidiya has been completed and a temporary workshop has been constructed. The mines and beneficiation plants at El Hassa and El Abiad are well connected to road and rail transport networks to Aqaba. Th- Ministry of Public Works have completed construction of an all weather road :rom Shidiya to the Ma'an - Saudi Arabia Highway and planned phosphate productitn now has permanent access to the road network to Aqaba.
E. Markets and Marketing 2.18 JPMChas its traditionsas a miningcompany, developing phosphate deposits for the purpose of exporting rock products to countriesproducing phosphate fertilizers and requiring rock feed for their processing plants. With the acquisition of JFI in 1985, JPMCbecame responsible for the production and export of fertilizer products (primarily DAP). In volume terms, JPNC remains, primarily, a phosphaterock exportcompany. However,revenues from fertilizer productand by-productsales (US$142 million gross in 1988)are now significant comparedto thosefrom rock productsales (US$211million gross in 1988)and will grow in value followingcompletion of rehabilitationof the JPMC fertilizerplant. 2.19 JPMChas found strong markets for phosphate rock in Asia, East Europe and the Far East, due to its geographic proximity to these markets, compared to major competitors. Eastern Europe is the largest regional consumer of Jordan rock, absorbing some 40% of JPMCexports (Yugoslavia, Romania, Poland, each about 10% and Turkey 5-10%) and Asia is the second largestmarket, taking about 25% (India20%, Pakistan5%). These two regions have traditionally represented65-75% of Jordan's markets, with the Far East taking an additional 20-25%(Indonesia 8-10S, Taiwan, Japan, each 4-5%),(Annex 2-2). Other consumersare on a sporadicspot market basis - the Americas(Mexico, Canada), - 9 -
Australia, New Zealand, and Africa (Tanzania). JPMC rock export performance in recent years iR shown in the table below. Jordan - PhosohateRock Exportsby Re"ion ,000tonnes)1/ 1984-88 1984 19i8 1198 19881 Average Growth Rate % pa Asia 1171(24.9) 1337(29.0) 1325(25.5) 1432(25.8) 1471(25.3) 5.9 E. Europe 1778(37.9)1650(35.8) 2012(38.7) 2510(45.3) 2608(44.9) 10.1 Far East 1182(25.2)1224(26.5) 1353(26.0) 1245(22.4) 1407(24.2) 4.4 W. Europe 451 (9.6) 333 (7.2) 398 (7.7) 276 (5.0) 289 (5.0) -10.5 Others 113 (2.4) 67L1.5) 110 (2.1) 81 11.5) 36 (0.61 -25.0_ Totals 4695(100.0)4611(100.0)5198(100.0)5544(100.0)5811(100.0)5.5
1/ Figures in parenthesisare exportsas a percent of total JPMC rock exports.
Source: JPMC MarketingDepartment statistics
2.20 JPMC has traditionallyshipped phosphate rock to 20-30 countrieseach year. However, more than 80% of total exports are absorbedby nine countries: India and Pakistan (Asia);Yugoslavia, Turkey, Poland,and Romania (Eastern Europe);and Indonesia,Taiwan, and Japan (Far East). The historic importsof Jordan rock by these countriesare shown in the Table below. The overall growth rate over the 1984-88period has been a healthy 9.0% pa. Average annual growth in individualcountry markets is strong - India (8.7%),the primary consumerof Jordan rock, Yugoslavia (19.9%),Turkey (40.2%)and Poland (25.3%), with demand diminishingsomewhat in Pakisten.Romania and Japan. Sales in Western Europe,an area where JPMC has no specific freightadvantage, have declinedover the 1984-88period from 10% to 5% of total JPNC exports.Sales in the Americas,Oceania and Africa have been sporadicspot market sales of small quantity. - 10 -
Jordan - Main Phosphate Rock Consumers by Country 1984-88 1984 JI85 128k 1987 1988 Av. Growth Rate & pa Asla India 812(17.3)968(21.0) 960(18.5) 1138(20.5) 1134(19.5) 8.7 Pakistan 266 (5.7) 246 (5.7) 251 (4.8) 232 (4.2) 234 (4.0) -3.2 E. Europe Y'slavia 342 (7.3) 233 (5.1) 571(11.0) 593 (9.8) 707(12.2) 19.9 Turkey 169 (3.6) 171 (3.7)215 (4.1) 492 (8.9) 653(11.2) 40.2 Poland 225 (4.8) 333 (7.2)424 (8.2) 899(16.2) 555 (9.6) 25.3 Romania 861(18.3)684(14.8) 590(11.4) 503 (9.8) 532(12.2)-12.8
Par East Indonesia 362 (7.7) 445 (9.7) 518(10.0) 394 (7.1) 518 (8.9) 9.4 Taiwan 217 (4.6) 177 (3.8)225 (4.3) 289 (5.2) 286 (4.9) 7.1 Japan 300 (6.4) 311 (6.8)286 (5.5) 317 (5.7) 251 (4.3) -4.6
Totals 3288(70.0)3322(72.1)3789(73.0)4575(83.2) 4636(82.8) 9.0
Source:JPMC Annual Reports and MarketingDepartment Statistics.
2.21 Throughoutthe 1970's and early-mid1980's, JPMC followedan aggressivephosphate rock marketingpolicy taking advantageof geographic position and consequentfreight advantages. Within the last 1-2 years, JPMC has recognizedthe benefit of Jordan developingstability in relation to the interestsof other major worldwidephosphate producers. In 1988, JPMC implementeda more conservativemarketing strategy, focusing on maintaining market share in establishedmarkets and avoiding spot market sales, and focusingmore on overall companyprofitability from rock sales rather than on export sales volume and revenue. This strategy,recognizing the position of other producersand the world supply/demandbalance, is a sensibleone, and will enable Jordan to both secure its market position and to continue its policy of expansionin relation to the plans of its long term customers, particularlythose located in Asia and the Far East.
2.22 JPHC produce primarilyDAP fertilizerat its fertilizerplant at Aqaba, (see part 2.12). Excess phosphoricacid not required for DAP manufactureis exported and aluminiumflouride is produced from processby- product and exported. The export of these products is nominal by world standards and JPKC has not faced any diffictlty in penetrating export markets. 2.23 Since the acquisitionof JFI, JPMC have maintaineda diversified fertilizermarketing policy with the objectiveof.maximizing sales revenues. Sales have been on the basis of annual or bi-annualnegotiations (India and Saudi Arabia), internationaltenders (Italy and Ethiopia),and spot market.Key DAP markets have been Asia (Indiaand China),Europe (Franceand Italy),Africa (Ethiopia)and Saudi Arabia (see Table below). - 11 -
Jordan - DAP exports (000 tonnes)
12i6 1987 198 198 1! M1
India 174 - 187 308 150 China 78 77 - - Pakistan - 196 - - 100 France 90 42 - - - Italy 89 98 91 - 50 West Germany - - 79 - - Ireland 6 16 - - Ethiopia 45 - 87 94 120 Tanzania 34 - - - - Saudi Arabia 50 60 94 22 100 Vietnam - - 28 -
Others A/ - 86 43 28 100
Totals 560 565 626 452 g/ 620
A/ Planned. bJ Periodic sales to Malaysia,Japan, Thailand,Philipines, Belgium, Yugoslavia,Greece, Kenya, Burundi,Reunion, Nicaragua,and Lebanon. sl Sales through September1989.
Source: JPMC MarketingDepartment Statistics.
2.24 India has traditionallybeen a leading customer for JPMC's DAP productiondue to its geographicproximity. Jordan has not sold DAP to China since 1987 due to China'smore recent purchasingpolicies. Saudi Arabia has been a dedicatedcustomer. Since the start-up of DAP manufacturingplants in Morocco in 1988, Jordan's competitiveedge in Western Europe is being eroded. JPMC's marketingplan for DAP in 1990 includesanticipated annual contracts with it's major long-termcustomers; India, Ethiopia,and Saudi Arabia, expected to take 150,000,120,000, and 100,000 tonnes respectively. JPEC expect to be able to supply Pakistanand Italy, 100,000 and 50,000 tonnes respectively,through internationaltender, and to disposeof 100,000 tonnes on the spot market.
2.25 In additionto DAP, JPEC exportsexcess phosphoricacid, and aluminium flouride (producedfrom the process by-productfluo-silicic acid). These products are of nominal quantityand are exported to aluminiumsmelters located in Egypt, Bahrain and Dubai. These Middle East export markets are expected to continue to provide a profitablebonus to JPNC's fertilizerplant operation. - 12 -
F. SsctorDevelopment 2.26 Following the acquisition of responsibility for fertilizer production and export, JPNC appreciates that, although its traditions are as a mining company, It now must focus on improving the vertical integration of its mining and fertilizer operations and maximizlng the added value of its products. The trend worldwide of major phosphate producers is to utilize low grade non- commercial phosphate rock in fertilizer manufacture and to maximize in-country processing of final and/or intermediate fertilizer products. 2.27 The fines content of phosphate rock produced at JPMCmines, although *ofrelatively high quality, is essentially non-tradeable because its export can create technological (fertilizer processing) and environmental problems for customers. JPMChave undertaken bench scale and pilot plant tests to evaluate the use of the phosphate fines in the Aqaba fertilizer plant. This research program has produced very encouraging results. Commercial scale tests are now being planned. JPKC has initiated a program for de-dusting of phosphate rock at the existing mines. The collection and utilization of phosphate fines at the Aqaba fertilizer plant will not only enhance the economics of the phosphate sector operations, but will also substantially reduce phosphate dust pollution at the port of Aqaba. Granulation and pelletization tests have been successfully completed and a study of the economics of transporting and utilizing compacted vs. noncompacted fines is now being finalized. 2.28 JPMCappreciate that as a major rock exporter and a marginal fertilizer producer, it is not maximizing the added value of its products and is exposed to fluctuations in fertilizer products. During the last 18-24 months, the company has been exploring options to diversify fertilizer operations. It has discussed joint ventures with various countries including India, Pakistan, USSR, Japan, Turkey, United Arab Emirates and Saudi Arabia, whichare in variousstages of negotiation. These discussions have focused on the development of phosphoric acid facilities in Jordan to supply fertilizer plants operated by joint venture partners. The discussions thus far anticipate JPMCtaking responsibility for manufacture of phosphoric acid (with rock feed from JPMCmines) but as a minor shareholder In the joint venture companies to be established. Discussions with three Indian fertilizer companies are in an advanced stage of regotiations and the Government of India has indicated a willingness to underwrite the phosphoric acid supply to the state companies. Such joint ventures arrangements have the potential benefit for JPMCof a captive market for a portion of their rock production and the benefit for the joint venture partner of a captive and guaranteed supply of phosphoric acid at a negotiated price, thus freeing Indian fertilizer manufacturers from reliance on spot market purchases of phosphoric acid at prices that have historically fluctuated widely. Another jointventure discussion foresees the option of JPNC developing a NPK compound fertilizer plant at Aqaba, either by modifying the existing plant or by developing a new plant adjacent to the existing facility. This option is attractive since Jordan produces both phosphate and potash and has access to ammonia at attractive prices. The added value would be significant but the market for NPK is more specialized and narrow than DAP. 2.29 JPNC's sector development strategy, to increase vertical integration of its mining and fertilizer operations and to secure additional and wider - 13 -
markets, is sound. Potential joint venture operations with overseas customers for the production in Jordan of intermediate or finaL fertilizer products are particularly attractive and will be pursued vigorously by JPMC in the coming months. Any future joint venture equity position proposed by JPMC would be reviewed by the Bank under the investment covenant of the first loan.
G. Accounting and Artangements for Audit 2.30 JPMC's accounts are satisfactorily kept and accounting systems and procedures of the mining and fertilizer units are fully integrated. The company's accounting staff are qualified and bookkeeping is efficient. JPMC produces a full set of financial statements every quarter, and the unaudited financial statements are available 2 months after the end of each fiscal year. The company's accounts are audited every semester by qualified external private auditors applying internationally accepted standards. JPMC prepare unit and consolidated accounts. Agreement was reached with JPNC during negotiations that separate unit and consolidated company accounts will continue to be prepared and audited by auditors acceptable to the Bank, and that audited financial statements will presented to the Bank within 6 months of the end of each fiscal year.
MII. THE MARKET FOR PHOSPHATEFERTILIZERS AND PHOSPHATEROCK
3.1 The proposed Project will increase Jordan's phosphate rock export capacity by 1.5 mtpy by 1996, representing less than 1.0% of projected world rock production in that year and 3% of anticipated world trade. This additional rock production will provide for the rock feed requirements to the JPHC fertilizer plant at Aqaba. Additional rock exports will be absorbed by the expanding Asian and Far Eastern markets and will partially replace closed and depleting mines in the Oceania area. The proposed Project will also increase export of final and intermediate fertilizer products and process by-product, but JPMC's world market share will continue to decline and JPNC will remain a- fertilizer exporter of nominal quantities. Phosphate rock prices are forecast to continue to rise modestly in real terms from recent levels and fertilizer prices are projected to decline nominally in real terms, due to the long-term industry investment and production response to the higher fertilizer prices of the 1988-89 period. Jordan's mine production costs are projected to remain competitive with other phosphate rock producers. For these reasons, marketing does not represent a major risk for the Project or JPMC as a company.
3.2 The phosphate world market is important to consideration of the Project for three inter-related reasons. Firstly, the incremental Project production must be readily marketable without disruption to the world market and without major market risk. Secondly, world market projections impact the economic justification of the Project through forecast rock and fertilizer prices. Thirdly, projected rock and fertilizer prices affect JPMC's future financial position and long-term viability as a company. - 14 -
A. PhogshateFertilizer World Demand/Supply
3.3 The predominantuse of phosphaterock worldwide is as a raw material input for the productionof phosphatefertilizers. Accordingly,the upper limit to the market for rock is the supply capacityof fertilizerproducers. World demand for phosphatefertilizers is projectedl/ to grow by 138 from 1987/88to 1992/93, approxim-tely2.6% pa, and by 8.3.6from 1993/94 to 1997/98, approximately1.60 pa, somewhat slower than the annual growth of 3.2% between 1982 and 1987 (see Table below and Annex 3.1). Stagnatingdemand is particularlynoticeable in Western Europe,where phosphate fertilizer consumption is expected to remain constant through 1992/93and decrease through 1997/98, and North America, with growth of only 1.1% and 0.85% pa through 1992/93 and 1997/98,respectively. In spite of this generalweakening, growth in fertilizer demand in Jordan's natural market areas is projected to remain strong. Demand in Asia/Far East and Eastern Europe,regions where Jordan has a demonstrated competitive (freight) advantage, is projected to grow at a 4.5% and 2.48 pa, respectively,over the 1988-93 period.
Jordan - World Suxnly/Demandfor PhosnhateFertiliz (in million tons P205)
Growth rate g.a- Demand 1l987t8 1992/93 1997/98 1988-92 1992-97
Vest Europe 5.0 5.0 5.0 0.0 0.0 Eastern Europe 11.4 12.8 13.5 2.4 0.9 Asia/Far East 9.4 11.8 13.9 4.5 3.4 Africa 0.7 0.8 1.0 4.6 3.3
World 35.8 40.8 44.2 2.6 1.6
ProductionPotential
World 38.8 42.5
Source: Bank/UNIDOFertilizer Working Group.
3.4 Phosphatefertilizer production capacity closely matched world demand until demand-drivenfertilizer price increasesin 1974 induced investmentin new productioncapacity and resultantproduction overcapacity. Until the mid- 1980's fertilizerproduction overcapacity was of seriousproportions. However, the lack of furthernew investmentin fertilizerproduction is slowly reducing overcapacityand continueiddemand growth is projectedto reduce the gap from its recent 2.9 mt (P205 equivalent)to about 1.5 mt by 1992. World supply potentialof P205 is projected to grow more slowly (1.86%p.a.) than demand over the next five years, due to the remainingindustry overcapacity. However, fertilizerplant capacity utilizationrates are expected to increase,causing the demand for phosphaterock to grow faster than the rate of growth of supply potential. The geographicaldistribution of increaseddemand for phosphate
I/ World Bank, International Economics Department - 15 -
fertllizeris mainly towardsthe developingcountries where fertilizer applicationrates are still relativelylow and agricultureis an important growth activity (Annex 3-1). It is projectedthat necessaryagricultural growth will require sustainedincreases in fertilizerconsumption especlally in Asia and the Far East (particularlyIndia, Pakistan,and Indonesia)where Jordan is well situatedgeographically to take advantageof freight rate differentials.
B. World PhosnhateRock Demand/Sunulyand World Trade
3.5 The productionand supply of phosphaterock depends on (i) the demand for phosphate fertilizers,(Li) mine capacity and (iii) mine exploitation rates. The amount of phosphaterock suppliedfor export depends on the total productionof rock and the degree of processingdone in the country of origin (domesticconsumption). Although thietrend among worldwidephosphate producers is to develop in-countryfertilizer process plants to maximize value-added, JPNC currently exports the majority of its phosphate rock production because of its traditions as a mining company and its historicalbase of established relationships with fertilizer manufacturers.
3.6 Demand for phosphaterock is forecastto grow at approximatelythe same rate (2.7% pa) as the demand for phosphate fertilizers,increasing by 57 million tonnes during the period 1988-2000(see Annex 3.2).
3.7 Forecastsof rock supply (see Table below and Annex 3.3) project rock productiongrowing also at 2.7% pa, somewhatslower than the annual growth rate from 1970-87of 3.6%, but recoveringfrom the productionstagnation in 1985 and 1986. A significantproportion of the expectedgrowth in rock productionis to feed expandingdomestic fertilizerindustries in countriessuch as Morocco, China, and the US. Rock productioncapacities are forecast to diminish in certain countries; production has already ceased in Christmas Island and the mines in Nauru are expected to be depleted by the mid-1990s. In the US. the high production costs of new mines are expected to inhibit the creation of new capacity at prices near or below their current levels and the depletion of existingmines is expected to begin to reduce U.S. capacity by 1995. Rock productionat the Soviet Union'snorthern mines is expected to diminish. - 16 -
Jordan - World PhosohateRock Production.197Q-2000 (milliontons)
Growth rate per annum 12ZQ 1980 1286 l287 1222 1!2M 2Q 1987-2000 Industrial 35.1 52.5 39.6 41.7 44.2 47.5 51.0 1.5% E.Europe 17.6 25.0 33.2 33.6 35.5 38.6 41.8 1.7% Asia 3.4 15.9 22.6 20.9 24.6 30.3 36.8 4.4% Africa 19.5 33.3 36.8 37.8 42.2 51.8 65.0 4.3% Oceania 3.5 3.4 2.3 2.2 1.9 1.4 .9 -6.6% Total 80.8 135.4 141.9 146.1 158.2 180.6 207.5 2.7%
Source: IFA Annual PhosphateRock Statistics (Actuals) World Bank, IEC DepartmentProjections, November 1988.
3.8 The major worldwidephosphate rock producersare planning varying levels of expansion in phosphatemine capacityover the coming years, notably:
(a) Soviet Union. In recent years, the USSR has exportedquantities of phosphaterock to EasternEurope and importedphosphate fertilizers. However, indicationsare that the level of exportswill be reduced in favor of domestic consumption. Total phosphaterock productionis projectedto increase by 5 mpty by 1995;
(b) China. China has plans to be self sufficientin phosphaterock productionby the year 2000 and has severallarge mines under plan that would increase their productioncapacity to 16 mtpy in 1995, an increaseof about 4 mtpy; (c) Moroccg. The output of Moroccan mines is expected to grow by 10 mtpy by 1995 to provide raw material input to fertilizerplants being developed and planned; and
(d) Latin America. Brazil and less significant Latin American producers (Peru,Mexico) have plans to increaserock productionfor an overall 1-2 mtpy regionalproduction increase.
3.9 World trade in phosphaterock is essentiallyinfluenced by phosphate fertilizerproducers without, or with inadequatedomestic phosphate rock supply. The trend of worldwidephosphate rock producersto process domesticallyto increasevalue-added content, although temporarilyarrested in the mid-1980'sdue to falling fertilizerprices, is expected to continue. Demand for phosphaterock importsis projected&/ to increaseby 9.2 mt during the period 1988-2000,a growth rate of 1.6% pa.
i/ World Bank, International Economics Department. - 17 -
C. Phoa_hte Rock and FertilizerPrices 3.10 PhosghateRock. The pricefor phosphaterock relativeto overall priceof manufacturedgoods has been on a gentlelong term declinesince 1960 exceptfor brief priceincreases in 1974-76and 1980-81(Annex 3-4). The long term floorof priceshas been set by marginalproduction costs in the U.S. and fluctuationsabove that leveldetermined by specificmarket conditions. 3.11 In 1987,phosphate rock pricesin real termswere at theirlowest levelsince 1960 havingfallen progressively since the brief recoveriesin 1974-76and in 1981. Through1988 and the firstquarter of 1989,strong increasesin demandleft the marketsufficiently tight to allowprice increases of aboutUS$5-10 per tonnethat elevated the FOB Casablancaprice of Moroccan rock to in excessof US$41per tonne. Major inventory(phosphate rock stockpile)reductions at severallarge US mines alloweddeliveries to exceed productionin 1988by severalmillion tons. Pricesare expectedto continueto remainstrong in the short-termas demandappears to be robustand supply conditions are expected to remain tight in some of the major producer countries (USSR, China). Over the long-term, real prices are projected to increase nominally at about 0.6% pa, 1991-95, and 0.5% pa, 1996-2000. These price forecasts are based on conservative assumptions and actual export prices realizedby JPNC during1989, and are lowerthan thoseforecast by the Bank (seeAnnex 3-4,pages 67-68).
Jordan- PhosnhateRock Price Forecast (US$/ton, FOB Casablanca,70 8 TCP)
12li 198 12A1 12a1 1990 1995 2000 current$ 33.9 34.0 31.0 36.0 38.5 50.4 61.7 Constant1988 $ 47.7 40.9 34.6 36.0 36.8 37.9 38.8
Source:Bank staffestimates.
3.12 Jordan has traditionally captured a price premium for its export rock due to its relativelyhigh quality (TCP grade and low level of rock impurities) and consequentoperating cost savingsavailable to phosphatefertilizer producers.FOB Aqabaprices have exceededFOB Casablancaprices, in some instances.The beneficiationplant component of the Projectwill producetwo rock products,one of whichwill be an exceptionallyhigh 75/77grade that will commanda price premium. 3.13 Fertilizers.Although historically subject to short-termcyclic fluctuations,phosphate fertilizer prices declined progressively 1980-86, for example,DAP fell fromUS$213 to US$130per tonneover that period,a decline of 61%, in constant terms. Due primarily to strong US demand and reduced exports,prices increased strongly in real terms from 1987. In early 1989, bulk DAP was sellingat a priceUS$215 per tonne (FOBAqaba), but fell under short-termfluctuations to US$165per tonnein mid-1989.Phosphoric acid prices jumpedas high as US$480per tonnein somemarkets in mid-1989.The general upwardtrend in fertilizerprices should increase the fertilizercapacity - 18 -
utilizationin the short-term,and hence the near-termdemand for phosphate rock. In the longer term, phosphatefertilizer prices are projectedto decrease at 0.1% pa, 1991-95and 0.7% pa, 1996-2000.
D. The Market for JordanianPhospbate Rock and Fertilizer
3.14 Phosnhaterock. Jordan's rock exportshave increasedprogressively since the middle 70's, ia spite of generallystagnant global market conditions. Through competitivemarketing and pricing strategiesJordan's exports grew at an average 13% pa from 1975 to 1988. Jordan managed to significantlyincrease its share of world phosphaterock exports from 2.5' in 1975 to 13.8% in 1988.
Jordan - Exportg and Market Share. 1975-88
Growth rate 1975~ 19802 1985 197 I _er annum Exports ('OOOt) 1,112 3,612 4,611 5,541 5,811 13.6 % Market Share ( %) 2.5 6.9 10.0 13.4 13.8
Source:JPMC Annual Reports
3.15 Cash operatLig costs at the existingphosphate mines in Jordan are in the same range (US$15-20per tonne FOB basis) as the major high-volume, low- cost phosphateexport competitors,Morocco and the US. As existing higher cost mines (El Hassa and El Abiad) are phased out over the coming 15 years and replacedby successivedevelopments at Shidiya,cash operatingcosts at JPMC mines will approachthe lowestworldwide. However, the new Shidiyamine and beneficiation plant developmbnts will bear relatively high capital recovery factors and production costs are expected to remain competitive with other low- cost producers worldwide.
3.16 Because of its geographic location, Jordan has significant freight advantage in relation to its competitors, for rock exports to expanding phosphate fertilizerregions and countries- Asia (India),the Far East (Indonesia),and to a lesser extent, EasternEurope (Yugoslaviaand Turkey). Followingrecent increasesin freightrates, Jordan currentlyhias a freight advantageof a minimum US$10 per tonne into India and many areas of the Far East and is competitive with Morocco into certain Eastern European markets. Jordan has priced its rock exportsessentially on a net-backbasis, sharing any freight advantage with its customer (importer) and has been able to place its rock on a CIF basis competitively with the next best placed rock producer.
3.17 Jordan currentlycaptures only 30% of the total Asian and Far Eastern market, 19% of imports into East Europe, and remains a minor source of imports to Western European, Latin American, and some Far Eastern markets. Into South Asia, Jordan's share was 60%, but was only 19% into the Far Eastern market. Jordan captures a relatively large share of only three Eastern European countries- Poland (26%), Romania (20%), and Yugoslavia (41%). Jordan relies - i9 - on the requirementsof its long-termcustomers in nine countries(para. 2.20 and Annex 2-2),which absorb858 of rock exports. In 1988,domestic rock deliveredto the Aqaba fertillzerplant reached1.0 mtpy. Followingcompletion of the fertilizerplant component of the Project, rock feed requirementswill increaseto 1.4 mpty starting1994. 3.18 The potentialdemand for Jordanianrock has been calculatedon a conservativebasis. The marketshares of 1987,on a countryby countrybasis, are extrapolated (Annex 3-5) and forecastsof totalimports by importing country were used to derive export figures for individual rock producers. In contrast to historically robust growth, projected changes in Jordan's market share have been conservatively assumed to resultonly from the differencesin demand growth rates between regions and from the anticipated reductions in exportsof Nauru and the USSR. Existing rock exporting countries suffer no erosionin marketshare. In thismarket scenario, expected demand for Jordanianrock is in linewith JPMC'sexport forecasts. The stronggrowth patternstems principally from the fact that (i) the marketsin whichJordan has a clearcompetitive advantage (India, Pakistan, Indonesia) have the strongestexpected growth of demandover the next five to ten years (Armnex 3-6),and (ii)the continueddecline in rockproduction in Oceaniawill open potentialnew marketsfor Jordanianphosphate rock. Jordan- PotentialMarket for JordanianRock and ExportTargets (milliontons) 1987 1990 195 2000- (actual) PotentialDemand 5.5 6.3 7.3 8.2 JPMC exporttarget 5.5 6.1 7.2 8.2
Source:Bank estimates and JPMCProduction/Export Plan
3.19 The abovepotential demand is conservativefor severalreasons: (i) Jordanis assumedto captureonly slightlylarger shares of th,% increased demand projected in Oceania and Eastern Europe; the potential market substantially exceeds the exportforecasts; (ii) Jordan's market share,which has been increasing annually in various majormarkets, is assumedto be limitedto 1987 marketshares; (iii) JPKC is actively exploringjoint venture fertilizer plant development schemes with various countries(para. 2.28) that would require Jordanian rock feed;and (iv)all other major exporters (with the exception of Nauru and the USSk) increase exports with the projected market increases, even though some major producers are expected to maintain, or decrease their export levels over the coming years. 3.20 Predictions in the worldwidephosphate rock marketare necessarily tentative but the conservative potential demand forecast indicates that the marketing of the additional 1.5 mtpy phosphate rock product from the - 20 -
beneficiationplant componentof the Projectpresents no major risk. Even under conservativeassumptions, the incrementalrock productioncan be absorbedwithout either destabilizinginternational phosphate market prices or impactingother producers'marketing plans.
3.21 PhosphateFertilizers. Jordan's position in world markets as a supplierof fertilizerproducts is relativelyinsignificant (less than 2% of world demand in 1988), and even followingrehabilitation of the Aqaba fertilizerplant, Jordan'smarket share will continue to decline.Jordan's market share would grow slightly,in the event that fertilizerplant joint venture discussionswith one or more countriesare successfuland new fertilizerplant capacity is developedin the mid-1990's. However, such joint venture discussionsanticipate captive rock supply, and there would be, therefore,no disruptionto the productionplans of existingproducers.
IV. THE PROJECT - INTEGRATEDPHOSPHATE
A. ProjectObjectives
4.1 The proposed project is a second step in the developmentof the Shidiya phosphatedeposit which within the next 15 years will most probably be Jordan's only productivemining aiea, as economicallyrecoverable phosphate reserves at existingmines become exhausted. The projectwill provide relativelycomplex beneficlationfacilities that can be later replicatedto process other low grade phosphateore that will need to be exploitedin future developmentphases at Shidiya,and possibly elsewherein Jordan. In addition,the project will rehabilitatethe existing fertilizerplant at Aqaba, enabling JPMC not only to reach, but marginallyexceed the original fertilizerplant production objectives,thus enhancingthe sector configuration.
4.2 The Project'sprimary objectivesare (i) to aevelopphosphate beneficiation(washing and flotation)plant facilitiesof capacity 1.5 mtpy rock products,which togetherwith rock productionplanned from the Shidiya Phosphate Mine Project (Loan 2902 JO), currentlyunder implementation,will generate 3.23 mtpy phosphaterock productby 1995 and (ii) to rehabilitatethe fertilizer plant at Aqaba and raise the levels of fertilizerexports to 740,000tonnes DAP and 59,000 tomes phosphoricacid. The projectbenef'ciation component will contributeto offset the progressivedecline in rock productionfrom the existingEl Hassa and El Abiad mines and will provide additionalrock feed requirementsof the JPNC fertilizerplant, followingrehabilitation and expansion.
B. Phasingof ShidiyaDevelopment and Sector Strategy
4.3 The phosphatesector strategy,of which the proposed project is an integralpart, is to progressivelydevelop the Shidiyadeposit to (i) compensate for progressivedecrease in productionfrom existingmines; (ii) provide additionalrock feed to the Aqaba fertilizerplant followingrehabilitation and expansion;and (iii) to increaseexport levels of phosphaterock and fertilizer - 21 -
products. Phosphate rock production at the El Hassa and El Abiad mines cannot be sustained at current levels beyond 1992 due to the limited nature of remaining reserves that can be recovered economically. Reserves are expected to be exhaubted at El Abiad and at El Hassa wlthln the next 15-year period. The implementation of the project's beneficiation component will support the necessaryproduction expansion at Shidiyaas a replacementfor productionat existing mines. The additionalphosphate rock productionwill support also the additional phosphate rock feed requirements of JPNC's fertilizer plant, following completionof rehabilitationand expansionunder the project in 1993 (see para. 4.19). Phosphaterock exportswill be progressivelyincreased to 7.0 st.pyby 1994, a relativelynominal increaseof 1.2 mtpy compared to the 1988 export level, requiringa growth of 3% pa. This strategy is presentedin tabular form at Annex 4-1.
4.4 JPEC recognizethat thteconfiguration of their mining and fertilizer operations is unusual because of their traditions as a mining company, and that these operationsare not sufficientlyvertically integrated. Leading competitorsworldwide process, domestically,a much higher proportionof rock (50% in Morocco, 75% in Tunisia, comparedto 18% in Jordan), utilizinglow-grade rock production. JPMC appreciatethat they are not capturingthe potential higher added value of fertilizer processing, that they have limited flexibility in terms of output mix to adapt to changing market conditions,and that they are rather fragile in terms of production margin in fertilizer products. As a result,JPNC has initiateddiscussions with various countries (para 2.28) regtrdingdevelopment of joint venture fertilizerplant operations.Feed to such joint venture plants would require further expansion of operations at Shidiya. The more ambitious production plan and sector strategy associated with this increaseddomestic production of fertilizerproducts is presentedin tabular form at AnMnoA.J.
C. ProiectDescription
4.5 The principalfeaturec of the proposedproject are:
(i) turnkey engineering, procurement, construction, and commissioningof a beneficiationplant with an output capacity of 1.5 mtpy, consisting of dry sreeningplant, washing plant (scrubbers,hydrocyclones, screens, storage tanks, and clay thickeners),flotation plant (hydrocyclones,hydraulic sizers, reagent conditioners,flotation cells, and product filters), dryers,and inter-connectingbelt conveyorsystems;
(ii) turnkey engineering,procurement, construction, and commissioningof phosphateore and producthandling, storage, reclaimand loading facilities;
(iii) engineering,procurement, and constructionof supporting infrastructure including power distribution, water supply, workshops, warehouses, and offices to serve the beneficiation plant; - 22 -
(iv) expansionof the Shidiyatownsite with necessaryutilities; and (v) turnkey engineering, procurement, construction, and commissioning to rehabilitate and expand the existing fertilizer plant at Aqaba.
D. Detailed Features 1. Beneficiation Plant. 4.6 Location.The locationof the Shidiyaphosphate area, climatic conditions,and detailsregarding the absenceof population,vegetation, and water courses,have been describedpreviously. Alternative locations for the proposedbeneficiation plant have been consideredwith due regardto the locationof the adjacentmine area,transport facilities, the projecttownsite, and economicallyrecoverable phosphate reserves in the area. 4.7 Or Reserves.During project preparation for the firstloan, extensivephosphate reserves were identifiedin the lowergrade Al and A3 ore beds,in addition to those in the high grade A2 ore bed which are currently being exploited under the first loan. In situ reserves are more than adequate to assure planned production from the beneficiation plant component of the Project,for in excessof 20 years. 4.8 Mie Developm . Mining equipment procured under the first loan was sized to permit overburden removal and extraction of high and lower grade ore beds. Refinement of mine planning has identified that phasing of mine development requires A2 ore production to reach and maintain 1.75 mtpy to permit1.5 mtpy combinedproduction of Al and A3 rock products. 4.9 Explorationand Research.Extensive sampling of the phosphateore beds has been undertaken during successive exploration campaigns. Within the project area,450 boreholeshave been drilled,82 pits (1.25m diameter)have been dug, and 2 trialcuts and the mine openingcut have been excavated. Extensivebench scaletests have been completedand physical,chemical, and metallurgicalore propertiesidentified. The trialand mine cuts provided severalhundred tonnes of phosphateore for pilotplant evaluation. This researchhas confirmedthat Al rock products(0.82 mtpy 68/70grade) can be producedby washingand A3 rock products(0.66 mtpy 75/77grade) can be producedby washingand flotation,utilizing conventional beneficiation technology.The tablebelow highlights the ore reservesand the resultsof the research in terms of rock product recovery factors, quantities, and grade. The suitability for fertilizer manufacture of Al and A3 rock products from beneficiation has been successfully damonstrated by evaluation of pilot plant samples at international laboratories. - 23 -
Jordan - Phosphate Rock Reserve - Q&antities and Grades
Beneaiciation Ore I Recovery Rgck PrBdu Procoss mt RM WI Im mm L TCP Al Washing 62.6 30 42 9.6 68/70
A3 Wash/Flotation 41.3 38 62 12.9 75/77
Source: JPMC Feasibility Study, November 1988.
4.10 Process Selection. At the conclusion of feasibility work undertaken by project consultantsin 1987, preliminarybeneficiation plant criteria and a flowsheetwere developed. Pilot plant tests demonstratedthe suitabilityof the flowsheet. Howsver, JPMC subsequentlyundertook additional studies, ore sampling,and bench scale and pilot plant tests to investigateoptions to simplify the flowsheet,to optimizeplant design criteriaand to establish a commercial appreciation of the response of A3 ore to flotation. Plant design criteria have been refined following th.ts additional sampling and test program. The criteriadeveloped are necessarilycouservative to ensure that projected plant outputs (productquantities and grades)can be achieved and sustained, bearing in mind the variabilityof RON ore grade and washing and flotation response. The TCP and weight balance, and water/solidsflow diagrams developed are at Annexes 4-2 and 4-3. JPMC are continuingwith further sampling and pilot plant testworkto generateadditional data to facilitatedetailed engineeringby prospectiveturnkey contractors.
4.11 Plant Description. The beneficiationplant process is outlinedin diagramaticform at Annex 4-4, Plant Flow Diagram,and at Annex 4-5, Plant ArrangementDrawing. The process encompassesa scalping stationadjacent to the mine to remove oversizeboulders from the RON ore; a dry screeningplant to remove coarse oversize;a washingplant to remove fine oversizeand clay slimes and to produceboth an Al rock product (68/70TCP) and an A3 washed product for feed to a flotation plant, which will remove silica sand to produce an A3 rock product (75/77 TCP). The detailsof the process are set out below (paras.4.12 - 4.19).
4.12 Scalping Stations. Phosphate ore from the mine will be hauled to two scalpingstations (one for each of the East and West phosphatemine extraction areas) immediatelyadjacent to the mine, where large boulders of indurated marly ore, chert, and limestonewill be removed as 250 mm. oversize. The minus 250 mm. screened ore will be conveyedto stockpiles,according to ore character. Five stockrileswill be developedto separateAl ores with high and low CaO/P205 ratio, A2 ore with high and low chlorinecontent, and A3 ore. The combined active storage capacityof 65,000 t will complementthe sel"c'tive mining operationto ensure a homogeneousore characterfor furtherprocessing.
4.13 Dry ScreeningPlant. Scalpedore will be recoveredvia reclaim tunnels and conveyed 3.0 km. to a high capacity screening plant. The plant will reject plus 12.5 mm. oversizeas waste for all ores. A2 ore will be - 24 - further screened at 6 m. to produce a final 73/75 phosphate rock product for direct shipment to export, as envisaged under the first loan. Four minus 12.5 mm. screened ore stockpiles of individual capacity 13,000 t will be created to facilitate interim blending, two for Al ore and two for A3 ore. 4.14 A2 screened ore will be conveyed to four (10,000 t) product storage concrete silos. Facilities will be provided to accommodate both high grade A2 oversize and A2 product with high (plus 3%) moisture. High grade oversize will be crushed and screened to selectively recover softer high grade A2 portion and A2 ore containing excess moisture will be dried. 4.15 Washing Plant. Dry screened ore will be reclaimed by conveyor from the stockpiles and fed to washing plant feed bins. The washing plant will have four parallel lines, two each for Al and A3 ore where the ore will be scrubbed, screened, rinsed, and deslimed to produce a minus 1 mm. plus 40 microns product. Feed from the storage bins will be passed, at a controlled rate, into drum scrubbers, where with the addition of water, sticky clay lumps will be broken down and harder particles attrition scrubbed (polished). Drum scrubber discharge will be screened at 5 mmand at 1 m. The Al ore will be rinsed (deslimed) to produce commercial grade minus 1 mm. plus 40 microns 68/70 TCP rock product and conveyed to 30,000 T wet rock product storage piles. 4.16 The minus 5 m A3 ore will pass through additional attrition scrubbing. The minus 5 mmplus 1 mmA3 ore (approximately 40% TCP) is rejected to waste. The minus 1 mmplus 40 microns A3 ore will be pumped to hydraulic sizers that will produce coarse (plus 0.6 mm) and fine (minus 0.6 mm) flotation feeds. 4.17 Flotation Plant. The coarse and fine A3 ore (flotation feeds) will be pumped from the hydraulic sizers to two 2,000 t slurry storage bins as feed for final processing by flotation. The flotation feed will be thickened through hydrocyclones and coated with reagents in conditioning (mixing) units. The flotation feed will be discharged into rougher flotation cells which will float phosphate particles. Additional cleaning cells will be provided to further upgrade the concentrates to produce a 75/77 TCP phosphate rock product. Dewatering will be by belt filters and conveyed to wet rock product storage (30,000 t) piles, along-side the Al wet storage piles (para. 4.12). 4.18 Drving Plan. Rock product from the Al and A3 storage piles will be recovered from stockpiles by drag reclaimer and fed to rotary dryers to produce final rock products with less than 3% moisture. 4.19 Uaste Disposal. Oversize products and reject (silica sand) from flotation will be conveyed to nearby waste disposal areas. Clay slimes waste from the washing plant will be pumped to thickeners to recover a substantial portion of the water content for reuse in the plant and the thickened clay will be pumped to a slimes disposal area located 17 kms. from the beneficiation plant (see also para. 4.36). - 25 -
2. Fertilizer Plant Rehabilitation 4.20 The existing fertilizer plant at Aqaba will be rehabilitated under a turnkey contract covering detailed engineering, procurement of equipment and materials, and construction. The rehabilitation will involve debottlenecking of the phosphoric acid plant (reaction/filtration and concentration sections), expansion of acid storage facilities, modification of industrial water cooling facilities, modifications to the DAPplant, and other minor improvements. The rehabilitation will increase effective phosphoric acid production from its current level of 303,000 tpy to 414,000 tpy starting 1994. Capacity utilization of the phosphoric acid unit is forecast to rise from 74% of current design capacity (412,000 tpy P205)to 92% of future design capacity (450,000 tpy). DAP production will increase from 633,000 tpy to 740,000 tpy. The lncreased phosphoric acid surplus production will be exported. 4.21 actign/F[tration. Rehabilitation of this section of the phosphoric acid plant will involve reaction volume expansion and the installation of additional surface or vacuum coolers to enable a production of 450,000 tpy P2 05 as acid at 28% concentration. P205 recovery (rock to filter acid) would increase from 94.0% to 95.5%. Specific consumption requirements of phosphate rock and sulphuric acid would be decreased by approximately 0.5% and 1.5%, respectively. Filter acid storage facilities would be increased to permit acid cooling down to 45-500 C. 4.22 ,Acd ConcentratLo. Rehabilitation of this section of the phosphoric acid plant will involve adding a fourth concentration line, rearranging the sequencing of the concentration phases, and replacing the existing graphite carbon block exchangers with shell-and-tube exchangers. The revamped section will have capacity to produce 450,000 tpy P205 as phosphoric acid at 54% concentration. Concentrated acid storage will be expanded from 12,000 to 22.000 m3 capacity to permit high operational flexibility ln the downstream DAP plant, and to facilitate shipment of excess phosphoric acid in sizeable tankers. 4.23 Coolin Pond System. The industrial water cooling system of the phosphoric acid plant will be radically upgraded. A cooling tower will be constructed to facilitate effective cooling in the fertilizer plant. The existing cooling pond will be by-passed. 4.24 DAPPlant. Modifications to the DAPplant will be undertaken to upgrade the product screen size, to improve cooler effectiveness and to add a DAP coating unit. 4.25 Other minor process and mechanical modifications will be implemented to enhance smooth operation and maintenance of the fertilizer plant complex.
3. Infrastructure Development at Shidiys 4.26 RoAds. The project area has been connected to the Ma'an-Saudia Arabia highway by a 25 km road constructed by the Ministry of Public Works. JPMCplan to contract trucks to transport phosphate rock products to Aqaba due to the - 26 -
rail capacity limitations(see paras. 5.1-5.2). An inter-ministerialCommittee is currentlyreviewing options to transfer responsibilityfor the operatLonof the ARC to JPHC (see para. 5.4) and the Ministry of Planning is investigating the economicsof developinga new road which will pass Shidiya and connect to Aqaba via Disi. The optimallonger-term transport route and mode for project phosphateoutput is being discussedthrough ongoingdialogue with the Governmentand will be addressedthrough the proposed TransportIII project, tentativelyscheduled for Board considerationMarch 1991. For project analysis, transportof phosphateproducts by road, via Ma'an, to Aqaba, has been consideredas a worst case assumption.
4.27 ElectricitySupuly. The total power requirementfor the development at Shidiya is 35 MW, 15 MW for the beneficiationplant, 12 KW for the minesite 2 MW for the townsite,and 6 MW for the water wells. Under the first loan, JPMC signed an agreementwith JEA to provide these power requirements. Necessarymodifications to the Ma'an sub-stationhave been completed,a 55 km. 132 kv overhead transmissionline from Ma'an to Shidiyahas been installedand energized,and constructionof the Shidiya transformersub-station is complete, providing 2 x 40 NW, one unit being availableon standby. JPMC are progressivelyimplementing the necessary33 kv (undergroundfeeder lines) distributionsystems.
4.28 Telecomomications. Project requirementsat Shidiyawill be 400 direct exchangelines. A contract for the supply and supervisionof installationof an electronicdigital exchange, including necessary ancillary equipment,was awardedby JPMC in August 1988. Externaltelephone link with Ma'an will be by IPCM system with minimum 30 channels.An agreementwith the Jordan TelecommunicationsCorporation (TCC) is being prepared in this respect. During the constructionperiod, the existingVHF transmitter/receiverwill be supplementedby direct microwavetelephone to facilitatecommunications between Shidiya-ElHassa/El Abiad/Ma'an/Amman.
4.29 Water SuL.l. Annual demand for water for industrialuse at the beneficiationplant is conservativelyestimated at 4,700,000m 3 based on maximum plant design values. Detailedhydrological investigations undertaken by international consultants indicate that the Amman-Wadi Sir aquifer, located 23 km. north of the plant can supply not only the requirements of the beneficiationplant but also future expansions at Shidiya. The hydrological studies indicate that the aquiferrecharge is 2.1 million m3 per annum and may reach 3.5 million m3 per annum. Gross aquifervolume is estimatedat 16.64 billion m3 of which 500 million m3 is consideredreadily available for abstractionfor Shidiyadevelopment phases. JPMC will drill 12 wells, 2 for standby/reservepurposes, to intersectthe aquifer. The total yield capacity of the wells will be 24,000 m3 per day, well in excess of requirements. Tests have confirmedthat the water quality does not need treatmentfor industrialor potable use. However, for potable use, the water will be treated in first and second stage aerationtanks, and chlorinatedif necessary.
4.30 Well water extractionwill be by 12 pumps (28 litres/second)at an average head of 275 m. The water will be pumped to Shidiya via a 600 mm. pipeline to storage reservoirs. During the constructionperiod, water will be trucked from two existing wells and JPMC have alreadycompleted an access road - 27 - and an elevatedwater storagereservoir for thispurpose, which is currently servingmine developmentunder the firstloan. JPMC have signeda contractfor the installationof overheadtransmission lines to the well sitesand thiswork is plannedfor completionJanuary 1990, well aheadof schedulerequirements. 4.31 Z91=i1te. Townsitedevelopment was initiatedunder the firstloan to providefor requirementsof the mine development. Under the project, the townsite will be expanded to cater for the requirements of the beneficiation plant. Initially,construction will focuson developmentof single-status accommodations to service personnel involved in the construction and for expatriate staff. The previous policy of developing family-status blocks for the longer-term will be continued. Under the project, 70 housing blocks with 420 individual flats will be developed. A local contractor has been in place since September 1988 and is constructing units of a high quality by any international standards. A town center development is included in the townsite plan and will provide mosque, retail shops, multi-purpose center, canteens, a clinic, and sports club and facilities. The townsite development encompasses necessaryroads, streets, water supply and distribution, sewage and rainwater network,irrigation, electricity, lighting, and telephones.The townsite layouthas been adjustedfollowing Bank recommendationsto fit a long-term developmentplan to reduceland use for roads,parking and to minimizetownsite infrastructurecosts.
4. Manwer. 4.32 The manpowerrequirements of the project,including the requirements for the mine developmentunder the firstloan) will be 1100 in an averageyear, at fullproduction. Recruitment has already been initiated for the mine developmentand reached393 personsat end-September1989. Totalmanpower requirementsin the years1989, 1990, and 1991 is expectedto be 490, 750, and 1000 respectively. JPMChas already recruited experiencedpersonnel from its existingoperations for managementand skilled/semi-skilledlevels at Shidiya. Throughthe projectconstruction period and initialbeneficiation plant operations, recruitment will continueprogressively. JPMC faceno difficulty to recruit high calibre personnel. Salaries and fringe benefits are attractive by Jordanian private sector standards. With the closure of Ruseifa mine, and the planned phasing out of El Hassa and El Abiad mines starting in the mid- 1990's,JPMC have highlyexperienced and qualifiedpersonnel at all levelswho are, or will be availableto join the expandingShidiya operation. In addition,excellent and establishedon-the-job training facilities exist in the company. JPMC plan to recruit annual personnel requirements well ahead of needs for appropriateorientation and trainingin existingmines. All project equipmentcontracts will make provisionfor extensivetraining to be supplied by suppliersand turnkevcontractors. The technologyto be used underthe projectbeneficiation component is in use at existingmines (withthe exception of flotationtechnology) and as a consequencenew trainingwill be limitedto flotationtraining by turnkeycontractors and by overseastraining. 4.33 Following rehabilitation and expansion of the fertilizer plant at Aqaba, no additional manpower will be required; necessary training of existing plant personnel will be provided by the rehabilitation turnkey contractor. - 28 -
5. Envronmeta Ioacts 4.34 During appraisal of the first loan and of the Project, potential environmental impacts relating to successive developments at Shidiya and at the fertilizer plant at Aqaba were reviewed by environmental specialists. Potential impacts considered were (i) environmental considerations to be incorporated into the beneflication plant, (il) original environmental provisions at the fertilizer plant, and monitoring of the environment and of occupational health and safety. (LiL) dust emissions at Aqaba port, (iv) environmental aspects of phosphate trucktransport, and (v) environmental aspects of the Shidiya townsite development. 4.35 Shidiya is in a barren desert region which is devoid of sedentary population, vegetation, and water courses. No resettlement issue arises. The region is part of a desert area thatextends into Saudi Arabia covering thousands of square kilometers. The area is traversed periodically by nomadlc tribes and their sheep herds and project development will provide a source of water and supplies to tribes people and a source of possible employment. Wildlife ln the region is essentially non-existent. The fertilizer plant component of the Project involves rehabilitation of an existing plant and no resettlement issue arises. 4.36 Sat. The design of the beneficiation plant has taken full account of the need to limit dust emissions, ,:ecover fine particles, and dispose of slimes and effluents. All vibrating equipment, screens, reclaimers, conveyors and conveyor transfer/discharge points will be enclosed; conveyor speeds will be kept low (2.0 m/s); dust collection devices will be an integral part of procuremuent packages for reclaimers, transfer towers, silos, and drying kllns; and rail and truck loading facilities will be specifically designed to minimsze dust emissions. Fugitive dust from stockpiles Is not easy to control but, stockpiles have been located such that any airborne dust will he carried away from the operating and residential areas. Agreement was reached with JPMCduring negotlations that JPMCwill enforce and monitor the same occunational health and safety standards at the beneficiation plant as are in place at existing beneficiation plants, which have been reviewed and found to be satisfactory. 4.37 Slimes from the flotation plant will be pumped 17 km. and discharged into a natural, and totally barren, depression to the south-east of the project area. The slimes will dry quickly in the ambient temperatures of the desert area and the flocculents (polyacrylamides, sodium silicate and tall oil) mixed with the phosphate rejects and clay particles will be absorbed by the agglomerated solid particles and are biodegradable. 4.38 AgabaFertilizer Plant. The existing plant was engineered to very stringent emission and effluent criteria, based on EPA standards. Few plants exist worldwide of this size with the same high level of environmental protection provisions. The impact of the plant on the environment is minimal and no improvements are considered necessary. Specific environmental protection provisions include (i) dry discharge of phosphogypsum in a controlled landfill 2 km from the plant; (ii) a high degree of water reuse involving a system of interconnected close loops, eliminating industrial water - 29 - effluent discharge to the Gulf of Aqaba; (iii) a sea water loop designed to permit a maximu temperature rise of 100 C between see water temperature and returning sea water flow; (iv) a fluorine abatement unit, which reduces gaseous emissions in the phosphoric acid plant to below 10 grams fluorine per tonne P2 05 ; recovered fluorine is processed in the plant into aluminium fluoride for export as a by-product; (v) a double conversion/absorption sulphuric acid plant which, under normal atmospheric conditlons, limits S02 pollution in compliance with EPA emission standards; and (vi) a DAP dust scrubbing system, which limits the maximumdust content of air exhaust to 35 ug/m3 at normal operating conditions. JPHC continously monitor environmental and occupational health and safety provisions at the plant. Agreement was reached during negotiations that JPMCwill continue to enforce and monitor the environmental and occupational health and safety standards at the plant, to ensure that the standards are maintained in a mannersatisfactory to the Bank. 4.39 Aqaba Port. Under the first loan,the environmental issue of airborne dust generated during the loadlng and unloading of phosphate was addressed and actions agreed to monitor dust emissions and implement a program to reduce the emissions to internationally acceptable levels by 1991. Consultants have been hired, to terms of reference and conditions acceptable to the Bank,and equipment procured, to monitor dust emissions as an i'rItl1P !nvestigatory step in the program. Following physical research into increased vertical integration of its mining and fertilizer operations, JPMChas initiated an Action Plan to collect phosphate fines at its mines and to utilize those fines in the Aqaba fertilizer plant. Research into the most economic method of transporting and utilizing these phosphate fines will be completed by January 1990. The Action Plan program will not only assist to ensure the satlsfactory environmental position at Aqaba port but will also improve the overall economic configuration of the phosphate industry in Jordan. The relevant supplementary letterunder the first loan has been modified to embody the JPIC Action Plan to collect fines at the mines and at the port site. JPMCare in full compliance wLth the schedule embodied in the revised supplementary letter. Further actions in relation to the environmental issue at Aqaba are, therefore, not required under this Project. 4.40 Truck Transgort. Phosphate rock is transported to Aqaba by covered trucks and in container trucks, effectively minimizing dust emission in transit. Truck traffic bypasses the town of Aqaba. 4.41 Shidiya Townaite. Sewage from housing units will be collected and, together with other waste effluents from the townsite, will be fed to a lagoon, the location of which has been fixed with due consideration to Project installation and wind direction. The lagoon system of waste treatment is satisfactory in such a hot and arid climate. 4.42 Based on the above assessments, no serious environmental impacts or worker hazards are expected to result from the Project. - 30 -
6. TechnicalAssistance.
4.43 Under the first loan, extensivetechnical assistance is being provided in a variety of technical, financial and institutional areas including assistancewith preliminaryengineering and bid document preparation for the second Project.
4.44 Specific technical assistance under the Project is limited to the retention of Project Hanagement Advisors to assist with the implementation of the turnkey fertilizer plant rehabilitation contract.An international construction management company, Davy McKee, was commissioned by JPHC in 1988 to assist to define technicalcomponents of the proposedplant rehabilitation: to prepare shortlistsof eligiblecompanies; to evaluatebids received;and to assist in contract negotiations.JPKC are negotiatingan extension to this contract to provide for assistanceunder the Project to review detailed engineeringand design;oversee and expediteprocurement; inspect the turnkey contractor'sdesign and fabricationwork; to supervisethe turnkeycontract and commissioning;and to provide on-the-jobtraining to JPKC staff.
7. Prolct CosUt. 4.45 The estimatedfinancing required for the Project is US$161.7million (JD105.1million), includingphysical and price contingencies,working capital and interest during construction,as summarizedbelow. The base cost estimate is in October 1989 prices. Physicalcontingencies for the beneficiation componentof the Project are calculatedat 10% for foreign costs and at 5% for local costs reflectingJPMC's extensive recent experience with local contracting and the lower level of certaintyregarding off-shore equipment costs. Physical contingencies of 10% for local costs and 15% for foreign costs have been applied to the fertilizer rehabilitation component of the project reflecting the higher level of uncertainty regarding estimates of that turnkey contract cost. Price escalationfor the beneficiationcomponent of the Project has been based on the phasing of commitments and expenditures consistent with the schedule for project implementation (see para. 4.59) and projected local and international inflation rates, assuming that Jordan will maintain the current exchange rate (JD 0.65-US$l.00) in real terms over the 1989-98 period. A domestic inflation rate of 11.8% has been consideredfor 1990, 9.5% for 1991, 7.8* in 1992, 6.5% in 1993, 4.9% for 1994 and 1995, and 3.7% pa thereafter. Internationalinflation rates are projected at nil in 1989, 4.9% pa in 1990-95, and 3.7% pa thereafter. - 31 -
Jgrdan- Shidi!aBenefigiation Prolect - SumaaM of ProsectCoAt A/
l Foreis,n Tot:al Local FEi Zo1 (JD million) (US$ million) BeneficiationPlant EquipmentA/ 4.6 25.8 30.4 7.1 39.6 46.7 Support EquipmentJ/ 0.7 3.1 3.8 1.1 4.8 5.9 Fort. Plant Equipmentb/ 2.4 13.7 16.1 3.7 21.1 24.8 Civil Works & Infrastructure 6.8 8.3 15.1 10.4 12.8 23.2 Dust Control Equipments/ 0.2 1.4 1.6 0.3 2.2 2.5 Engineering& Tech. Assist LA 0. 2_ 2_ LQ BAS2 Cost iLl 53.0 69. 2ILA 11. 1Q6.3 PhysicalContingencies 0.9 6.0 6.9 1.4 9.2 10.6 Price Contingencies 4.1 6.7 10.7 6.2 10.3 16.5
1M&a11led-Co,1t 21.1 65.7 86.7 32.4 101.0 133.5
Incremental Working Capital 0.5 lQ. 15 8 .5 ILl
Project Cost 21.6 75.7 97.3 33.2 116.5 149.7
InterestDuring Construction 0.Q L.8 7. 8 0.0. 12L. 12. Total FinancingRequired 21.6 83.5 105.1 33.2 128.5 161.7
A/ Costs include insuranceand freightcharges, equipmenterection, commissioning,operator training,and an initial inventoryof spare parts. Lumpsumn/ turnkey contract for plant rehabilitation,including engineeringservices, procurement and constructionmanagement a/ Includes incrementalcosts of dust collectorsnot includedin Shidiya Mine Project - Loan 2902-JO.
Sgurce:JPMC Feasibility Study and Bank estimates.
4.46 Cost estimates are based on JPMC's recent cost experiencein procuring similarequipment and works in recent years, updated to October 1989. The estimatedincremental working capitalrequirements are based on additional product and consumablesinventories at 14 days' sales and mining costs, and additionalreceivables and payables amountingto 75 days' sales and 30 days cash costs of production, respectively. The estimate is based on JPMC's actual (1988) working capital structure.
4.47 The total capital cost for the beneficiation component of the project, including physical but excluding price contingencies, working capital and interestduring constructionis approximatelyUS$60 per tonne phosphaterock product which is in line with currentcost estimatesof typicaldeveloping countriesbeneficiation experience worldwide. That componentof the project can be consideredcompetitive with worldwide beneficiation plant investment costs. - 32 -
8. Fluancing Pl-n.
4.48 The financingplan for the project is shown below. Total financing required is US$161.7 million of which US$128.5million or 79.58 constitutesthe direct foreign exchange component. The indirect foreignexchange component is estimatedto be US$19.9 or 12.3% of total cost. The proposed Bank Loan of US$25 million represents19.5% of the direct foreign exchangecomponent, 16.8% of the direct and indirectforeign exchangecomponent, and 15.5% of the total project cost. The financingplan is tabulatedbelow and will be finalized during Negotiations.
Jordan - Integrated Phosohate Project - Financing P1^D
aource IteMs to be Furniohd Locl reigB Ttal
Arab/KuwaitFunds BeneficiationEquip., 9.5 44.9 54.4 Support Equip.,Civil Works/Infrastructure
Fert.Plant. Equip. - 16.3 16.3
IslamicDev. Bank BeneficiationEquip., - 9.0 9.0 A/ Infrastructure
IERD Loan Beneficiation Equip., - 25.0 25.0 Fert. Plant Equip., Domestic JPNC Cash Support Equip., Fert. 2. 7 3- 57.0 Generation Plant Equip., Civil Works/Infrastructure, Dust Control Equip., Engineeringand Tech. Assistance
Total Financing 33.2 HU1.
A/ USll.0 million less US$2.0 million for equipmentunder the first loan.
Source:Bank estimates
4.49 The Government has secured loans from the Kuwait and Arab Funds (KD 8.0 million each) and has initialled additional loanc from the Funds for the Project (KD4.8 million). In addition the Government has secured a US$11.0 million loan from the Islamic Development Bank, of which US$2.0 million has been allocated for equipment under the first project. The effective Arab Fund loan is to the Government at an interest rate of 4.5% and carries a 5 year grace period (starting from the date of first disbursement), followed by 35 semi-aznual repayments. The loan will be onlent by Government to JPNC at 6.0% - 33 - pa, the differencebetween the interestrates being held in a specialaccount for use by JPMC for phosphate/chemical research and developmentprograms to be agreed by the Fund. The loan carriesa commitmentfee of 0.5%,applied after individualirrevocable letters of creditare establishedand will be chargedon a procurement package basis, on the undisbursed loan balance for each package. 4.50 The Kuwait Fund loan in to the Government at 4.0% (3.5% interest on the disbursed amount and 0.5% management fee). Loan repayment starts from September 1, 1993,over 12 years. The loanwill be onlentto JPNC at 6.0%, the differencein ratesbeing held in the same specialaccount with Arab Fund monies. The KuwaitFund loan carriesa comuitaentfee of 0.5% on the undisbursedbalance for L/C's issuedat the requestof JPMC. The initialled additional(KD4.8 million) loan from the Fundsare on the same termswith the exceptionthat onlendingrates are the same as the interestrate to Government. 4.51 The IslamicDevelopment Bank loan is at 8.0% interestrate over 9 years (including2 yearsgrace - startingafter the arrivalof specificgoods at Aqaba or on completionof erection)and with no commitmentor management fee. The IslamicBank loanoffers a 15% discounton installmentsand interest paymentssubmitted on time. 4.52 The proposedBank loanwould be made to JPMCover 17 years includinga 5-year grace period and the Government of Jordan would guaranteethe loan,as under Loan 2902-JO. JPMC would pay to the Governmentannually, a guaranteefee equivalent to 10% of the Bank interest rate on the outstanding loan balance. JPMC wouild bear the foreign exchange and variable interest risk of all loans. 4.53 The Kuwait/Arab Funds and the Bank will parallelfinance beneficiation plantturnkey contracts and will jointly finance a portion of the fertilizer plantrehabilitation turnkey contract. The Kuwait/ArabFunds will financealso supportequipment, certain civil works and infrastructurerequirements. The Islamic Development Bankwill financedryers and the trainloading station. The risk of a shortfall of funds can be considered negligible. Agreement was reached during negotiations with JPHC that the effectivenessof all project relatedloans with the Kuwaitand Arab Funds (which represent approximately 90% of project cofinancing) will be a Condition of Effectiveness of the Bank loan.
9. Pro=urement and Disbursement. 4.54 Prgurement. JPNC has procured all off-shore packages under the first loan utllizingICB procedures approved by the Bank and is familiar with the Bank'sprocurement guidelines and proceduresfor services and goods. Bank proceeds will be utilized to finance two of the five packages to be procured for the beneficiation component of the project. Those two turnkey packages will be procured by ICB following Bank guidelines. Procurement of the turnkey contract for the fertilizer rehabilitation has been undertaken following ICB procedures in accordance with Bank guidelines (para. 4.62). Packages which are suitable for Bank financing (Annex 4-6) have been agreed with JPMC. 34 -
4.55 Contractsfor a total of 3 offshorepackages (US$20.8million - list of main items are given in Annex 4-6) would be awarded followingICB. All ICB packages to be financed out of Bank loan proceeds,will be subject to prior review. This constitutes 100% of the value of all goods to be financed out of the loan.
4.56 Details of procurement of goods and services are shown in the table below.
Jordan - Integrated phosinhate Project - Procurement Arrangements (Installed Cost US$ million) Project Element Proment Method Total IC LI Ote b/
Beneficiation Plant Equipment 51.8 - 7.4 59.2 (21.8)s/ () _ (21.8)
SupportEquipment - 1.5 4.2 5.7
FertilizerPlant Revamp 32.7 - - 32.7 g3.2)gc/ () -)(3-2)
Civil Works/Infrastructure - - 28.8 28.8
Dust Control Equipment - 3.2 3.2
Engineering/Tech.Assist. - (-) 3.9 3.9
TOTAL 84.5 1.5 47.5 133.5 (25.0) (.) (-) (25.0)
A/ Figures in parenthesis are the respective amounts to be financed by the Bank loan. bi Other includes civil works/infrastructure, engineering and dust control equipment to be undertaken under loi-albidding procedures. s/ Individual contract description and estimated costs at Annex 4.6.
Sour-c: Bank estimates.
4.57 DLabursementswill be made against (i) 100% of the foreign and local (ex-factory) costs and 90* of local expendituresfor other items procured locally of turnkey contracts for beneficiation plant packages; (ii) 100% of the foreign cost of directly importedgoods for the fertilizerturnkey rehabilitationpackage. Disbursementswould be made against full documentation except for contractsof less than US$100,000equivalent, for which disbursement - 35 -
would be made against statement of expenditures (SOE) procedure. JPMC would retain the necessaryback-up documentation.To facilitatedisbursement, a revolvingfund would be establishedin a bank acceptableto the Bank with an initialdeposit of US$2.0 million to cover the e-timatedaverage expenditures of about 4 months. The estimateddisbursement figures are shown at Annex 4-7, togetherwith comparison with Reeional and Bankwide industryproject profiles. The estimateddisbursement profile is somewhat steeperthan both Bank and regionalprofiles, reflecting the facts that (i) B&nk financingis limited to major turnkeycontracts, and (ii) JPMC have demonstratedunder the first loan, its ability to process contract invoicesin an expeditiousmanner. The Bank loan is expected to be fully disbursedby June 30, 1995, and the loan closing date shall be December 31, 1995.
10. ProjectManagement and Implementation
4.58 Prolect organization. Projectengineering and design of the beneficiationcomponent of the Project is being carried out by JPMC's Project Department,with technicalassistance mobilized under the first loan. Procurementis being initiatedby the ProjectsDepartment and will be processed by JPMC's Supplies Department,which handles procurementfor all goods and servicesfor the company and which effectively managed procurement under the first loan. Qualifiedengineers from JPMC's existing operationshave been appointedas Constructionand Mine Managers at Shidiya. The ShidiyaProject Directoris accountable to a company Steering Committee comprising the Deputy Managing Directorsand other Directors(Technical, Production, Finance, Supplies)of the company. The ProjectDirector is assisted,as under the first loan, by an Advisory Group which was formed to performdetailed engineering tasks, assisted as necessary by local consultants.
4.59 The organizationchart for constructionmanagement of the beneficiationplant is given at Annex 4-8. A total of 234 personnelwill be involved in constructionexcluding personnel assigned by turnkey contractors. A constructionmanager, operationsmanager, and deputy managers in charge of mining, civil, mechanical,electrical, surveying, and administrationdivisions have been appointedunder the first loan and this constructionmanagement group will be responsiblealso for construction and implementation of the Shidiya beneficiationcomponent of the project. All of these personnelhave long standingconstruction and operationsexperience within JPMC and will reside at the project site and be fully supportedby technical,skilled and semi-skilled workforces. Arrangementsfor project implementationare satisfactory. JPMC recognizethat project control (scheduling,monitoring, expediting and cost control)is critical to the success of project implementationand are finalizingarrangements for the staffingof Project and Cost Control teams. Agreementwas reached during negotiationswith JPNC that staffing of these teams with personnelof experienceand qualificationssatisfactory to the Bank will be a conditionof Loan Effectiveness. JPMC has long experiencein effectiveconstruction management. Beneficiation plant contractsthat are on the project criticalpath will be undertaken by experienced international turnkeycontractors. - 36 -
4.60 Rehabilitationof the fertilizerplant at Aqaba will be carried out under a turnkey contractfor the provisionof all equipmentand materials,and services,for the design, construction,erection, and commissioningof the facilities. JPNC recognizethat their plant operationspersonnel, who are production-oriented,have limited fertilizerplant constructionmanagement capabilityor experience. JPMC will establisha ProjectManagement Unit (PMU) to effectivelydirect implementationof this componentof the Project. JPMC will assign a full-time senior technical staff member as Unit Manager and a group of experiencedengineers, qualified in the various relevant engineering and other (financial/accounting)functions, to direct and superviseproject implementation. To assist the PMU and to developan effectiveproject managementteam, JPMC will engage an engineeringcompany to act as Project ManagementAdvisors (PNA). The responsibilityof the PHA wi'l be to (i) assist JPNC in contractnegotiations, (ii.) assign specialists,as necessary,to the turnkey contractor'soffice to review detailedengineering and design, to overseeprocurement, and to inspectvendor's design and fabricationwork on criticalequipment items, (iii)provide on-the-Jobtraining to JPMC staff assigned to the PMU, and (iv) to assist JPAC staff to supervise the turnkey construction,commissioning and performanceguarantee test runs. The PMA will consist initiallyof 2 project engineerssupported by specialistssuch as a process engineer,a planning engineer,and a MIS/progressreport specialist. About 75 man-monthsof work by the PMA are planned over a 30-monthperiod at an estimatedforeign cost of US$1.0 million. During negotiations,agreement was reached with JPMC that execution of a Project Management Services Agreement, to terms and conditions satisfactory to the Bank, to supervise turnkey rehabilitation of the fertilizer plant, will be a Condition of Disbursement for the fertilizercomponent of the project.
4.61 Project Status. The Projecthas been approved by the Ministry of Planning and is an integralpart of the Government'sFive-Year plan. JPMC has completedpreliminary engineering and has developeddesign criteria for the beneficiationplant componentof the Project.A prequalificationNotice for beneficiationplant turnkey contractswas issuedAugust 31, 1989. A prequalificationquestionnaire, acceptable to the Bank, was issued October 1989 to contractorsresponding to the advertisement.JPMC will submit to the Bank, its evaluationof companiesseeking prequalification, in January 1990. JPMC is in process of finalizingbidding documents for the beneficiation plant contracts. These will be submittedfor Bank review in February 1990 and issued to prequalifiedcompanies in March 1990, accordingto the Project implementationschedule. A procurementNotice for the fertilizerplant turnkey contractwas issued on April 30, 1989. FollowingICB procedures,a lowest evaluated,fully responsive,bidder has been identified. Commercial negotiationswith that bidder are being finalized.
4.62 IilementatLonSchedule. JPMC has completed project preparation and are proceeding with detailed engineering. Agreement on a realistic project implementation schedule was reached during appraisal and updated during post- appraisal (Annex 4-9) and forms the basis for financial and economic analysis. The necessary land required for the project is already allocated to JPMC by Government. Access roads and power supply have been completedunder the first loan. Procurement for water supply requirements(well drilling and supply equipment)and power distributionfacilities will be initiatedJanuary, 1990. - 37 -
Procurement of beneficiation plant equipment will be Initiated In February 1990. CommissionLng of the beneflciation plant is scheduled October 1992. Projectcompletion (full productlon) ls plannedstarting 1995. Contract slgnLngfor the fertilizerplant rehabliltation contract is anticipated February 1990, and commissioning of the rehabliltated plant is scheduled for December 1991.
V. TRANSPORTAND PORT INFRASTRUCTURE
A. LandTrananort Ar&AUgM&.= 5.1 Phosphaterock is transportedto Aqaba from existlngmlnes by both rail and road. Rock destlnedto the fertilizerplant at Wadl II ls transported exclusivelyby truck,avoiding trans-shipment at Aqaba.Phosphate rock from Shidlyawill in the near-termbe transportedby truck,pending a decisionon the constructionof a rail spur to projectarea. HistorLcally,truck transport has been contractedby JPMC to the extentthat rail c.pacLtyhas proved inadequate.JPMC appreciate that economics favor phosphate transport by rail and remainedcommitted to utilizetruck transport only to the extent that rail capacityls limited. Recentstatistics for the transportof rock to Aqabaare tabulated below. Jordan - PhoanhateRock Tran nort to Agaba (million tonnes)
x^¢ Road Rail Total Jby Rail 1984 1.57 3.20 4.77 67 1985 1.83 2.25 4.08 55 1986 2.80 2.58 5.38 48 1987 3.81 2.60 6.41 41 1988 4.45 2.25 6.70 34
Source: JPIC Annual Reports and Transport Department Statistics.
5.2 Transport by rail has proved erratic in terms of annual capacity, due primarily to poor management performance of the Aqaba Railway Corporation (ARC),the poor conditionof existingtrack, and derallments.The overall proportion of phosphate railed to Aqaba has declinedsteadlly. 5.3 Under the Bank'sMulti-Mode Transport Project (Loan 2463-JO), track on criticalsectlons between existing phosphate mines and Aqabahas been renewed, maintenancefacilities have been revamped,and technicalassistance and traininghave been provided to ARC. This should enable phosphate transport by rail to reach increasedlevels, on a sustainablebasis. The proposedTransport III Project could includefor extensionof the rail line to Shidiya. 5.4 Recognizing previous performance deficiencies in the rail operation and that transport economics in Jordan favor the transport of phosphate rock by rail as opposed to truck, the Government decided in 1988,to investigate - 38 -
options to transfer responsibilityfor rail operationsto JPMC. Since the rail operationserves only the phosphateindustry, this decisionhas substantial rationale. Governmentalinter-ministerial committees (includingrepresentation from JPMC) have reviewed a variety of options in this respect. Although no final decisionhas been reached, the Governmentappear presently to favor JPHC purchasingoutright ARC's currentand movable assets and rental of fixed assets. The issue of phosphaterail transportwas discussedduring negotiationsand agreementwas reached that not later than June 30, 1990, or such later date as mutually agreed,the Governmentwill submit proposalsfor the financial and institutional arrangements for the rail transport of phosphaterock for Bank review and comment. To the extent that future rail capacity falls short of phosphaterock transportrequirements, JPMC will maintain truckingcontract arrangements.
B. Aqaba Part
5.5 The Port of Aqaba (see Nap 19921) is operatedby The Aqaba Port Corporation(TPC), an independentpubllc corporation. Phosphate rock is received at the port at two rail and six truck intakesand is loaded to ships via two phosphateberths. The rail and truck intakeshave receivingcapacities of 7.5 and 5.0 mtpy respectively,which far exceed requirements,even following implementationof the Project. The two existingberths (A and B) have a combinedphosphate loadingcapacity in excess of 9 mtpy. This capacity exceeds planned export levels (para 4.3 and Annex 4-1) after completionof the Project, and provides a safety factor needed to accommodateseasonal variation in rock demand and export,and variationsin customerdispatching of vessels for loadingto Aqaba.
5.6 Phosphatestorage at the port is accommodated in six storage sheds with a combined capacity of 341,000 tonnes. The storage facilitieshave been effectivelymanaged through close communicationbetween JPMC mine management and JPMC staff located at the port. With the flexibilityof the port installation,the storage facilitieshave proved adequate.During recent years however, JPMC have faced increasingdifficulty to maintain the storage at or close to capacity due to the erraticperformance of incomingrail system. Stores of phosphatewere only 40-50% full, on average, during 1988. This constrainedJPMC's flexibilityin terms of servicingcustomer needs in 1988 and demurragecharges were incurredand some export opportunitieslost. This transport deficiency can be expected to be gradually removed as the rail operations improve over the coming years following rehabilitation and training under the Bank's Multi-ModeTransport Project. In addition,JPMC concluded additionaltruck transport contract arrangements in 1988 which will balance any ongoing rail deficienciesin the short-term.
5.7 Followingcompletion of the Project, the number of grades of phosphate rock to be stored at Aqaba will increase. However, in parallel,production from existingmines will progressivelydecline and with the planned transport arrangements,the storage facilltiesare adequate to handle variationsin phosphateproduct grade. - 39 -
5.8 Port handling tariffs paid to TPC by JPKC are governed by Ministerial Decree and are on a sliding scale, with a 650 fils per tonne tariff in excess of 2 mtpy throughput. The tariff structure is consldered reasonable and has been used in the financial analysis of the Project.
VI,- FIANCIAL ANASIS
A. Past and PresentFinancial Performance
6.1 Simmazy. JPXC has historically been a company with a sound financial record. Followingthe absorptionof JFI in early 1986 and throughmost of 1987, JPMC's financialposition deterioratedas a result of the impact of the financial costs of the takeover,continuing losses at the fertilizerplant, and declirningphosphate rock prices. However, the operatingresults of both units recoveredstrongly in 1988. Phosphaterock and fertilizerprices continuedto strengthenand with product sales denominatedin US Dollars, the October 1988 devaluationof the Dinar combined to place JPMC in a strong financialposition by year end, with a solid cash balance,no short-termdebt, adequate debt service coverage,a conservativedebt-equity ratio, and good liquidity. The mining unit returnedto former levels of profitabilitywith surplus liquidity and a strong balance sheet. The fertilizer unit earned its first profit and financed its own working capital,but still had to rely on the parent company and governmentto service its debt and meet outstanding commitments to former shareholders. Details of past unit and consolidatedcompany financial performance are provided in Annex 6-1 and summarizedin the followingtable: - 40 - - ^ts r 1390 .
loft Mod am Ca01w
fluum sWu &A
e tw 1 | bXtS _b tb~~~~~UI Ulw S ts 2mmsW..oo _aW 7wW.tw-l Il nuti OWU2w as lat 412Mw 1 Il IVA Oa..6u usM 1.0 IL.I 141.9 "2. 2W. 11.0 "9. 21.0 Wi 00. ILI 141.0 ct n Wmu 2SW6 4.1 .1 4.1 V. 11.5 4. Su. 19.9 40.0 4.1 IL f t_ I isIeUa o.b 112. 11.0 1.2 17. 1.3 U .l 26 L. 21.3 2L0 1.9 .9 isitaui. 2.1 2.i L2 L. IW Li 1.9 L1 1.1 4. 10.0 *S e U. .2 t . uX ". . tota Noat2q CutsXb *~~~~~~~7-41. 640z. W7.311 04;.S 30;.O 9. 1 .. 0 a2.1 . i. Zat_ ut _ 2.6 3. IA 1W Lo 4. 2.9 1 06 24 3.0 . of t, fm L2 U 2.0 . .1 *.6 3.92A 20.9 6.61 4.2 U.1 0.7 3. 1| t 1 LS2 22.0 0.L 1.0 MU 24 20.9 44l 2 IL2 .1 1 ' hIm.~~~~~~~ S _ _ _._m
Col holIdi, 9. 242 Li2 0.1 0.0 0.i I 0.0 U. 12. 1. 14.1 _mw kaltI. 14.9 2L.3 1.1 S1 6.1 42.9 1. Lo 4.1 43. .712.4 ow is 2o y 0.0 3.0 0.0 1. . b 4.7 .9 24 3.3 Ls 4.7 3.2 uPEts I7Av 1.1 1.4 1U. 0. 44 11J1 63 4.0 ILI l .71 U J 2.4 bf is tou sIti U 1. 1 34 0 24 4.1 4 43 6.1 0.3 1.0 12oitP ts oinW 941 U4Li 12 2.1 14. 12.9 4.1 2L9 I.l 2.1 I2I tdoil _~ Sm 41.9 IL U.1 24 21.0 19 .1 1 . SUU 9.3 .9 24 1uSs at Fid hs 24.17 3A. .a Su2 9. 1A 23 444 19t 30.9 .1 60.0 t ut.s %02 14 90.1 .1 A. l 117.1 3 1.0S UL.1 42.7 2 M.4
k -ts h L2vU 21.2 U l 22.0 Li 234 10 2 M 4 LS 7.9 t to. 2 3. 4.1 0.0 *. 44 IL3.1 12. 1.0 I L. 0.0 0.0 cat 61.21 oi LIN 0.1 0.2 4.4 4eJ U oU 2.9L 1A as 11 LO 1U. Ida ut ut 2.3 1 64 19.0 .4 .1 a.4 1.1.3 u4.441 4W W9us t 332 W n.9 11.1 24.0 .4 2. a1.1 ".46 24 24.0 106 few tU02t2 4 NJ U2 60.2 43. 034 11.0 4.1 1L2 09.0 3.1 2.4 lp1ti 42.1 6. 11. 31.1 24.1 14. 42.1 24.2 11L7 n1. V21 6.9 -qd uou1 aLX e ntvU S U.1 Wa7 . J" law L2Ol2 I 61146 . .1 90. 201. 9.1 61.l 211.4 11.1 61 1.4 110.1 6.7 3.4 ______O _ - . - soc- IuUzatim d0Fab
cm run 14.4 U.2 2L1 1.0 -LG IOA 21 -LO U.1 26.1 S1 2L2 Iwihl On tal 0.0 0.0 0.0 0.0 0.0 23.0 0.1 0.0 0.1 2L3 22.3 31.4 w uad1 t 21.0 2.1 -2.3 0.0 0.e W3 23. 0.0 29.3 WS. 2. 33.1
1.2.2hum. 29.T4 . 2 1. *L 0. 41. *Lo 4,#9 04.? 23.9 .2IL
laushut AI 010ts 4.4 1.9 1.1 3.1 "A 1.1 0.0 LO 9.1 I0 1.3 11.6 , t df UW.f Oat LI 3.6 4.1 0.0 0.0 13.3 LO0 0.0 3.5 22.9 146 20.3 1osuhis Ta 1.1 LI 0. -1.0W.1 2.0 2.4 0.0 0.0 1.4 5.1 0.0
lawCou u 119Cpm 4.0 2.4 20.2 ~~~~~~~~~~~~.1. 462 .3.1 41.9- - 0 902. 10. 0.
1eq eu.s 0.1 LI# 0l4 0.0 2 m L.n L.S 0.2 0.10 01 0.n4
OOWAs isa 26m20 22.2? U.43 *.ME 4.714 21.111 -I21 9n11 2.3n 1u? 19.H11 a Crlt an" 14.M 1L2a 242 20.142 .3.291 M 20 -2009 Ls0 14.m22 1.2n 94n C~ t AO LO LLU L.S 13 0.90 24S l2.U . 1.41 2.9t 2.10 2.13 stiw t b*de 0.u 0-6 0.X 0.ss 0.10 04 0e.7 0.04 0.41 0.43 0.41 0.44 kit lim2g m w 3.22 3is 3.91 1.46 -1.04 0.6 6.1s 0.4 0.4 1.25 O.0 1.26 6t a. G fit hu 217.1 20.51? 29A II.0 -10.13 221 -2.a 2.9? 26.41 142 20.4? OagaI Nosha(ai 2.1 L2 312S 2W9 2.24 2.46 4.14 0.7 341 6.44 2.0 4.39 - 41 -
6.2 1986-1987Results. The average phosphaterock export price (fob Aqaba) declined 6% in 1986 and a further 9% in 1987, reaching the lowest level since 1960. Historicalphosphate rock and fertilizerexport prices (fob Aqaba) are in the Project File. Through tight cost control, the unit cost of phosphate rock productiondeclined by 38% in 1987, sustainingthe profitabilityof the mining unit. The unit's net profit margin increasedfrom 10.7% (JD7.8million) in 1986 to 18.2% (JD10.9million) in 1987. However, profitabilityof the mining unit was offset by combined 1986-1987losses of JD12.2 million at the fertilizer unit. Fertilizerprices continuedtheir prolongedslump. Plaguedby capacity constraintsand the modest appreciationof the Dinar against the US Dollar, the fertilizerunit sold all products at a loss in 1986 and 1987; the loss on its principalproducts (bulk and bagged DAP) ranged between negative 10% and negative 23% of the sales price. Consolidatednet profit of the company fell from JD10.9 million in 1985, the year before the JFI absorption,to an average JD2.2 million in 1986 and 1987. Return on gross fixed assets declined from 19.6% in 1985 to 1.8% on average in those two years. Due to increaseddebt service and operatinglosses at the fertilizerunit, corporateliquidity dropped sharply; the current ratio declinedfrom 2.13 in 1985 to 1.37 in 1986 and 1987 on average. As a result of reduced cash generation,JPMC was unable to service its new level of debt and short-termbank borrowingsrose JD20 million during the period. The debt service coverage ratio f3ll from 3.5 in 1985 to 0.7 in 1986 and 1987 on average.
6.3 1988 Results - Mining Unit. 1988 4xrkedthe beginning of a substantial improvementin the company'sperformance. .hemining unit increasedphosphate rock exports (5%) and continuedto gain world market share (to 13.8%) in 1988. The averagerock export price rose 13% in US dollar terms in 1988, but increased 31% in Dinar terms due to an 18% decline in the averageJD/US$ exchange rate during the year. The averageunit cost of sales rose only 12% for the principal grades of rock exports, so that pre-taxprofitability doubled to JD21.7 million comparedto 1987. With only about 35% of cash productioncosts imported, furtherdepreciation of the Dinar through 1989 has had a positive impact on profits. Through September1989, the average rock export price rose only 5% above the average 1988 export price, but averagerevenue rose 40% in Dinar terms as a result of a further 36% decline in the value of the local currency against the US Dollar. In contrast,devaluation has as yet had only a limited impact on local operatingcosts: road transportcontracts were renegotiatedin early 1989 at levels about 10% above 1988 rates, and medium-termcontracts with contractors for overburdenremoval and mining at El Hassa and El Abaid were renewed at 14% above 1988 levels, due solely to the increasedcost of importedfuels, lubricantsand spare parts. Other local costs affectingmine operations, includinglabor, constructionservices and civil works, have been stable during the first 10 months of 1989, though more of the inflationaryeffects of devaluationare expected to pass into operatingcosts in 1990.
6.4 1988 Results - FertilizerUnit. The fertilizerunit achieved its first year of profitableoperation in 1988. Productionof bulk DAP rose only 2% from 1987 to 614,400 tons DAP. However, revenues increased60% (in JD terms), due largely to devaluation,but also to price increases(in US Dollar terms) ranging from 7% to 16% for major fertilizerproducts. Nevertheless,bulk DAP, which accountedfor 63% of revenues,continued to sell at a nominal loss of about 3% of its sellingprice, despite a 16% increase in the average export price over - 42 -
1987. Bagged DAP, which accountedfor a further 26% of the sales, earned only a nominal profit of 2.7% on its average sellingprice. The only consistently profitableproduct, aluminumfluoride more than covered the loss on DAP products. Unit costs of productionrose from 14% to 26% on major products. As a conseqnenceof the major price increases,the operatingmargin improved sharply from negative 10.9% in 1987 to 11.8% in 1988, but operatingprofit just covered interestpayments and the added cost of the unit's foreign currency- denominateddebt caused by devaluation. Overall profitabilitywas modest at 1.3% of sales. Imported raw materialsand consumablesconstitute about two- thirds of cash productioncosts, so devaluationhas had a less positive impact on the unit's profitabilityin 1989. However, the unit was able to sell all of its expectedDAP productionat the high prices prevailingduring the first half of 1989 (up 9% over 1988) and is expected to earn nearly JD12 million after tax.
6.5 CorporateFinancial Position. JPMC used the improved liquidity resultingfrom profitableoperations and the share capital increase of JD35 million in early 1988 to strengthenits financialposition. It repaid all JDl9 million in outstandingshort-term bank loans, reduced accountspayable by JD12 million, and increasedcash to JD12 million. Net working capital rose to JD70 million from JD29 million in 1987. The current ratio rose from 1.41 in 1987 to 2.53 and the debt servicecoverage ratio improvedfrom 0.68 in 1987 to 1.07 in 1988, after chargingto income JD4.3 million for the revaluationof the long- term debt maturing in 1989 and all of the underwritingdiscount resulting from the equity issued during the year. JPNC further improvedthe liquidityof its working capitalby reducingexcess inventoriesof phosphaterock 36% (JD5 million) in 1988. It also negotiatedrepayment of its largestoutstanding receivableover the 1989-91period, which will reduce receivablesby one-third. Under the first loan, the company is upgradingits materialsmanagement system and is developingan Action Plan to reduce the high spare parts inventorylevels held by the company.
B. FinancialProjections
6.6 Financialprojections for the 1989-98period have been prepared separatelyfor the mining and fertilizerunits in order to assess each unit's profitability,and for JPNC as a whole (Annex 6-2), to assess the company's long-termfinancial viability in view of the capitalexpenditures planned. The projectionsare based on: (i) conservativeassumptions about phosphaterock and fertilizerproduct export prices and fertilizerinput costs; (ii) a long-term mine developmentand phosphaterock sales program,with rock exports limited to 6.1 mt in 1990 and 7.8 mt in 1998; and (iii) forecastmining unit production costs. The long-termmine developmentand phosphaterock sales program and forecastmining unit productioncosts are in the Project file. All projections have been made in constant Jordanian Dinars based on actual prices in the last quarter of 1989 at an exchange rate of US$1 - JDO.65, the mid-point exchange rate prevailingin late October1989. Local operatingcosts have been increased by 14% in 1990 and than held constant to take into account the anticipated impact of the 20% Dinar depreciationbetween early and late 1989. Inflation rates used in the calculationof capital costs are those projectedby the IMF for local inflation(1990 - 11.8%, 1991 - 9.5%, 1992 - 7.8%, 1993 - 6.5% and 1994-1988-5* p.a.) and the NUV as calculatedby the Bank's International - 43 -
EconomicsDepartment (1990 to 1995 - 4.93% p.a., 1996 to 1998 - 3.68% p.a.). Price escalationhas been taken out of asset values and long-termdebt for financialprojections. Sensitivityanalysis has been carried out to estimate the Impact of lower phosphaterock and fertilizerprices on JPKC's financial position.
1. Mining Unit
6.7 The mining unit is expectedto generate solid profitabilityand strong cashflowover the 1989-1998period. This will be due primarily to the continued substantialeffect of Dinar devaluationon JPMC's US dollar-denominatedproduct sales. Since October 1988, the Dinar has declined 50% against the US Dollar and this relativevaluation is expected to be maintainedby the Governmentto preserve the improvementin the country'sexternal competitive position. Second,world phosphaterock prices are expected to continue a modes; recovery in real terms through1998, growingat 0.3% in 1990, 0.6% p.a. from 1991 to 1995, and 0.46% p.a. from 1996 to 1998. A third factor in the unit's improved profitabilitywill be slow growth in domesticproduction costs, due to the Government's tight economic management and the gradualreplacement of the higher cost existingmines at El Hassa and El Abiad by the relativelylow cost mines at Shidiya. Cash generationis expected to be sufficientto enable JPMC to finance about 20% of the mining unit's capitalinvestment from internallygenerated funds, build a reserve for potential capital expenditures related to joint venture projects under discussion and provide a comfortable margin to service its debt, while retaininga conservativedebt/equity ratio below 50:50 and excellentliquidity. The financialstatements for the mining unit for the 1988-1998period are summarizedin the followingtable: - 44 -
Jodn -ury o1Hieing bit floocll Perfereesce1588- 1998 Idllien 1939ID) IOE SmAymS. IUB IM IMwo IWI IW 19 1W4 1 199I 1997 1919
Sain bln 84.9 129.$ 151.7 144.3 172.6 I72.4 i80.5 14.4 192.0 198.3 203.4 Cah Oerati Cst 59.5 75.0 57.9 91.7 93.3 .o 99.4 95.2 9.3 9.3 103.4 Depoietin 3.9 L.0 6.1 5.9 11.4 10.9 15.7 18.5 10.4 17.5 13.9
opratingPIroit 21.4 48.4 57.7 44.6 47.8 46. 72.4 72.7 74.2 81.5 85.9 Interst Expense 2.3 4.7 5.5 5.9 7.5 9.1 10.4 9.7 10.4 10.7 10.8 Pro-Tax 1ao 21.7 29.3 53.0 62.9 63.3 40.8 65.1 46.8 67.9 75.5 60.3 lIu tax 9.2 10.2 18.5 22.0 22.2 21.3 22.8 23.4 23.8 26.4 28.1
Not Incm After Tax 12.5 19.0 34.4 40.8 41.2 39.5 42.3 43.4 44.2 49.1 52.2
BALAMSE9EM
ASSETS Cuh I STlosotots 1U.1 7.7 18.2 44.8 7.5 89.5 12.9 145.2 153.0 168.9 184.1 Store I Re HAtorals 7.3 6.8 4.3 4.2 4.2 6.2 4.2 4.2 6.2 4.2 4.1 Frodt lmvoterifs 14.8 31.8 37.3 40.4 4.4 42.3 44.4 45.8 47.2 48.7 50.0 ActcmtsReceivable 43.9 43.2 50.6 54.8 57.5 57.t 60.2 62.1 4.0 44.1 67. OtherShort-Ter oots 10.0 11.7 11.9 11.9 11.7 11.9 11.7 11.9 12.1 12.0 12.2
Total Currentbuts 9.9 101.3 124.2 110.0 191.5 207.4 245.2 271.2 262.4 301.9 322.2
PatFixed Aeh 24.9 19.0 56.4 50.4 39.0 85.9 70.4 127.1 £10.4 97.2 87.4 OtherLo-ter se 44.8 79.7 54.9 70.0 97.9 66.9 78.7 10.3 24.9 47.5 64.9
Totalhuts 10.7 200.0 235 2. .4 322.5 340.2 394.3 408.4 417.6 446.7 474.7 ma - wma m am axm m sa mamas LIBILITIES Payable 24.8 36.7 47.7 54.5 58.7 60.6 64.7 68.7 71.9 76.5 O.8 Shert-TemBank Lns 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Curruit ateriUts 6.5 12.4 7.9 11.0 8.9 9.2 10.3 13.4 14.4 16.0 13.7
Totl Crrt Liabilities 31.3 49.1 55. 45.5 4-7.5 79. 7.0 E2.0 86.5 92.5 94.5
Pat LnTo let 54.6 69.0 77.9 0.O 109.9 129. 142.4 34.9 U5.9 133.0 142.3 OtherLon-ta U ablties 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 Wit 4011ty 71.7 73.8 .9 121.9 120 157.8 173.9 118.7 202.2 218.2 23.8
Total UbilitUn a Eqity 10.7 2t0.0 3.s 0.4 22.5 30.2 394.3 408 417.6 44.7 474.7 ma - - - mfa- w~mo- - -XS -sn ama m
I -13118WPLICATI U -
Cash612ratuan 16.7 24.4 39.4 45.5 51.3 4S.1 59.7 60.4 U.2 6U.0 U4.4 Incresd Lo-Tr Debt 30.5 13.3 u.9 23.0 28.8 28.8 23.0 5.8 5.8 23.0 23.0 Total Enormm 96.6 51.1 96. 74.1 5.4 134.4 8.2 13.7 72.5 90.8 17.5
APPLICATION Intmnt in Find to 10.3 23.9 24.2 20.6 33.5 32.1 20.5 12.4 21.9 29.7 21.6 PrincipalRlpsts 12.9 12.4 7.9 11.0 8.9 9.2 10.3 13.4 14.6 14.0 13.7 DividendPaots 5.1 1.3 13.3 14.4 19.0 22.5 24.9 27.2 29.3 31.5 34.0 OtherLan-term lovmets 34.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TotalA1ltatipea 70.1 58.4 0.3 481 62.1 114.7 55.7 115.8 65.8 77.2 69.3 Ibt CUn in Pariw CqIbl 2.5 47.41 U.3 26.0 23.5 19.7 32.6 19.0 6.7 13.6 18.1 9_ _ _ . _.1 TotalAppliucto .6 51.1 96.4 7.1 85.6 134.4 8.2 13.7 72.5 90.9 87.5 - ma mam _m ma m ,m ma. ma ma RATIOIEIBIS lbrkingRatio 0.70 0.58 0.58 0.56 0.54 0.55 0.50 0.51 0.52 0.50 0.51 Debtservice Clrap 1.25 1.70 3.33 3.04 3.59 3.18 3.39 3.05 2.84 2.84 3.07 LTDa IofLD &Eqty 43 47 44 42 44 45 4U 42 38 38 38 cemt Rtio 2.91 2.06 2.23 2.44 2.75 2.97 3.27 3.31 3.26 3.27 3.41 peran Ftfit llu ( 25M2237.51 3.042 A0.51 39.3113.631 40.1 39.98239.8. 4.095 42.2U PatPrfit arin (if 14.72 14.68222.711 24.5 23. 22.91123.43 22.302 23.00224.74 25.663 Rtur anBron he alot s (2) 16.b11u.25.tOS 29.312 34.74S 35.04M 22.55S 23.711 17.135 17.302 18.St 19.m - 45 -
6.8 Revenues. FollowingJPMC's revisedand more conservativewarketing strategy (see para 2.21), rock exports are planned to remain at the 5.8 million ton level in 1989 and to increaseprogressively to 7.8 million tons in 1998. Transfersto the fertilizerunit are expected to grow from 1 million tons in 1989 to 1.4 million by 1994 once the fertilizerplant rehabilitationis completed. Revenues (exclusiveof transfersto the fertilizerunit) are projectedto increase from JD84.9 million in 1988 to JD129.5 million in 1989, a 52% increase,due largely to the beneficialeffects of devaluationfor a full year on operations. Thereafter,revenues are projectedto grow at 5.1% p.a. to JD203 million in 1998. Revenue growth will come primarilyfrom the expected growth in rock exports (3% p.a.), and continuedrecovery in phosphaterock export prices which are expected to increase 1.3% p.a. in real terms between 1989 and 1998. The followingtable summarizesthe projectedgrowth in rock sales and export prices during the period:
Jordan - Mining Unit - Summary Rock Sales and Export Prices: 1988-1998
Ave. Annual Growth Rate 19i8 1222 1990 1224 1998 % Sales Revenue (JD million) 84.9 129.5 151.7 180.5 203.4 9.7 Production(mt) 6.8 6.9 7.2 8.4 9.2 3.1 Rock Exports (NT) 5.8 5.8 6.1 7.0 7.8 3.0 Avg. Export Price ($/ton) 35.17 37.54 38.25 39.68 40.11 1.3 Avg. Export Price (JD/ton)14.41 22.34 24.86 25.79 26.07 6.1
Source:JPMC and Bank Staff Estimates.
6.9 Mining Costs. Cash costs of productionare projectedto increaseby 2% p.a. between 1988 and 1998, slower than the growth of sales revenues,for two reasons: first, only one-thirdof productioninputs are importedso that operatingcosts will be less affectedby the decline in the value of the Dinar, adding to unit profitability. Local cost increasesin 1989 have been only on the foreign componentsof costs and are running at a level of 10%-14%. Domestic costs, for items such as civil works and constructionhave been flat or have actuallydeclined in some cases due to substantialovercapacity and sluggish demand. Second, developmentof new, lower cost ore bodies at Shidiyawill slow the rise in averageproduction costs. For example, the projectedaverage cash cost of productionof phosphaterock produced at Shidiya (in constant1989 prices and excludinga JD5 per ton productiontax imposed in 1989) is calculated to be JD4.18 (FOB mine) per ton, some 40% less than the averagecash cost of productionat existingmines in 1988 of JD6.90 per ton. The averagecash cost of production (ex-mine)is projectedto decline graduallyfrom JD7.20 per ton in 1988 to JD4.80 by 1998 as low-costShidiya production replaces existing mines.
6.10 Profitabilityand Cash Generation. The profitabilityof the mining unit is expected to improvesharply in 1989 as a result of devaluationand to remain robust through1998. The operatingmargin is expected to rise from 25% in 1988 to 38% in 1989 and to remain at the 1989 level for the balance of the - 46 -
1990-1998 period. The net profit margin is expected to rise from 14.7% in 1988 and 1989 to a respectable 22.7% in 1990 and remain around that level throughout the 1990-1998 period, the difference being attributable to substantial Interest and tax expenses. Cash generation (after taxes) is projected to rise 35%, from JD16.7 million in 1988 to JD24.4 million in 1989, after charging to income the further increase In the value of JPMC's foreign currency-denominated debt, and then to average JD55 million p.a. between 1990-1998. 6.11 Capital Exnenditures. The mining unit is planning capital expenditures between 1989-1998 amounting to approximately JD240 million, in constant 1989 prices, to finance the Project, modest replacement investments and the subsequent development of two additional phases, each 3.2 million tons per annum capacity, at Shidiya (see Annex 4-1). JPMCis expecting to finance about 20% of this projected capital expenditure through internally generated funds and to borrow JDl90 million, including JD58 million for the Project. The Company expects to utilize an additional JD117 million (23% of aggregate projected cash flow) for debt service of the mining unit during the period. Finally, dividends are expected to amount to JD230 million during the 1989-1998 (44% of aggregate cash generation). This will provide a reasonable dividend of 15% o0iaverage shareholders' equity, while enabling the company to add JD50 million to reserves and JDl1O millionto retained earnings in order to provide for its possible share of joint venture projects currently under discussion between JPNC and various fertilizer producing countries. 6.12 In the event that these joint venture fertilizer plant projects materiLlize in the mid-1990's, future mine development at Shidiya would need to be accelerated (Annex 4-1) beyond the levels anticipated in the projections and would require additional investment. The additional costs of further mine development to support phosphate rock input to such potential joint venture projects, and the potential benefits that would result from such expanded operations, have not been taken into account in the unit or consolidated projections. 6.13 Working Canital Management. The mining unit year-end 1988 accounts show a high level of net working capital (JD70 million) which is less liquid than it appears. The mining unit has historically carried high levels of phosphate rock inventory and accounts receivable, about 2-3 months of sales on average since 1983. The unit reduced excess finished product inventory by approximately 1.0 mt in 1988. However, accounts receivable increased from an average 3 months of sales in the 1982-86 period to 5 months in 1987 and further to 6.4 months of sales in 1988, due largely to delays in payment by one customer, representing 30% of accounts receivable. Payment of this receivable during the 1989-91 period has been arranged through an offset arrangement. The relatively high level of receivables is due to the fact that rock is sold on credit terms of up to six months, due in part to its nature as an industrial input: 60% of the mining unit's sales are on terms of 60 days or less, but 25% are on 120-180 day terms. As a result, the weighted average accounts receivable for the mining unit in 1988 was 2.4 months, but only 1.1 months for the fertilizer unit. JPMCis reviewing the classification of its accounts receivable with the objective of reclassifying as along-term" assets those unlikely to be collected in the next twelve-month period. Such a reclassification could affect as much as JD15-20 million of receivables, about 15% of current assets. - 47 -
6.14 SensitivitvAnalysis. Becauseof the importanceof the mining unit to overall corporatefinancial performance, the unit's projectedprofitability has been subjectedto several sensitivitytests: (i) a 10% decline in rock export prices from 1990; (ii) a 20% increasein the cost of sales from 1990, representinga full pass throughof devaluationin 1989 to increasedoperating costs; and (iii) a combinationof a 10% decline in rock prices and a 208 increase in the cost of sales. The followingtable summarizesthe effect of these sensitivitiesin 1996, the first year of full productionfor the beneficiation plant component of the Project:
Jordan - Minir,gUnit - Effect of Alternative Aasusmtions on Unit Profitability
10% Price Decline & Base Rock Price Cost of Sales 20% Cost In. 1996 Case Decline 10% 20% Increase Increase
Pre-tax Income (JD m) 67.9 46.9 49.3 28.2 Cash Generation(JD m) 61.2 47.9 49.4 36.1 Net Profit Margin (8) 23.0 17.6 16.7 10.6 Min. Debt ServiceCover 2.84 2.32 2.38 1.80
Source: Bank estimates.
Under any of these scenarios,the mining unit would continue to generate sufficient funds to service its debt and provide the level of funding required for projectedcapital investments. Under the worst case scenario,debt would approach 60% of capitalizationin 1994 and debt service coveragewould drop to 1.70 in 1997. However, the companywould still have adequate funds to finance capital expenditures and could reduce its dividend payment to conserve funds.
2. Fertilizer Unit
6.15 At the current restricted level of production, the profitability of the fertilizerunit is expectedto improvesignificantly in 1989, due to the recent devaluationof the Dinar. The unit is forecast to remain profitable,following completionof the fertilizerplant rehabilitation,through 1998. The net profit margin is expected to jump from 1.3% in 1988 to 13.1% in 1989 and to average 13% through 1998. The unit is projectedto generate sufficientcash during the period to more than cover projected capital investment and debt service and to fully repay the debt and shareholder obligations incurred in establishing the company and as a result of its transfer to JPMC in 1986. These obligations, carried off balance sheet in a "Special Account", have been servicedpreviously by JPMC and the Government in lieu of fertilizer unit profitability. Pro-forma projected financial statements for the fertilizerunit for the 1988-1998 period are in the Projec; File and summarized below: - 48-
- Souaryof Frtilitr I1it FinancialProrteanas 199 - 1998 (Billion 1m JO)
IOHE 918195319 1999 1999 1990 1991 199 1993 1994 19s 1996 1997 1999 'M -AO (Actual)Xl 98 -Poaca-----t 189 M I tt d M------M- SeIm bamu 56.1 92.3 101.1 101.1 97.0 11.1 2. 129.3 121.3 127.3 126.3 Cab ewratirngCnts 44.6 61.6 9.9 70.7 669. 95.2 95.3 9b.5 97.5 98.6 99.7 Depreciatin 4.9 4.9 5.2 5.3 5.3 6.5 6.5 6.5 6.5 6.5 6.5
OpnrtingProtit 6.6 25.9 25.9 25.1 22.9 29.3 27.4 26.3 2.2 22.2 20.1 ltatrnt Eapm 3.0 3.3 3.0 2.6 2.2 1.7 1.2 0.9 0.9 0.7 0.6 Proeax1.i.. 0.7 18.6 23.3 22.7 20.9 27.0 26.5 25.9 24.2 22.9 21.2 1ou Tax 0.0 6.5 9.2 7.9 7.3 9.7 9.5 9.0 9.5 9.0 7.4
Netlome Aftar Ta. 0.7 12.1 15.2 14.9 13 5 £9.1 17.2 6.9 1. 14.9 13.9 mm- mm ,m mm mmm m
ABTSI Cab 6 STlovutmts 1.9 6.3 5.6 3.7 5.4 5.7 10.2 15.6 32.6 9.9 66.0 Stors ABoaaterials 10.4 13.5 14.1 14.1 13.7 16.4 17.9 19.0 19.2 19.3 1.5 ProductIlNtorina 3.0 5.1 5.6 5.6 5.4 6.7 7.2 7.2 7.1 7.1 7.0 ccountsbRiacvable 9.7 14.2 15.6 15.6 15.0 18.7 20.0 20.0 19.9 19.7 19.5 OtherShort-Ta bsats 0.6 1.2 1.3 1.3 1.3 1.6 1.9 1.9 1.9 1.9 1.9
Total Currentbats 24.6 40.3 42.3 40.3 40. 49.1 57.0 62.6 7 113.0
Ibt FizadAmut 41.2 36.9 39.3 42.1 45.2 42.9 36.9 30.9 24.9 18.9 12.9 OtherLo-tas bs-'s 0.1 0.1 ..9 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 lotal boat 65.7 77.0 91.6 V7.4 96.0 92.1 93.9 93.5 104.5 115.6 125.9
LIABIUITIE9 P"in 9.4 19.7 22.9 22.7 21.6 29.0 29.5 29.4 29.1 29.9 29.5 Short-Toeank Lon 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Currat laturitia 5.0 5.7 6.0 5.4 5.6 3.4 1.5 1.6 0.7 0.7 0.7 lta1 Cant Labilitia 14.4 25.4 29.9 29.L 27.2 31.4 31.0 31.0 29.9 29.5 hy
1st L -Tar kmt 24.0 21.7 19.5 17.9 1.1 13.9 24 10.9 10.1 9.4 9.7 Othr L1g-tar L itia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 SPEEquIty 2.2 29.9 33.2 36.5 42.9 46.7 50.5 51.7 64.6 76.7 8.0
otatlLiailitin &Equity 65.7 77.0 91.6 92.4 96.0 92.1 93.9 93.5 104.5 115.6 125.9 macIESAOUlCATIIS F FMDS
Ssum Cub imeatin 5.5 16.6 19.9 19.6 19.4 24.0 23.2 22.7 21.7 20.9 19.9 lcraid IgTar hbt 2.6 0.0 3.9 3.9 3.9 1.3 0.0 0.0 0. 0.0 0.0 Total bun 25.8 20.0 23.7 23.4 4.3 25.3 23.2 22.7 21.7 20.9 19.9 lnstit ib Find bat 1.3 0.5 7.9 9.1 9.4 4.2 0.5 0.5 0.5 0.5 0.5 Ptincil loa ts 7.6 5.7 6.0 5.4 S. 3.4 1.5 1.6 0.7 0.7 0.7 Pymn to Spa Alburnt 0.0 9.1 U.4 U.1 6.7 13.6 12.9 15.1 2.4 2.2 2.1 OtherL a inoasmetl-tar 0. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ippltia 8.9 15.3 25.2 24.6 32.9 21.2 14.9 1.1 3.6 3.4 iS
altChog in ftkig Caital 14.9 4.7 (1.41 (1.23 1.4 4.1 9.3 5.6 19.2 17.4 16.6
taWl4plUcatios 23 20.0 Z2.7 2L4 3U 2L Z.2 2 21.7 20. 199
brkie o0.n71 0.61 0.64 0.65 0.66 0.65 0.69 0.70 0.71 0.72 0.74 DMt bainn. Coug 0.90 221 2.54 2.77 2.66 5.00 9.09 9.61 15.07 15.51 15.29 Debt/epity 47 37 33 27 23 20 17 14 11 9 Curnt Ime 1.70 1.S 1.46 1.43 1.50 1.56 1.84 2.02 2.67 3.28 3.07 Opeatn Poit agn (11 U.501 V.941 25.652 M4.91 23.461 24.23 2.222 20.3 19.901 17.42 15.9M1 SatProfit 1or (1 1.2 13.132 15.001 14.592 13.911 14.93 13.31 12.97 12.252 11.622 L.M blur oo Brm Fixd bin,I (12 1.341 22.441 27.122 2.512 1M2 2J.901 20.711 20.041 9L9 17.491 62 - 49 -
6.16 Aggregatecarh generationduring the 1989-1998period is projectedat JD205 million. Of this, JD86 million will be required to dischargethe company'sobligations to the SpecialAccount, liquidatingthe currentbalance and initiatinga 15% dividend to the governmentout of future profits. An additionalJD31 million each will be needed for planned capital investmentand principalrepayments, leaving uncommitted cashflow, during the period, of about JD60 million,which will be sufficientto fully repay the net advance from the parent company and provide a small cushion of liquidityfor possible capital investment. This projectionis based on JPKC's plan to finance about 30% of the proposed fertilizerplant rehabilitationfrom its own resourcesand borrow the remaining70%.
6.17 Revenues. Revenues are projectedto increasefrom JD56.1 million in 1988 to JD92.3 million in 1989, a 64% gain, primarilyas a result of devaluation. Thereafter,revenues are expected to rise to JD101 million in 1991. Once the fertilizerrehabilitation is completedin 1992, revenuesare projectedto rise a further28% and to an average JD128 million p.a. from 1994 through1998, the consequenceof a 37% increase in phosphoricacid production due to debottleneckingat the fertilizerunit. Future selling prices for fertilizerand intermediateproducts are based on conservativeassumptions and actual export prices realized during 1989 by JPMC, and are lower than those forecastby the Bank.l/
6.18 The followingtable summarizesthe projectedgrowth in fertilizersales and export prices during the period:
Jordan- FertilizerUnit - SummarySales and ExnortPrices - 1988-1998
Avg. Annual Growth Rate I=88 198 1922 1994 1998 _ M Sales Revenues (JD Million) 56.1 92.3 97.0 129.3 126.3 8.5 ProductionBulk DAP ('000 mt) 614 633 602 740 740 1.9 DAP Exports ('000mt) 626 636 604 740 740 1.7 Avg. DAP Export Price ($/ton) 198.51 215.00 214.45 213.90 209.11 0.5 Avg. DAP Export Price (JD/tcn) 76.75 127.93 139.39 139.04 135.92 5.9
Source: JPMC and Bank estimates.
Product prices includea bulk DAP price of US$215 in 1989, equivalentto the average price realizedby JPMC on first half of 1989, with no increasein 1990, and then a decline of 0.1% p.a. between 1991-1995and a decline of 0.71% p.a. between 1996-1998. A US$15 per ton differentialfor bagged DAP has been utilized,conforming to the average differentialbetween bulk and bagged DAP realizedby the fertilizerunit in the 1986-88period. A relatively conservativeprice of US$350 per ton for 54% phosphoricacid has been projected, based on the estimatedlong-run marginal replacementcost of phosphoricacid
1/ InternationalEconomics Departmernt. - 50 -
production adjusted for the modest decline ln real terms projected for DAP fertilizerduring the 1991-1998period. A price for aluminumhydroxide of US$805 per ton has been projectedin 1989 and 1990, based on company estimates, 8% above the average 1988 export price. Thereafter,this price has been adjusted to take lnto account the cyclicalnature of aluminumprices projected by the Bank's InternationalEconomics Department during the 1991-1998period (an increaseof 0.9% p.a. in 1991-1995and a decline of 1.6% p.a. in 1996-1998). In aggregate,the fertilizerunit is projectedto benefit from an extendedperlod of relativelystable prices as fertilizerprices climb back toward the historical trend line after a period of prolongeddepression.
6.19 OneratingCosts. Unit costs of productionfor fertilizerand intermediateproducts are expected to increasebetween 6%-8% p.a. in real terms, during the 1988-1998period, largelyreflecting the substantialjump in the cost of imported inputs to productionin 1989 as a result of devaluation. The price of most product exports and the cost of most major raw material inputs (phosphaterock, ammonia, sulphurand aluminumhydroxide) are projectedto be fairly stable in US Dollar terms as summarizedin the followingtable:
Jordan - FertilizerUnit - ProjectedInput and Sale Prices (USS/ton)
Ave. Annual 1988 Growth Rate (Actual) 1989 1990 1994 1998 (%) Products Bulk DAP 198.51 215.00 215.00 213.90 209.11 0.5 Bagged DAP 214.33 230.00 230.00 228.90 224.11 0.4 54% PhosphoricAcid 368.25 350.00 350.00 348.21 340.41 (0.8) Aluminum Flouride 745.24 805.00 805.00 834.37 802.12 0.7
IuDUts PhosphateRock 26.63 32.98 37.79 38.44 39.12 3.9 Sulphur 101.40 100.00 93.00 102.00 119.51 1.7 Ammonia 123.10 120.00 120.00 148.93 142.47 1.5 Aluminum Hydroxide 116.26 200.00 200.00 213.52 205.26 5.8
Source: JPMC and Bank estimate.
Anmonia is expected to move in line with the price of urea, rising 0.4% p.a. between 1991-1995and declining1.6% p.a. in 1996-1998. The price of sulphur is expectedto remain weak becau e of regionalover-supply due to sour gas and oil strippingin Iraq and Kuwait, and to follow the priee of crude oil, falling7% in 1990, then rising 1.8% p.a. from 1991-1995,and 4.5% p.a. from 1996-1998. Aluminum hydroxide is expected to fluctuate in a narrow price level in real terms, essentiallyfollowing aluminum prices, rising 0.9% p.a. in 1991-1995 and declining1.6% p.a. in 1996-1998. Phosphaterock prices are expected to increase 1.95% p.a. in 1989 over 1988, 0.3% in 1990, 0.6% p.a. between 1991-1995,and 0.46% p.a. between 1996-1998. The rock input price is based on the actual transferprice formulautilized by JPMC, which is equivalentto 80% of the lowest export price realizedin the previous three-monthperiod, plus - 51 - adjustmentsfor the averagecost of transportto Aqaba port and the fertilizer plant, port charges and the Government'snew productiontax of JD5 per ton of phosphateproduced. Followingrehabilitation of the fertilizerplant in 1992, improvedplant efficienciesare projectedto reduce the unit productioncost of phosphoricacid by a modest 1.8% (JD3.18ton). The principalbenefit to the companywill be from higher volumes for export,not operatingcost efficiencies, and greaterproduction flexibility to meet changingmarket requirements.
6.20 Profitabilityand Cash Generation. Operatingprofit of the fertilizer unit is projectedto jump from JD6.6 million in 1988 to JD25.8 million in 1989, declininggradually to JD22.8 million in 1992, as operatingcosts rise faster than sellingprices. Followingcompletion of the plant rehabilitation, operatingprofit is expected to rise to JD29.3 million in 1993 due to the enhanced profitabilityof additionalphosphoric acid productionand higher tonnagesavailable for sale. Phosphoricacid exports followingrehabilitation are expected to add an annual net benefit of approximatelyJD1.4 million to pre- tax income. Cash generationis expected to increase from JD5.5 million in 1988 to JD16.6 million in 1989, and to averageJD22 million p.a. during the 1993-1998 period after plant rehabilitation.
6.21 Working CapitalManagement. The fertilizerunit has historically demonstratedefficient working capitalmanagement. Accounts receivablein 1988 were less than 60 days' sales; finishedproduct inventorywas approximately2 1/2 weeks' sales; and raw materialsinventory was about two months of consumption. These levels are reasonableand are expected to continue. However, the fertilizerunit has some JD5.6 million in spare parts, more than five years consumptionat current levels. Under the first loan, the company is upgradingits materialsmanagement system and is developingan Action Plan to reduce the high spare parts inventorylevels held.
6.22 SensitivityAnalvsis. The projectedprofitability of the fertilizer unit has been subjectedto severalsensitivity tests: (i) a phosphaterock input price equivalentto the opportunitycost of exports for the mining unit (i.e. without the 20% discount from the export price or US$45.69 per ton in 1990); (ii) continuedproduction at currentlevels without the capital investmentfor plant rehabilitation;(iii) diversionof all increasedphosphoric acid capacity to bulk DAP manufactureinstead of phosphoricacid exports from 1993. The followingtable highlights the impact of these alternative assumptionson the projectedprofitability and cash generationof the fertilizer unit in 1994, the year after the rehabilitatedplant comes on line:
Jordan - Fertilizer Unit - Results of SensitivityAnalysis
Phos. Rock Phosphoric Base Opportunity No Acid to In 1994 Cas Cost Revamp DAP
Pre-tax Income (JD million) 26.5 19.1 18.7 26.9 Cash Generation (JD million) 23.2 18.6 18.3 23.4 Net Profit Margin (%) 13.3 9.6 12.0 13.2 Minimum Debt ServiceCoverage 2.2 2.2 2.2 2.2
aource:Bank estimates. - 52 -
Under all scenarios the unit is projected to have adequate cash flow to repay in full the obligationsof the SpecialAccount, meet lts capitalinvestment requlrementsand serviceits debt.
3. JPMC ConsolidatedFinancial Positlon 6.23 Pro-formaprojected flnancial statements on a consolidatedbasis are given in Annex 6-2. The followingtable summarizes the consolidatedfinanclal performanceof the company after eliminating the transferof phosphaterock between the miningand fertilizerunits: - 53 -
Jordan- muar of C lnslited Fincil Perfurnce 199 - 1993 Ill SimilSa)
Im T=IEETS 193 19 1990 1S91 2IM 193 1994 195 1996 1997 IM (Actual dKtlds Salm b_e. 141.0 221.9 22.7 265.4 269.6 293.4 309.3 315.7 320.2 125.6 329.7 Chb Ourting costs 104.2 13.6 157.8 162.5 162.3 130.2 134.7 191.7 196.9 197.9 203.2 herectinm 9.9 10.9 11.3 11.2 16.7 17.3 25.2 25.0 24.9 24.0 20.4
OpratingProfit 28.0 74.4 93.6 91.7 0.6 95.9 9.9 99.0 99.5 103.7 106.1
Interet EFpu 5.4 9.0 9.5 9.5 9.7 10.8 11.6 10.6 11.4 11.3 11.4 PreTuaI1 22.4 47.9 76.3 83.5 94.1 81.6 91.5 92.6 92.1 99.2 101.5 Ic1 Tax 9.2 16.3 26.7 29.9 29.4 31.0 32.0 32.4 32.2 34.4 35.5
llt Icm After Tax 13.2 31.1 49.6 55.6 54.7 57.6 59.5 60.2 59.9 63. 66.0
ASSS Cau a STInvtmntus 15.0 14.0 23.9 50.5 73.0 95.3 133.0 160.9 195.6 218.7 252.1 Stn A an flateils 17.6 20.3 20.4 20.3 19.9 22.6 24.1 24.2 24.3 24.5 24.6 ProductInitoris 19.9 36.9 42.9 46.0 47.8 49.1 51.5 53.0 54.3 55A 57.0 ents Rcivable 52.5 57.4 66.2 70.4 72.5 76.1 90.1 92.1 93. 835.0 97.3 OtherShort-Terom beh 10.6 12.9 13.2 13.2 13.2 13.5 13.5 13.7 13.9 13.9 14.1
Tot Corrt lbts 115.5 141.6 166.4 200.3 226.3 256.6 302.2 333.0 361.9 399.6 435.1
Net Find Ast 66.0 55.7 89.7 90.4 94.3 129.9 107.3 159.0 135.3 116.1 100.6 OtherLug-te bst. 44.9 79.9 60.9 Q2.1 97.9 66.9 79.7 10.3 24.9 47.5 64.9
Total kWt 226.4 277.0 37.0 362.9 403.6 452.2 499.2 502.1 522.1 562.3 600.5
LIADILITIES PaYabls 34.2 56.4 70.5 77.2 E0.3 38.6 9.2 93.1 100.9 105.3 109.3 Short-TemBack Los 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 carrnt btltrites 11.5 1t.1 14.0 16.4 14.4 12.6 11.8 14.9 15.4 16.7 14.4
TotawCrrnt Umbilities 45.7 74.5 04.5 93.6 94.7 101.2 106.0 113.0 116.3 122.0 123.7
let Log-TaoDebt 78.6 90.7 97.4 107.0 12t.0 143.5 4.9 145.6 1U3.0 142.3 151.0 oter Lugter LIbIltIe 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 mc Ewitv 9s.9 108.7 132.1 159.3 194.0 204.5 224.4 240.4 266.9 294.9 322.9
Total Uailities Ewity 226.4 277.0 317.0 362.9 409.6 452.2 493.2 502.1 522.1 U2.3 600.5 s A APPLICATImOF FUNDS
Fnds fromOptions 22.2 41.0 59.4 6U.1 6.7 73.1 82.9 93.3 92.9 95.9 34.3 lnd Long-TernDnbt 33.1 13.3 20.6 26.9 32.6 30.1 23.0 5.9 5.9 23.0 23.0 Total lurca 109.1 71.2 120.3 97.4 U9.9 159.7 111.4 157.5 94.2 111.7 107.3
APPLICATIU Intmnt in Filed Ass 11.6 24.4 32.0 20.6 41.9 36.3 21.0 12.9 22.3 30.2 22.1 Prncpal Rbpa ts 20.5 U.1 14.0 U.4 14.4 12.6 11.9 14.9 15.4 16.7 14.4 DividenPaat 5.1 20.4 24.7 27.6 26.5 36.0 37.9 42.2 31.7 33.7 36.0 Other Lg-em Invtants 21.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total AppliuOs 66.7 73.9 105.5 72.6 95.0 13.9 70.6 12.9 69.4 90.6 72.6 lt Chan in UnotigCapItal 41.4 (2.7) 14.9 24.9 24.9 23.7 40.9 24.6 24.9 31.0 34.7
Total AplicuUons 103.1 71.2 120.3 97.4 119.9 159.7 111.4 157.5 94.2 111.7 107.3
RATIOILISIa
No" buo 0.74 0.62 0.62 0.61 0.60 0.61 0.60 0.61 0.61 0.61 0.62 Dbt Sevice enrae 1.06 1.99 3.02 2.96 3.29 3.58 4.04 3.69 3.52 3.47 3.70 LTDa of LDEquity 44 45 42 41 41 41 41 30 34 33 32 Currnt atio 2.53 I.0 1.97 2.14 2.39 2.54 2.95 2.95 3.11 3.27 3.t2 OpratingProfit hrgin (2) 19.82 33.5M2 33.09S 34.561 33.612 32.3 32.241 31.3JU 30.762 31.951 32.172 let Profit "argin (2) 9.371 14.042 19.62 20.941 20.292 19.622 19.2 19.07 1.69 19.612 20.012 Return Bn6rossFied Asuts ( 10.361 24.3 28.602 31.701 27.912 22.341 22.762 17.919 17.642 19.56 U19.911 I - 54 -
6.24 Based on the profitable financial performance of the mining and fertilizer units, JPMCis projected to have adequate cash generation to meet planned capital Investments, projected debt service, a healthy dividend payment to shareholders and other cash requirements, while maintaining a strong balance sheet, Including reserves for possible financial participation in joint venture projects under discussion, takeover of the Aqaba Railway Corporation (see para. 6.28) and a cushion of working capital. JPMC will be able to continue to meet the financial covenants established under the first loan. 6.25 Cash Generation. Cash generation Is expected to rise sharply from JD22 million in 1988 to JD41 million in 1989, largely as a result of the added profitabillty cau-ed by Dinar devaluation since October 1988. Following completion of the Project components in 1993, cash generation is projected to increase further to an average level of JD82 million p.a. between 1993-98. Aggregate cash generation is projected at JD725 million during the 1989-1998 period. The achievement of projected cash flow targets is important for JPMC to be able to service its existing and future debts and to contribute to its future investment. Agreement was reached with JPMC during negotiations that the working ratio, which determines the available cash flow, will be maintained below 0.8.
6.26 Investment and Debt Service. Capital expenditures on fixed assets associated with the first loan, the Project, and further phased development at Shidiya in the mid-1990's are projected to total some JD270 million between 1989-1998. The company expects to finance about 25% of this sum from internally generated funds and to borrow 75%, about JD205 million. Servicing of existing and planned long-term debt is projected to require an additional JD150 million over the 1989-98 period. Dividends, at a payout ratio of 15% on average shareholders' equity, are projected to require an additional JD315 million and payments to the Special Account (paras. 6.15 and 6.16) will amount to JD86 million. Long-term uses of funds are expected to total an estimated JD820 million, between 1989-89. Agreement was reached with JPHC during negotiations, that the company's overall debt service ratio will be maintained at less than 1.5.
6.27 Financial Position. JPMC's substantial cash flow will not be sufficient to meet all of the above commitments from internally generated funds and maintain an adequate cash reserve, given the planned investment in devalopment of the successive places of the Shidiya mine through 1999 and the possibility of joint venture projects which may require a financial participation by JPMC. JPMCis planning to borrow JD205 million to fund part of its capital requirements, with borrowings concentrated in the 1990-1994 period. However, the Company's balance sheet will remain conservative, with reserve for further borrowings and considerable liquidity: the debt/equity ratio is not expected to exceed 45:55 during the 1990-1998 period and the current ratio should remain above 2:0. Debt service coverage will be sufficient, remaining at 3.0 or better throughout the period. To malntain a sound financial structure and to avoid excessive debt service increase, JPMC should limit future investments to those which have been discussed during project appraisal (paras. 6.11 and 6.16). Agreement was reached with JPMC during negotiations that the investment plan be updated annually in consultation with the Bank at least six months before the beginning of each fiscal year, and that the overall - 55 -
debt/equityratio be maintainedbelow 60/40. From 1993, JPMC is projected to enjoy a progressivelystronger financialposition, as cash generationimproves followingproject completion. The current ratio is projectedto rise from 2.5 in 1993 to 3.5 in 1998. The debt/equityratio is projectedto decline rapidly from 41:59 in 1993 to 32:68 in 1998 and the debt service coverage ratio will rise somewhatfrom 3.6 to 3.7. Profitability,as measured by return on gross fixed assets, will drop from a high of 32% in 1991 to 19% in 1998 as the largely depreciatedassets at the existingmines are replacedby the new mines at Shidiya. However, the operatingmargin will remain highly positive,averaging 33% during the 1989-1998period, due to the replacementof the higher cost existingmines by the lower cost mines at Shidiya.
6.28 A final decision transferringall or part of the assets of the Aqaba Railway Corporation(ARC) to JPMC has not been reached (see para. 5.4). Among the many optionsbeing considered,the Governmentappears presentlyto favor the one whereby JPMC would assume full financialresponsibility for the future operations of ARC and partial responsibilityfor future debt servicing. Under this option,JPNC would purchase ARC's current assets and rolling stock for a sum of JD12.2 million and pay an annual rent of JD8.525 million for use of the rail line. The rental fee would cover all operatingand administrativecosts, includingdepreciation, and intereston ARC's outstandingdebt. It is proposed that JPMC pay an additionalamount to cover future changes in the principal value of ARC's debt, which is largelydenominated in foreigncurrencies. This amount would fluctuate with changes in exchange rates, but in the first year would amount to an estimated JDl.9 million. Assuming that the transaction is completedin 1990, the overall financial cost of this option to JPMC would amount to JD22.6 million in 1990 and about JD10 million in 1991, assumingno furtherchange in exchangerates. The rental fee portion (JD10 million) would thus be equivalett to a fee for rail transport of about JD4 per ton, based on the average annual rail f:eight volume of 2.57 million tons carried by rail between 1984 and 1988, an increase of about 90% from the present level of rail tariffs. The financial impact of this proposal on JPKC would be felt primarily in 1990, with some reduction in profitability and liquidity. Consolidated net working capital would be essentially unchanged, instead of rising by about JD15 million. Thereafter,there would be a minimal impact on the profitabilityor financialposition of JPMC. Assuming that forecastincreases in rail freight capacity materialize, unit freight transport costs would actually decline somewhat from 1994 onwards. In addition, JPHC would bear the cost of constructing the rail spur at Shidiya during the 1991-1993 period, at an estimated cost of some JD13.5 million at currentexchange rates. This amount would utilize about 20% of the company's projected build-up of surplus cash balances during that period.
C. Financial Rates of Return and Sensitivity Analysis
1. Beneficiation Plant Component
6.29 Financial Rate of Return. The estimated financial rate of return (FRR) for the beneficiation plant component of the Project (Annex 6-3), in constant terms, includinga Governmentproduction tax of JD5/ton, is 17.4%. Without the productiontax, the FRR is 25.1%. The FRR has been calculatedusing standard - 56 - incremental cost-benefit methodology, over a 20-year operating period, beginning in 1993 with no salvage value on project fixed assets or incremental working capital. Total project cost, for financial purposes, is estimated at US$98.2 million, including physical contingencies of US$7.1 million and incremental working capital of US$9.5 million. Project implementation is spread over a 4 year period to year end 1992, based on the project implementation schedule. 6.30 Operating costs have been calculated based on JPMC's experience with operation of beneficiation plants at El Hassa and El Abiad. A 10% contingency on production costs has been added in the base case to reflect JPKC's lack of experience in the operation of flotation technology. All input prices for financial analysis were taken at their market values in October 1989. A combined road/rail transport cost from Shidiya to Aqaba has been calculated at JD2.39/ton and the current mid-range port charge of JDO.75/ton has been used. Future selling prices for phosphate rock are based on conservative assumptions and aetual export prices realized during 1989 by JPNC, and are lower than those forecast by the Bank.2/ 6.31 The acceptable financial rate of return (17.4%) in the base case is due to the low capital intensity (investment cost of US$13.17 per ton at a 15% discount rate) and low operating costs (US$21.59 per ton) relative to the averagerevenue per ton of US$37.61 in 1996, the first year of full production. The analysis reflects the fact that investment for mine development to provide phosphate rock feed to the beneficiation plant was primarily catered for under the first loan and has been considered as a sunk cost. The low incremental mine operating costs of phosphate rock input to -he beneficiation plant are due to favorable stripping ratios, and the allocation of certain operating costs (overburd&n removal) to the mining of the A2 phosphate ore under the first loan. 6.32 Sensitivitv Analnyis. The main project risks are uncertainties concerning future phosphate rock prices, the ability of the market to absorb the additional rock output, project capital costs, and future operating costs, including land transport. The following table deownstrates that the FRR of the beneficiation plant project component remains acceptable under a range of adverse assumptions: Jordan - Mine Brenficiation Plant - Financial Rate of Return Sensitivity Analysis Base Case 17.4% A. Phosphate price 10% lower 13.1% B. Capital cost 10% higher 16.0% C. Operating costs 10% higher 16.5% D. Transport costs 1JD higher 15.7%
Source: Bank estimates.
2/ International Economies Department. - 57 -
6.33 PhosphatePrices. The principaluncertainty is the future level of phosphaterock prices. Although currentlyfirm and rising, prices have varied sharply in the past. The base case conservatively projects the growth in rock prices at 0.66% p.a. in real terms between 1989-1998. The project returns are sensitiveto changes in selling prices. At a price 10% below the levels in the base case, the FRR falls to 13.1%. The recently institutedGovernment productiontax of JD5 per ton of phosphaterock produced,acts as a windfall profits tax, and could be reversed in all or part in the event of a sustained downturn in phosphateprices, which is not anticipated,protecting JPMC's financialviability. Assuming no real price increaseat all after 1989, the FRR is still 15.7%. Assumingprice increasesin accordancewith the Bank's InternationalEconomics Department forecasts, the FRR rises to 29.8%.
Jordan - World PhosphatePrices. Base Case and Sensitivity (708 BPL, FOB Casablanca,1988 US$/ton)
1288 1990 1952 FRR t)
Base Case 36.0 36.8 37.9 38.8 17.4 10% Lower 36.0 33.4 34.5 35.3 13.1 ConstantPrice 36.0 36.0 36.0 36.0 15.7 IEC Projections 36.0 41.7 44.4 47.2 29.8
Source: Bank estimates
6.34 Capital and OneratingCosts. The total project cost is estimatedat US$98.2million (JD 63.8 million),including physical contingencies. If actual investmentcosts were 10% higher (in real terms),the FRR would be 16%. Average operatingcosts, includingthe costs of mine production,transport to port, marketingand overheads,and already includinga 10% contingencyon all productioncosts, are estimatedto be US$13.89 (JD9.03)per ton over the life of the project, excludingthe productiontax, and US$21.59 (JD14.03)per ton includingthe tax. If operatingcosts were 10% higher than anticipated,the FRR would fall to 16.5%.
6.35 TrasngortCost. There is some uncertaintyabout future transportcosts due to concern about the success of the currentAqaba railway (ARC) rehabilitationprogram, ARC's need to earn enough to cover its operatingcosts and debt servicerequirements and the final terms of JPMC's possible takeoverof some of the assets of ARC. Moreover,reduced back-haul opportunities from Iraq and strict enforcementof axle load limits could increaseroad transportcosts. However, even if land transportcosts were to increaseJD1 per ton to JD3.39, a 42% increase,the FRR would still be 15.7%.
2. FertilizerPlat RehabilitationComponent
6.36 The estimatedfinancial rate of return for the rehabilitation of the fertilizer unit (Annex 6-4) is 26.3%. For purposes of financial and econonaic - 58 -
rate of return calculation,the total projectcost is estimatedat US$35.0 million, includingUS$3.5 million of physical contingenciesand US$6.7 million of incrementalworking capital. The FRR was calculatedover a 12-year operating period from completionof the rehabilitation(1993 through 2004), with no salvagevalue for the project fixed assets or incrementalworking capital. The average annual net benefit at steady state productionis projectedas US$10.4 millionpa, and the net presentvalue of the project benefits at a 10% discount rate is US$29.1 million.
6.37 The favorablerate of return in the base case is due primarilyto the substantialincrease in production(36% from 1994 on) of phosphoricacid for fertilizermanufacture or direct sale and, to a far lesser extent, nominal savings in the unit cost of productionas a result of modestly improved productionefficiencies. Rehabilitationis expected to result in a small decline in the amount of phosphaterock (0.5%),sulphur (1.6%) and sulphuric acid (1.4%) required to produce a ton of phosphoricacid.
6.38 Sensitivityanalysis indicatesthat the project remains attractive under a range of adverse assumptionsregarding capital and operatingcosts, sellingprices and capacityutilization, as the followingtable shows:
Jordan - FertilizerRehabilitation Component: FRR & SensitivityAnalysis Base Case 26.3% A. Sellingprices 10% lower 15.7% B. Capitalcost 20% higher 22.2% C. Operatingcosts 10% higher 14.6% *D. Capacityutilization @ 80% from 1993 14.4%
Sg=e: Bank estimates.
6.39 FertilizerPrices. The major uncertaintyis the future level of phosphatefertilizer and intermediateproduct prices. Although currentlystrong and rising,DAP and phosphoricacid prices have varied widely in the past and were in a long-termdowntrend from 1960-1987. JPMC adopted a flexiblemarketing strategyduring the past few years to lessen its dependenceon bulk DAP sales when prices were at their weakest, increasingthe proportionof bagged DAP sales in order to benefit from the higher margins availableon this more retail- orientedproduct. An objectiveof the fertilizerrehabilitation is to enhance JPNC's marketingflexibility and further reduce its dependenceon bulk DAP sales by giving it substantialadditional phosphoric acid capacity to sell as such or convert into DAP, dependingon the relativeprofitability of each product. The base case assumes that all additionalphosphoric acid productionis sold as acid at a base price of US$350 per ton in 1989 and 1990, equivalentto the estimated long-termmarginal replacementcost of phosphoricacid production,and declining by 0.13% p.a. between 1991-1995and by 0.71% p.a. between 1996-1998,in real terms. This price is about 15% below the average sellingprice during the first 5 months of 1989 (US$421per ton fob), though that price was based on special factors concerningthe availabilityof phosphoricacid in the Indian market and - 59 - is not considereda representativelong-term price. At a price 10% below the projectedprice level - and about 25% below the current sellingprice - the FRR dropsto 15.7%. Such a declineis consideredunlikely given the conservative pricesfor DAP fertilizerand phosphoricacid used in the projections.Assuming no real pricechange after 1989, compared to a modestdecline in the base case, the FRR risesto 31.7%. Assumingprice increases in accordancewith the Bank's InternationalEconomics Department forecasts, the FRR increasesto 41.5%. Jordan- DAP FertilizerExport Prices. Base Case & Sensitivity (FOBUS Gulf, 1988US$/ton) 1988 1990 1995 2000 BRR ( Base Case 197.0 213.4 212.0 204.7 26.3 10% Lower 197.0 192.1 190.8 184.2 15.7 ConstantPrice 197.0 213.4 213.4 213.4 31.7 IEC Projections 197.0 244.1 260.7 269.1 41.5
Source: Bank estimates.
6.40 Capitaland CperatingCosts. The capitalcost of the projectis estimatedat US$28.3million, including physical contingencies of 14%,plus incrementalworking capital of US$6.7million. If the projectcost (excluding workingcapital) were 20% higher,the FRR would only declineto 22.2%. Estimatedoperating costs are based on the experienceof JPNC'sfertilizer unit, adjustedfor the expectedmodest gains in productionefficiencies as a resultof rehabilitation,and conservativeforecasts of raw materialinput prices. As a resultof these efficiencies,average unit operatingcosts are expectedto decline1.8%, or US$3.18per ton. If, however,operating costs were to increase 10%, the FRR would fall to 14.6%. 6.41 Capacit!Utilization. The principalreason for the unprofitablepast operationof the fertilizerplant has been its inabilityto producenear design capacity.Output in 1988was 73.5%of designcapacity and is not expectedto exceedthat levelwithout rehabilitation. Design capacity of the rehabilitated plant is expectedto increase9% to 450,000tpa. Utilizationis expectedto declineto 70% in 1992 as the plant is closeddown temporarilyto bring the new facilitieson stream,to increaseto 85% in 1993 as plant techniciansbecome familiarwith its operation,and to operateat 92% of capacityfrom 1994,in the middleof the normalrange (90%-95%)of capacityutilization of such plants worldwide.Should the investmentin rehabilitationnot proveeffective at debottleneckingthe plant,and utilizationremain only at the 80% levelfrom 1993,the FRR would fall to 14.4%.
D. ProjectRisks 6.42 The beneficiationplant component of the Projectfaces no higher technicalrisks than thosenormally associated with mineralbeneficiation. All projectactivities involve proven technology that has been in regularuse in the - 60 - industrializedworld and,with the exceptionof flotationtechnology, in Jordan. JPNC has considerable experience vith the construction management of beneficiation plants at existing operations. The fertilizer plant component of the Projectfaces no major additional technical risk; similar rehabilitation has provednecessary at otherplants in differentparts of the world and the rehabilitationinvolves technology that is well developedand proven. The main risk lies in projectionsof phosphaterock and fertilizerproduct prices and sensitivityanalysis has demonstratedthat underworst case assumptions,the projectis not exposedto seriousrisk in this respect.
VII. ECONOMICANALYSIS
7.1 The economicanalysis demonstrates that the projectcomponents are each economicallyjustified, with economicrates of returns(ERR) of 26.18on the beneficiationplant component (Annex 7-1) and 28.3%on the fertilizer rehabilitation(Annex 7-2). The ERRs deviatesubstantially from the FRR's becauseof the JD5 per ton productiontax leviedon phosphateproduction beginningin August1989. Sensitivitytests carried out (para.7.6 and 7.10) indicatethat within a large margin of uncertainty regarding prices, demand, projectcosts, and land transportcharges, the projectcomponents remain economicallyattractive. The macroeconomicimpact of the projectin termsof the foreignexchange balance is presentedat para.7.13.
A. EconomicRates of Returnand SensitivityAnalysis 1. BeneficiationPlant Conmonent 7.2 EconomicRate of Return. The economicrate of return(ERR) was derived from the financialcosts of the projectand calculatedfollowing standard cost- benefit methodology. Total project cost for economicpurposes is US$98.1 million,including physical contingencies US$7.1 million, and incremental workingcapital of US$9.5million. All inputsare takenat marketprices, exceptinput costs of electricityand fuel importswhich were correctedto internationalprices to eliminate cross-subsidization of different types of petroleumproducts. Electricityhas been calculatedat its long-runmarginal cost. Tariffson importshave been removed. The followingcorrections were used in calculatingeconomic costs: Jordan- Economicand FinancialEnergy Costs RetailPrice EconomicCost Implicit (US$/ton) OUSS/ton) Tax (I Gasoline 338 174 195 DieselFuel 115 109 5 Fuel Oil 85 88 (3) Electricity(US$ per kwh) 0.0310 0.0277 12
SoUrCe: WorldBank Report,Jordan: Energy Sector Study, April 1989 - 61 -
7.3 Since no additionalinvestment at the port is necessaryfor the additional1.5 mpty rock throughput,the port charge for economicanalysis of the beneficiationplant componenthas bnen taken as the marginal port operating cost for an additional1.5 mtpy, calculatedat 14.3 file/ton (Annex 7-1).
7.4 Due to uncertainty about the level of future rock productionat Shidiya to be moved by railroad, the cost of trucking has been taken as the economic cost of land transport. Since a final decision regarding the road extension to Aqaba from Shidiya, through Disi, has not been made by Government, the road transport cost is calculated via the existing road through Ma'an at JD2.39/ton, including incremental road damage, but excluding taxes paid for imports. Because current rates are based on substantial truck overloading and back-haul opportunities for Iraq-bound traffic, which are expected to diminish over the life of the project, the sensitivity analysis examines the impact of higher transport charges.
7.5 The high economic rate of returr in the base case of the beneficiation component of the Project (26.1%) is due to the relatively low unit investment cost (US$13.17 per ton at a 15% discount rate and low operating costs (US$12.78 per ton) relative to the averagerevenue (US$37.61per ton) in 1996, the first year of full productionof Al and A3 ore. The low capital cost is partiallydue to the fact that many of the raw material input costs to the beneficiationplant were includedunder the first loan and have been treatedas sunk costs. The low operatingcosts are due to relativelylow strippingratios at the mine site and the allocation of certain mine operating costs to A2 production under the first loan.
7.6 Sensitivitv Analysis. The main projectuncertainties for economic analysis are future prices, the ability of the market to absorb the additional rock production, project capital and operating costs, and transport costs. The correspondingsensitivities were calculated:
Jordan - BeneficiationPlant Component- ERR - SensitivityApalysis
IL Base Case 26.1 A. PhosphateRock Price 20% lower 19.1 B. Capital Cost 20% higher 22.7 C. OperatingCosts 20% higher 24.0 D. TransportCosts 1JD higher 24.6
Source: Bank estimates.
7.7 The switchingprice for an ERR of 10% was calculated,indicating by how much the rock price could drop before endangeringthe viabilityof the project. For the ERR to fall to 10%, the assumed long-runcost of capital, the phosphate price would have to fall 40% from its current level and remain at that depressed level, relativeto the prices assumed in the base case, through the life of the project. - 62 -
7.8 Market Absorptive Cagacity. Theprojects benefits are based on an export tonnage of 1.5 mtpy. Although the analysls in Section III indicates that JPHC will be able to market this additional tonnage without difficulty, there is a minor risk of slower growth in world demand than that projected. Under this scenario, Jordan's exports might expand more slowly than anticipated, and the project mightreach full production two years later than forecast. Under a "slow growth" scenario, project production might develop as follows: Jordan - Boneficiation Plant Proiect Comonent - Base Case. Lower Demand Scenarios (Million tons) 1.993 1994 .122k 1996 Base Case Exports 0.945 1.232 1.413 1.479 Lower Demand Case Exports 0.4&2 1.010 1.413 1.479
Source: Bank estimates.
With slower growth of production, the project benefits would be reduced slightly, but the ERRwould still be 24.0%.
2. Fertilizer Plant Rehabilitation Component 7.9 Economic Rate of Return. The estimated economic rate of return is 28.3%. The average annmal net benefit of plant rehabilitation, for economic purposesis US$12.81 million at steady state production from 1998, and the net present value of the project benefits at a 10% discount rate is US$37.9 million. Project cost and analytical methodology were identical for financial and economic rate of return calculations with these exceptions: (i) the Government production tax of JD5/ton on phosphate rock and import tariffs of 22% on amonia and 3S on sulphur and aluminum hydroxide, to which JPIC will be susceptible beginning in 1994, have been deducted from operating costs; (ii) the "economic" port tariff for phosphate rock exports of JD 0.143 per ton has been applied to the transfer price calculation of phosphate rock. 7.10 Sensitivity Analysis. The results of sensitivity analysis for economic purposes are shown below: Jordan- Fertilizer Rehabilitation Component: ERR& Sensitivity Analvsis Base Case 28.3% A. Selling prices 10% lower 19.6% B. Capital cost 20% higher 24.5% C. Operating costs 10% higher 22.6% D. Capacity utilization @ 80% from 1993 15.4%
Source: Bank estimates. - 63 -
7.11 The switchingprice for an ERR of 10% was calculated,indicating how much average export prices would have to fall below the prices used in the base case for the componentERR to drop to 10%. Analysis shows that prices would have to drop about 18%, to an equivalentUS$180 per ton of bulk DAP and US$294 per ton of phosphoricacid, in constant 1989 terms, before the ERR would decline to 10%. These prices would be within about 7% of the lowest prices for DAP and phosphoricacid reached (1986-1987)during the period since 1960, and are consideredunlikely to occur.
7.12 Market AbsorptiveCasacity. Jordan's DAP exports in 1988, amountingto 626,398 tons to some 20 countries,represented about 2% of world DAP exports in that year. Rehabilitationwill increasecombined DAP and phosphoricacid export potentialto less than 3% of currentworld DAP exports. JPMC is not anticipated to have any difficulty selling the moderate additional amount of fertilizeror phosphoric acid produced.
B. Foreign Exchange Balance and Employment
7.13 The benefits of the two project componentsaccrue in direct foreign exchangeearnings and the profitabilityof these componentstranslates directly into foreign current benefits for the country. The foreign currency balance of the project is extremely favorable. The cumulative foreign currency balance for the beneficiationplant component(Annex 7-4), discountedat 10%, is JD132 million, equivalentto US$203 million, and JD65.0 million, equivalentto US$100.0 million, for the fertilizerrehabilitation component (Annex 7-5). The beneficiationplant componentof the projectwill generate 350 jobs and, in addition,100 jobs in the transportsector.
VIII. AGREEMENTSREACHED AND RECOMMENDATION
8.1 During negotiations, the following agreements were reached:
(a) With JPMC that it will:
(i) maintain separate accounts for the Mining and Fertilizer units, as well as consolidated accounts (para. 2.30);
(ii) continue to have its annual audits completed by auditors acceptable to the Bank and that audited financial statements continue to be presentedto the Bank within 6 months of the end of each fiscal year (para. 2.30);
(iii) enforce and monitor the environmental and occupational health and safety standardsat the beneficiationplant and fertilizerplant and ensure that the standards are maintained in a manner satisfactory to the Bank (paras.4.36 and 4.38);
(iv) establishProject and Cost ControlUnits with company personnelof qualifications and experience satisfactory to the Bank (para. 4.59); - 64 -
(v) execute a contract,to terms and conditionsacceptable to the Bank, for Projectmanagement services for the rehabilitationof the fertilizerplant (para.4.60);
(vi) maintain a working ratio (workingexpenditures/current revenues) below 0.8 (para. 6.25), and satisfactorydebt serviceand long-term debt/equityratios of above 1.5 and 60/40 respectively(paras. 6.26 and 6.27); and
(viii)update annually its five-yearinvestment plan in consultationwith the Bank at least six months prior to the beginningof the fiscal year (para. 6.27);
(b) With the Governmentthat it will, not later than June 30, 1990, or such latar date as mutually agreed, submit proposalsfor the financialand institutionalarrangements for the rail transportof phosphaterock for Bank review and comment (para. 5.4).
8.2 The proposed loan will become effectiveonly upon receipt of satisfactoryevidence that all project-relatedloans with the Kuwait and Arab Funds become effective (para. 4.53) and that JPHC has establishedProject and Cost Control Units with company personnel of qualifications and experience satisfactory to the Bank (para. 4.59). The execution of a Project Management Services Agreement, to terms and conditions satisfactory to the Bank, to assist supervision of rehabilitation of the fertilizer plant will be a Condition of Disbursement for the fertilizer component of the project (para.4.60).
Recommendation
8.3 Subject to the foregoing, the Project would be suitable for a Bank loan of US$25 million equivalent for a term of 17 years, including a grace period of 5 years, at standard variable interest rate.
Industry and Energy Operations Division Country Department III Europe, Middle East and North Africa Region - 65 -
Ii ANNEX2-1
Iili liii ii ! i-'
ii~~~~~~~~~i -r- -T- ~~~~~~~~~a% a' - 66 -
N nITE KIXI OFJini AN= 2-2 IUTIUATW PHOIPATEPOJECT
JNM - lock Export Steas by Country _._...... (thoauaadtmn)
190 191 192 19e3 194 195I19061966 16 1988 ...... Cstntry: India 618 630 r9 431 612 966 960 1138 1134 Pak1stan 182 171 199 24 266 26 251 232 234 Uwtladuuh 90 71 50 114 93 123 114 62 90 OtherAsia 51 34 3 13 0 0 0 0 5 ...... Asia 949 906 1050 842 1171 1337 1325 1432 1471
Tman no236 226 142 193 217 177 225 269 2J6 PhfItlftw 26 6 0 3 6 0 13 13 1S Indiedte 235 204 17r 232 362 44S 516 394 S16 Jqu 276 236 230 251 300 311 266 317 251 alaysia 68 31 60 S2 6S 75 69 67 174 Chin 175 62 60 66 76 48 50 0 0 S. K"ee 0 0 0 55 136 166 192 145 163 ...... Far Est 101t 770 669 052 1162 1224 1353 1245 1407
lulgarwi 76 66 22 53 69 93 4 0 46 Poind 294 317 372 270 225 333 424 699 S5 Cuodraavla 63 47 43 147 112 116 110 73 115 am na 3K 684 611 740 661 664 590 503 532 Tupo lavla 201 121 252 17T 342 233 571 543 707 Turkey 432 407 101 132 169 171 215 492 653 ...... East Europe 1457 1644 1604 1519 1776 1630 1956 2510 2606
Italy 136 45 69 60 66 53 37 72 64 Grawo 0 20 5 53 93 115 91 46 65 Fr_ 0 102 112 172 16 110 173 132 114 Cyprus 0 0 0 10 0 0 0 0 16 W. G rw 0 0 0 3 0 14 42 11 0 Austria 0 0 0 2 126 Is 4 15 0 USwden 0 0 0 66 0 12 0 0 30 Other W. Europe 0 0 0 4 0 14 9 0 0
West Europe 138 167 186 392 451 333 396 276 289
Oc ta 0 5 53 60 113 67 46 33 30
Att Other 50 31 0 17 0 20 120 48 6
TOTAL 3612 3523 3562 3702 4695 4611 5198 554 5811
Source: JPNCNarketing Oapertit.
Elt3IE 1,4vember 1989 - 67 -
HASHENITEKINGDOM OF JCRAN AMNEX3-1 INTEGRATEDPHOSPHATE PROJECT .
PhosphateFertilizer Long-TermSupply/D_ d
Per Aim 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1997/98 1988-93 1988-98 ...... , ...... ------... ------...... _...... Region:
World Total SuppLypotential 38.77 40.05 41.15 41.61 42.17 42.52 1.86X Demand 35.84 37.02 38.22 39.00 39.85 40.80 44.18 2.63X 1.60X
North America Supply potential 9.22 9.75 10.23 10.21 10.19 10.16 1.96X Demand 4.35 4.40 4.45 4.50 4.55 4.60 4.80 1.12X 0.852
West Europe Supply potential 4.94 4.92 4.92 4.90 4.91 4.91 -0.12X Demand 5.00 5.00 5.00 5.00 5.00 5.00 4.80 0.002 -0.812
AfrIca Supply potential 3.64 3.94 4.05 4.11 4.14 4.17 2.76% Demand 0.68 0.72 0.75 0.79 0.82 0.85 1.00 4.56X 3.302
Latin America Supply potentIal 1.91 2.02 2.09 2.11 2.13 2.22 3.05X Demnd 2.80 2.90 2.97 3.05 3.13 3.21 3.60 2.77M 2.322
Far East Supply potential 6.07 6.20 6.34 6.48 6.80 6.91 2.63X Demnd 9.46 9.96 10.41 10.83 11.31 11.81 13.95 4.54X 3.392
East Europe Supply potential 9.68 9.91 10.19 10.45 10.63 10.76 2.14X Demand 11.42 11.78 12.25 12.42 12.60 12.87 13.50 2.422 0.962
Other Supply potential 3.31 3.31 3.33 3.35 3.37 3.39 0.48X Demand 2.13 2.26 2.39 2.41 2.44 2.46 2.53 2.92X 0.56X
Souree: CURRENTWORLD FERTILIZER SITUATION AND OUTLOOK, Jure 1988, ------FAO/UMIDO/WorldBlnk WorkingGroup.
EM3IE November 1989 - 68 -
ANNEX3-2
HASNENITEKINGDO OF JORDAH INTEGRATEDPNOSPHATE PROJECT ......
PhosphateRock - Future Demwd by Regios ...... ,, ___.... (Nhtlion tons rock) Growth Rate per annu 1986 1987 19E8 1990 1995 2000 1987-2000 ___ ...._.. .. --- ...... --- ...... __
North Aar 32.7 33.5 34.3 36 40.7 45.9 2.5X
EEC-10 13.8 14.1 14.3 14.5 14.7 14.8 0.4X
Non-Narket 1/ 39.2 39.9 40.5 42 45.7 49.8 1.7X
Asia/Far East 21.7 22.5 23.2 24.9 30.7 36.5 3.8X
Africa 16.4 19 20.6 22.5 29.9 41.5 6.2X
Other 16.9 17.1 17.3 18.3 18.9 19 0.88
TOTAL 140.7 146.1 150.2 158.2 180.6 207.5 2.78
i/ Eastern Europe *d USSR
Souroe: Vartd Bank, IEC Department projections.
E3I3IE ll~r 19819 - 69 -
ANNEX3-3
HASKENITEKIMMON OF .O01M INTEGRATEDPNOSPHATE PROJECT
Phosphate Rock - Production Forecests by RevIon ...... Growth Rate per iu 1966 198? 1988 1990 1995 2000 1987-2000 ......
USA 38.9 40.9 41.5 42.6 45.7 49.0 1.4X
USSR 33.2 33.6 34.5 35.5 38.6 41.8 1.7X
N. AfricajUiddle East: 43.1 44.2 45.8 48.9 59.2 73.2 4.0X Norocco 21.2 22.0 22.7 24.7 322.0 42.1 5.12 Tuisia 5.9 6.1 6.4 6.6 7.1 7.7 1.8X T9og 2.3 2.4 2.6 2.8 3.6 4.4 4.8X Jordan 6.2 6.4 6.5 6.7 7.4 8.2 1.9X
China 9.5 10.0 10.5 12.0 16.0 20.5 3.72
Oceania 2.3 2.2 2.1 1.9 1.4 0.9 -6.6X
Other 15.0 15.2 15.8 17.3 19.7 22.1 2.9X
TOTAL 177.5 188.0 188.4 199.0 520.7 269.9 2.7X
Source: IFA Ail Phosphate Rock Statistics (ActuaLs) ----- lorld Bank, IECDepartmnt Prospectus, Noveebr 1968.
EM3IE N1ovber 1989 - 70 -
ANNEX 3-4 ...... Page 1 of 2 HASHEMITEKINGDON OF JORDAN INTEGRATEDPHOSPHATE PROJECT ......
PhosphateRock and DAP - Price Hlstory and Forecasts ......
Phosphate DAP
Current Constant Current Constant
1988 $ 1988 $ (NUV defl.) (HUV defl.) 1965 14.0 63.0
1970 11.0 42.6 54.0 209.3 1975 68.0 146.1 243.0 522.0
1980 46.7 63.0 222.2 299.7 1981 49.5 66.4 195.0 261.7 1982 42.4 57.7 182.8 284.8 1983 36.9 51.6 183.5 256.3 1984 38.3 54.4 189.1 268.8 1985 33.9 47.7 169.0 237.7 1986 34.4 40.9 154.2 183.4 1987 32.0 34.6 172.7 187.0 1988 36.0 36.0 197.0 197.0 1989 41.0 41.5 219.0 220.5 1990 44.0 41.7 254.0 244.1 1991 46.6 42.2 269.9 247.3 1992 49.4 42.8 286.8 250.6 1993 52.4 43.3 304.7 253.9 1994 55.5 43.9 323.8 257.3 1995 59.0 44.4 345.0 260.7 1996 61.9 45.0 360.0 262.4 1997 64.9 45.5 375.7 264.0 1998 68.1 46.1 392.1 265.7 1999 71.4 46.7 409.2 267.4 2000 75.0 47.2 427.0 269.1
Source: World Bank, IEC Department,October 17, 1989.
EN3IE November 1989 - 71 -
Annex 3-4 HASHEMITE KINGDOM OF JORDAN Page 2 of 2 INTEGRATED PHOSPHATLE2
Phosphate Rock Price: 1960-2000
coatm 13 6ton
I20170 I
340 lw NSI so
40-
103 19tI 193 97 1975101 194 137 100 11 19 5 1'*9
0 utl, ISc - AVg. W=,"600
DAP Price, 1967-2000
700-
4W.SW-
97 19 19W7 117W79 191Q 15 1911 1SSt 1994 1997
a ACtgin, ISC + buS 0_ Avg. 1011-9
3IE November 1989 - 72 -
NASNITE KIO OF JDAN ANNEX345 ITEGRATEDPHOSPIUTE POJCTT
Forest Rock 1wrtsb REeginsz17-2000 _......
Grwth Rate Groth nate Growth Rate Grotth in per an W m per awnu teom 1967 1990 19t7-90 199 1990-9S 2000 1995-200 1) 67-2000 ...... ~ . _...... ------
vat Euo 16603 1664S 0.11 155 -0.71n 16061 0.0% -542 Eat Ewp 105"9 12120 4.71 13120 1.6" 13518 o.6 2f9 South Asia 3173 3 8.01 499 4.5S 65 3.31 2664 Far EKt 4641 4321 -2.6X 6m0 0.11 74S9 3.21 617 *AUOthe 606 8145 7.21 9 0.O11 507 1.0X 1896 Wtrld 43115 4m5 2.6e 45614 o.6 51402 1.1X 7617
Foreast Rock Exports. by Ewtort. Lews Shoret md Rates of Growth
Extorter: NgrdJNorocco Tunist a Atei Syrara lsretl Namu Christas USSR USA Other Totat
Eorts (thousid tam)
1967 S52 13061 1245 m 1604 2667 1376 47 3518 90OT 5430 4509 19W 6227 14052 1443 75 20W M7 1602 0 3500 9f54 5716 48135 1995 7320 1453 1571 s 226 2734 0 0 3400 10875 5696 49504 2000 a6 1511S 1666 936 235 26D4 0 0 3400 11640 6167 52351
Share In World Rock Exports
987 12.3 29.0% 2.6a 1.tX 3.6 5.91% 3.11 1.9% 7.61 20.0e 12.0% 100.21 109 12.91 29.21 3.0X 1.0X 4.21 5.11 3.31 0.01 7.31 20.7n 11.91 100.0% 19f5 14.a 29.41 3.2X 1.6 4.63 5.s5 0.0% o.es 6.9% 22.0% 11.91 100.11 2000 1S.43 29.0% 3.21 1.61 4.51 5.41 0.01 0.0% 6.51 22.2X 11.S6 100.0%
Grnoh Rates Per Amnu
19U-1990 4.01 2.51 5.1X 3.13 6.3 0.81s 5.21 -100.0% -0.2X 3.41 1.71 2.21 1990-19ff 3.31 0.71 1.71 O.1 2.11 O.11 -100.0% 0.0% -0.6" 1.61 0.63 0.63 1995-2000 2.3X 0.91 1.2 0.6 0.61 0.51 0.0% 0.0% 0.01 1.4 1.0% 1.11
Source: World llk staff ntiltes.
E631E loebwr 1969 - 73 -
HASHMITE KINGDOM OF JORDAN Annex 3ML INTEGRATEDPHOSPHATE PROJECT
Jordan's Export Shares BY Region (average 1Y 5 - )
East Europe (34.3%) Asia (36.72)
All Other (1.4%) West Europe (5.1%) Far East (21.82)
Growth in Rock Imports.1987-2000 (Composltionby Region)
All Other (22.9%)
Eastern Europe (37.3%)
Far East (7.4%)
South Asia (32.42)
EM3IE November 1989 - 74 -
IUASKIMITrKINGDOK °F JORDAN INTG PHOSPHTEPOJC
Tentitive Production/Rxoort Plan (million tonnes)
Bas Cae
------PRODUCTION ---.. SALES------Year Existing ------SHIDIYA------Export Domestic Total Nines / I h/ I III IV Total Sales ..._.__...._...... _.._...... ___...... 1989 6.4 0.3 - - - 6.7 5.7 1.0 6.7 1990 6.1 1.0 - - - 7.1 6.1 1.0 7.1 1991 6.0 1.5 - - - 7.5 6.5 1.0 7.5 1992 6.0 1.7 - - - 7.7 6.7 1.0 7.7 1993 5.5 2.7 - - 8.2 6.9 1.3 8.2 1994 5.4 3.0 - - - 8.4 7.0 1.4 8.4 1995 5.0 3.2 0.4 - - 8.6 7.2 1.4 8.6 1996 4.6 3.2 1.0 - - 8.8 7.4 1.4 8.8 1997 4.1 3.2 1.7 - - 9.0 7.6 1.4 9.0 1998 3.3 3.2 2.7 - - 9.2 7.8 1.4 9.2 1999 2.6 3.2 3.2 0.4 - 9.4 8.0 1.4 9.4 2000 2.0 3.2 3.2 1.2 - 9.6 8.2 1.4 9.6 ......
Ana4nded CBQM QJ
------PRODUCTION------SALES------Year Existn ------SHIDIYA------ExportDomestic Total Mines A/ I b/ II III IV Total Sales
1989 6.4 0.3 - - - 6.7 5.7 1.0 6.7 1990 6.0 1.0 - - - 7.0 6.0 1.0 7.0 1991 6.0 1.5 - - - 7.5 6.5 1.0 7.5 1992 6.0 1.7 - - - 7.7 6.7 1.0 7.7 1993 5.5 2.7 1.4 - - 9.6 6.9 2.7 9.6 1994 5.4 3.0 1.9 - - 10.3 7.0 3.3 10.3 1995 5.0 3.2 3.0 - - 11.2 7.2 4.0 11.2 1996 4.6 3.2 3.2 0.4 - 11.4 7.4 4.0 11.4 1997 4.1 3.2 3.2 1.1 - 11.6 7.6 4.0 11.6 1998 3.3 3.2 3.2 2.1 - 11.8 7.8 4.0 11.8 1999 2.6 3.2 3.2 3.0 - 12.0 8.0 4.0 12.0 2000 2.0 3.2 3.2 3.2 0.6 12.2 8.2 4.0 12.2 ...---.---.. .-.---.---.-...... --.---.----.------.. …-. .-. ...--.. . A/ includesminor adjustmentsfrom/to stocks. b/ incorporatesphosphate rock productsfrom the ShidiyaPhosphate Nine Project(Loan 2902 JO) and, starting 1993,also from the beneficiation plant component of the Project. 9/ incorporates feed (domestic sales) to potential Joint Venture FertilizerPlants.
EN3IE November1989 - 75 - ANNE 4-2 HASHEMITEKINGDOM OF JORDAN INTEGRATEDPHOSPHATE PROJECT Shidlya Benficlation Plant Actual Net Basel Welght/TCPBalance
MINE Al A2 A3
SCALPINGSTATION +250mm Al A A3 - NIL 10 413w 100 312 10i0 2 Al A2A 100 49.0 100 70.0 100 45.8
DRYSCREENING SECTION -12.5mm -125 |
137.213e.2 12.mSmm ROC A2 115.01 47 Al A3 190.0174.0 PRODUCT A52.3 216 754 198 I 1L-146-8.- | +5mm 58 85.5262.885 0
o A324.6
0 14.4 26.8 +12.5mm _l _ ___ WASHER 1 | 12.7 | 52 | J I -1mm+ 4(4 I Z712.7| 49| +1mm | Al II30.0124I~ROCK - PRODUCT
A3 -Al 9. 4 1.6127 7.7 1392~ AQv ~ ~ ~ 72954.21
0 L~~~10.7147. 1 -44, s FLOTATION
1mm +4qA A3 62 138.01100 ROCK WASTE 10.7 20.4 -1 mm+ 44p 1622175.2 PRODUt&
W"ht % TonPer Hour Solids Perwh(Mtm/r DIstribudion TCP%(Grade) of TCP
EM3IE November 1989 ' - 76 - AMU 4-3 HASHEMITEKINGDOM OF JORDAN INTEGRATEDPHOSPHATE PROJECT Shldlya Benefclation Plant WaterSolids Flow Diagram
UIINE N jM Al A2 A3 785765 50~50000 5451
NominalCapacfty SCALPINGSTAMON te is 1500TPH +250mm A A2 A3 _ NIL r7-R5 -7-agI F500 500 1 54 A1A2A3 19 9. NIL- N EI IF IF DRYSCREENING SECTION -125mm -125 |mm Al ~~~~~~~~~mm
19 | 97.5mm[ +124nAl A3 O2 INIL NIL PRODUCT 410 400 410 400 NN NIL +5 mm 10 97.5 10 97.5 AS 34713~ 0 3 +125 mm WASHER -1 mm +40 279229 ~Al ROCK 0n | ' | '-PRODUCT
g -4q-10 * E L { |~~~~~~~~~WATERWELLS
n A3| | 309 | 54 | -1 mm +4CM Maxtmumto meet I e25S 17-5I -4(50 DesignRate
I FLOTATION 74%Fine 23%Coarse
AS AS 432 248 202Y ROCK SIUCASAND -0 $-PRODUCT WASTE 82 (OC Cncentae)
m3/Hr TonPer Hour Solids Slurt y (eecoHm m3jHr Welfht%Solids W"ater In Slurry
EM3IE WA1eaia Novemb r 1989 KEWEIOMNGOOMFJORDA r -ACF r_HA O
OORmn | lR Shr* hndnm FPW
-12~~A~ .*1:
+ > (2 *>4,r. n e P ; _ Al/A3~0 A FkPO
bv tA3er! aus(2 A2) <
' u w, s 14" %V r-----^- # Ix~
rXhoA *-...... bAeo |
§ __ § ( | § | i " R&| @- ff~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~AlA OllrSbrb£t~~~~sc aw4t A *1 * _i A3 NOrUo 1989'- ,,,l t---~~ =4=~ ~~~~~~~~~~~~I (SoctnnAPR)
=*--A-l.~~~~~~~~~~~~~~~~~ IC AG"_
SOE: Noeber 1989 696T zaqluDoN rau
. ' . I I,> _ ,
~~~~- L I tz ~l
.4_* - ; . - 79 -
Annex4-
HASHEKITEKINGDOM OF JORDAN INTEGRATEDPHOSPHATE PROJECT
Procurement Schedule
Total Tender Unit Base Issue Package Descriptlon Quantity Price Cost Date (US$m) (US$m) (m/yr)
1. BeneficiationPlant - scalping station,mine storage, screening and blending facilities,and overland conveyors. 1 9.0 9.0 03/90
2. BeneficiationPlant -cake storage and reclaimers,rejects dump, handling and loading facilities, and overland conveyors. 1 8.8 8.8 03/90
3. FertilizerPlant - Cooling tower cells and supply pumps 1 3.0 3.0 05/90
TOTAL BASE COST 20.8 Contingencies 4.2 25.0
EM3e November 1989 - 80 -
Anmex 4-7 HASHENITEKINGDOM OF JORDAN INTEGRAtSDPHOSPHATE PROJECT
Disbursement Schedule
Disbursement Profiles (CumulativeI Disbursement) IBRD Mining Industry EstimatedDisbursement schedule Fiscal Projects Projects Cumulativea Semester Cumulative Year Bank-wideA/ In EEA Dis-bursement ------USS million-----
1st Qu. 0.2 0.2 2nd Qu. 0.3 0.5 3rd Qu. 0.8 1.3 4th Qu. 0.9 2.2 7.0 8.0 8.8 1922 1st Qu. 1.0 3.2 2nd Qu. 1.9 5.1 3rd Qu. 2.1 7.2 4th Qu. 1.7 8.9 26.0 30.0 35.6 1993 1st Qu. 2.7 11.6 2nd Qu. 2.3 13.9 3rd Qu. 1.7 15.6 4th Qu. 1.4 17.0 48.0 59.0 68.0 122A 1st Qu. 1.7 18.7 2nd Qu. 1.6 20.3 3rd Qu. 0.5 20.8 4th Qu. 1.0 21.8 69.0 78.0 87.2 1995 1st Qu. 1.0 22.8 2nd Qu. 1.0 23.8 3rd Qu. 0.8 24.6 4th Qu. 0.4 25.0 84.0 91.0 100.0
1996 93.0 99.0 1222 99.0 100.0 1998ft 100.0
m/ Based on 17 mining projects, IBRD financed,all fully disbursed. b/ Based on 46 industrialprojects, in the Europe,Middle East, North Africa regions, IBRD financed,all fully disbursed.
EM3IE November 1989 -81 - ANNEX4-8
* I i-_ _ _ ;;-tN_611N |
*~~~~ ...... S rj_
110tdtilbIk
,~~~~~~~b. Ye, HASHEMITEKINGDOM OF JORDAN INTEGRATEDPHOSPHATE PROJECT ProjectImplementation Schedule 1987 E
- BenefhationPlant, FeD System Thickeners Slime Dprposal * -Drfrln Plants q nooM11-NMI -CakeStong. Rejt Dumping&on T1s1.1l AI/A3Produti Handling & TruckLoading - TrainLoadhing Facilities
SUPPORTFACILITIES c
-Offices *Workshop& Ancillarseo CENTRALFACILITES
-Office A Laboratores
-Workshops. Stores,Fuel Storage 0 INFRASTRUCTURE PowerDistributionL WaterSup19y TOWNSHIP FERTILIZERPLANT oEupe
o SWdInviationuo a st W SodcIosg 0 EquipmenllPlantoperationa & EvalualioiCompleted - ErecloorvCommisswwoinleftormanoeTests
0 ConbactAward i nn*CnM Wotk ksw*4482fa EK31IE November1989 - 83 - "muUlM1N w w
tqdntsiFO4ta 60t .1p Ad 4 Jordo UtI VAlm ga, Lt.
hgBn1%1 11F r tr7 ta13
1933i 3914t 19i5 33043.4.3.9131w 7Xi.t- #6. t FwtilUr loWi1091 tti631tfirtilIrwT 1.4*35
R l~~~~~~~~~~~~~~~aitdWIthfited Owidttill lUtdd f I litwtd tmtodl ii) Ilttwi Stl I-W li Itd lSuiX
Mu,, r,o,w 1,974,,1474,09,339 72,1n,33 U,20,64 %,1, 59,614,i 434,95,r9 "4,740,0 44,11,39 5,1,0u2 14,9, trnf rr to farliter toit 0 ; 0 5,f,2 0 5,63,234 9,15,10 0 9,1,o 0,,0 0 to1,,w ktw, t rki,ot,bl ft,30 1mom n4,1n %30, 2fO,4bf I,'2 1,437 o.ue ",39 0 0,209 TaWi _ 51,103,12"19,0,060 74,7,327 72,00,4"7 2,2,92 9,9,4 59,61,41134,9,0 94,13,102 m,Z.t,mso,iu,o2 :06,93,19 Prn04tlu toot LW 9,10,01310,240,90 11U,16,514 9,0,202 3,13,453,11,7Y,0 6,0l2,5h 2,337,6 16,44,244 M,UI,X 3O,0u-oo0M2,*2,W Catra.ctr 14,U00,70413,130,019 16,92,136 16,466,7141 0 I,4U,174 1,403,a 0 I1,04, 20,747,060 0 32,747,00 I" 6lts 0* a 1,W06,26 0 1,10,213 3,21,11m1,511,51 17,75,21 0 sia44" t,l49 CtlctricitY,thi ad cIt-u, 1.49,053 2,142,0571,07,52 1^,93,15 419 2,57,10 1,7212,Y3137,03 ,40,21 3,0 000 3,I12,X0 7,1t,000 cIn 60,423,005 1,24,0490,303 7,13,4931i2,37,499 19,5,9554 0,01710 3,07,945fs1,,76 1,U12,000l,3i., 2,36,30 OtW hol vp. lct 3rapr si 41,31,2313 2,963,302 1,341,064 1,3M142 1,1161,054 3,219.1% 5,W2 W0,20A 1,300,0 2,194O, 191 2,3,6 Pttoat, to FortliU it 0 0 0 (.M.1701 0,13,3t0 1,079, (9,44,101 9,442,761 0 43,111,70311,202,300 2,03,2 aUciatiA, 0,03,001 0,30,000 51,920 5 , 11 2,274 6,141,"s 31,210174 4,19,s3 7,4n0,11 ,7,9 4,0,333 4,i7,211
TUt lft ti Cuts 33,3,0 42W,507,345,19,439 4,30,410 2,110, 70,W1,06 27,6,"§ 6,3,60 0to10 33,20,2 41,314,434 74,1",Aw
0Wro stW $116 p9f.t 71,00,010 9,309,105 ,6,09 12,110,096 3^,m,m2 35,09,480 13,42,7m 1,11,90 14,9,702 1,132 3,931,39 20,13,063 Cl Otack finltso p ct 9,33,741 0,09,4 32,17,395 11,42,733 1,55,9 14,34,1n,013,092 39 290,",401 10,944,3 2,3,971 U,71,39
Tol Castof Sao" glad 33,012,07145,7111,5 39,106,119 44,t1,1SS 2V,I3,M 11,4,003 20,194,149 35,110,400 59,9,0 00,49,0 43,,216Vl,314,31
6as rt It (tausk 2,151,044 31,323,71 33,174,148 20,40,922 31,0Z3,33062,444,16 35,0,2 164,095 34,060,113 4,2,530 341,349 17,62,9
Freight clw 11,249,71015,025,4 1314,931,02 30,21i4 ,0 99 1,105,03 1,fell" l,291,11,f30,371,36 111,44 10s,9I90,7 laIn mnlm 44,41.1 4o0 7 13,11 003,011 1U,7 032,408 03 1 1,242 133,014 1,133,424 290 3 Pat a"" 0 0 0 0 4O1,99 40395 0 501,17 503,713 4,42,1 6e2,2m6s a""a broths.39, 301,039 515,402 503418 35,16 0 99,6 515,449 0 51504 01406 0 101,066 0w costs 0 0 0 0 3U,2S3 31 0 302,94 362,994 90,20 63,5" 1,011j,
Totl Ira". 0 tgk.tuft. 12,1,0 ,33,007 1.1,1 11,43,540 1,39,49 1,095 4,201,114 5,219 17 53 17,98,393 1,99, 439 19,034,,2
Mahiat,, 0 6a3 944,593 1,1,304 1,2179244 2,171193 0,111 3,31034 1,949210 1,0,3, 2,q97,1 2121,60 1,711 3,00,41 81h0wiclat. 1,u2 i4,u 202 u9, 23,417 1,L41 099U 30,4% 41,351 0,480 19,010 2i4,4uU .arlln_ti 1,41,49 m1 21,1510223 104,324 0,271 21,39 4,173,33 m3,59 5^,924 1,142," 2,0 7 15,741,371 total Osor30ads 2,090,09"2,409,W4 2,101,142 0,7 1,20,9 3,921,92 0,1,1 1,9 0 -,1,9 5,4 ,u59,4 9,93,353
Owata Profdit 9,547,11911,210,110 17,420,745 6,312,379 3,30,411 4,46,9 32,03,4 23,0 ,,017 3,,2m 0,2,441 2,031,0u4
bunt *aid 2,30,39 2,194,400 1,,147 1,297,7 2,70,174 3,9,131 2,91,1 1,470 0,4160,706 31) 2,3151,M 3,4,902 5,310,179 6a pmcy bholati 0 1,3#2,33 1,405,027 (14,46 123,t23 (303,4433 I35,f s1 471,216 909,0 3S,317,4204,307,09
otaowtest lag 2,5,M9 1,170403 30 1 1,093,47 2,1,21 ,04,0 3,070,900 030,040 7,491,020 321,4 0,420,M 9,7113,2 Iaiwln lous 1,24t,9933,519,39 t37,7929 2,I0,235 S3I6,13 2,7,%9 t1,33,01 1,231,4232,43,307 3,50,49 114,5 4,,01 Pot lcut 8,217,10912,013,32 130,5,30 9*,t2M,1(5,015,091 3,912,249 10^,0,37 203X4,40 4,1,033 , 00,16 n,5714 2,405,413 locu Tn, 0 0 5,12,210 1,72,3510 0 119,310 0 0 l,00,00 9190,tU 0 919,102
1bt 6,31,10972,0F3,71 10,0161 7 ,14 25,U2150692,1, 1, 37 20,00,22 2,W,O3 ,4,14 1,m=31'
0nli 4ct00w109 - 84 - _,w *i-, _ ,,
i09lao# 16 _ , W.
409 *v Luw 561 609 253s _m 353U bwe.-,^ 14_ 6u,. , s - m _ . w,~
(8611e101011 144110944.36.04991.36MA 66.0 am3.13, 416.3 3.1V .53,~ SWIM6 8.61111 I4~33 Obeim 45.oo53 01u 4 5.5 17,53 0,51 361 3. 0.3010 535 * 3.09 0*' VANWOfmowp .13.4g.m a.m.a .Fnwgau 46*' s.1^w.wm1,1&a.maJm*' WA... a.i.".An1 tAAmIa- 3s-.96.1,3 415. 111.131 . t436.1311 .4x,U,^411
ftw mom" U. ,61116 3n.6Z no ,^909 lt.3, mow ,a36 4 9 Le-po" 4W W? ? , a * ,39I4194 .9,111IMAMi llmt 111695.431 191.AM il.") . m"ft.
ttw~~~~~~~~~~~~~~~~~ 0 a = am .W I mm ULM 4t i tbtt, 11=1403 4f 1^ 5A.13 4.11161 53.ll6 1,09.5 43.5 6.6 43.53 MINIX1 31,53 11.14 onIs45 0 Wm 4111.53 ~1 I 4 g6.1141 4.1110 111.0 4i.su 83.1 4111,101
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Isaam In1.14. Mit 4,305,1901,13,30116 I,393, 3,213,13 V,2,442 6331,714 4,376431 3,1043,47 1,2111069 4,13,340 ceofto)kito I hpi 0v 01 - - 761,944 434,69 7403,269 76,2 7,2u1,472 Ltarta LiSs t4.30 I - 0- 17,13io 3,64,6 22,06,49 0 2,0,9 ether mg-tarehost, 3220,11 139,43 331,16131 141,39 403,34 24l,33 0 73,350 b itof Img-tor. kIt 2,636,21 3,64,62 4,493,30 339322,349,7 X 1W.9,40 7,633,691 20,1115,911 Olstrlati of krpl" 3mmvi,waild 4,975.22 3,1143,3 ,7,303114 11,9,02 133,02 4000 1-,0 0 0.m. Ia.alul4 of LUtorimLb. -. Vw 0 0 333,44 a ?,3,90 0 7,370,1 tota IdOicat1io of Fwi$. 1443,713431,91 93,0 21200,1,4 54,4 0 0 3,91,13 91,69,22 3,931703 46,464,92 094amp1 is a" (suite 14,763,69 2,343 26,31 5,111,111306,25423312ol7j7,93 45,l31 42I632,393 9,61,6W 26*1,11 14,969,62041,474,11030 IacImlau.tm of now a SW"in (agi Iaa,Ohrueul Is bwrat htat
lastomy .6 ha pum 2,74030 32,64063 33mm00 - 51960, 1,02,49 3134,310) 912,79 2,394,27 00,4 2,3*^ SPIRDpits lmtw9 (331,701) 5C3,270 M7.=3 - ,443130 (2363013 469,347 (5043 446,U4 037,233 1,3530)w tu.trA ascezl IaintMt 0 0 0 - 4,w,a4 *M ial u,233,26961,61,61 311016,192364,249 1,430"3 Pripatory imaus kirb 0 0 0 *0 6,031,313 0 6,30,23 1,,74 0 1,69744 Lottorsof audit 135,046 9,239 371,40 -99,20 1,43401)11 1309,41l3 M.4 31,140,133 311.330 370,1133 comui,ce 1.11,440 38,40,304 6,43,011 4,134,41 43,1123,43 6,121,93 31,2M,411 3,4,31 241,43,212 6,,491l 31,433,70 gmuu.triceiwUag 43~~~~~~~~,91(10,4303 10,3510,26 - - 30,13114 4117*) 300,243 3317146 1113,A291,3212,31.21 120.063430 11th rocoV44l MO9,32 (47,23 (433,249) 3S.26,3 113.60 103,400 40,49" 11,9 I9 3332,04) 02,37443 Pml i r 4.hiIt. 0 0 0 - (41,1142P3 0 326,01 320,43 3444,621 "91,94 MOM,07 Not RealelvW 310,937 "No06,6 1210117 33439) 3413,9 3,31 K3m2 (30.792 - 9o "a 0 3,20 - 1,6 3,33 15,424 51,771 3,496 313,4241 69,03 Prohl umgu 00,902 314,133 37,13 33 763 21,5 3,347 332 344,373 4104113 tubadhi Ikmdemits 9,39,6 4.73,001(13,14,6) - 2,9013 1,0690 36,4943 1,41100461 10,300430 1,.0344 32,001,94
IlsidIm wolf63 3036,423)1,440,49 3442,69 326,63 3,72,40 0 3,123,6 3m 3 ga0a 3fdo17,4371,336,2121 M."3,92,901393 70,63 0 1,6 6,1,00#9 I 6,730, FIhKstlas 0 0 4012.36 - 3,63 14,300 33,'9e 9,11 122,23 13,32 133,1 kane!. 26,376h 10444,07?31,403,63 - 4,7t41,3 90,77 369312 (MOM13) 1,OM11 18.30110 2,949,141 hcint orm"I 1,004,130 31,146 9,,6 - 10,6111,419 ,2491,690331,311,9Jl 11 3,911,2473 31,3,39 ,23933 311,411,313 ohmlepyfll 34,221,463 211,61 333,1331 - m233 r41i,US 1,43,31 03,93 1,37,334 31499733t,34701 kw0th90963 0 0 0 - - ,11,62 0 35,613 (3110,116) 3 334.1,343 3341,0413 009*3.bn1311kList 69,400 old,46 (4,493,323 13,103343 5,472wi 0 43,29 5,470,4 312,116,313 6,6,1933l19,113,I30 (mi att94161 of LaI 37,109,4693 431,403)4,237,34 - 310966 km4,26,6 5,3,1" 16212547 036, 0213(2,01,996 39,62,
09t Chap la usrn"Ut Liiklu i 3?9,13333,4- I~:- ,(,0- 0o 0 30,73400 3,616* 2,43,;6 ;-63~ 1, 11,6,9,1)37310 -u'e 133, -I,3) Ut ouph kid" I 114Wpu 34,762,31 2,393,93 221,37 0 0 312717,23") 11,33,6 33,1116,6) 9,316" 26,101,23 14,969454 41,474,640 4 WI all ori Wos wI WI e ttit ill WI u it PI isla-n a d w-J Vi wI El all Wir WI WI LVIo 31 wI we Ws I IIV4O
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NuiUts awn Ofdwia AMNX 62 Page 1 of 3 InbteratePtskt Project
Cosolidatod Flemcial Prolctl.n Ina Statua ts,H169 ta 000 IM JD)
19 196 190 1991 19 I9 1994 199" 19S6 197 1 s 1100010030 Dl ktl ----
P kt5 Rc Erprb 54,767 129,141 151,157 14,319 172,591 12,0 110,5120116,391 191,977 119,2S2 211,370 Fertiliw rEgts 56,131 92,251 101,0 101,121 9,SI 121,067 l2,27 u2,27 ,271 127,29 W2,29S
1st als RI 140,900 221,72 252,734 265,440 219,51 25,447 3SO,S073,62 320,249 32,562 9,966 Son msiuts 94 0 0 0 0 0 0 0 0 0 0
Total 1gs lo, 21,79 252,734 265,40 269,53 293,447 309,607 1,U62 320,24 3,562 9,4
Predim tests
Cotracto 20,747 17,989 17,223 13,3 10,744 10,814 7,524 6,759 8,661 6,232 6,237 Laer 212,482 15,574 16,804 17,567 18,022 1,377 17,912 1,643 19,191 19,074 19,640 Ptuephatsrock 10,202 19,715 24,79 24,814 23,748 31,507 34,219 34,436 34,606 34,73e 34,US Sair 11,005 17,058 17,232 17,646 17,085 22,717 25,771 21,240 27,421 2,655 29,913 #Am" *6,641 10,42 11.408 11,457 10,940 13,506 16,5 16,19 16,351 16,06 15, Aloiu_ bdsidse l,O6 2,7M5 3,30 3,410 3,441 3,472 3,606 3,641 3,3 3,525 3,469 Uulaosllorild tfr rmle 615 0 0 0 0 0 0 0 0 0 0 lodtril Ibtr 744 750 75a 7S 72 930 997 997 7 97 W7 ElctriAty and fes 5,90S 7,940 8,646 9,106 9,249 11,096 11,430 12,191 12,6? 13,307 1,942 Otker Casmubles 2,895 1,934 7,268 8,511 9,16 10,341 10,155 1,290 11,841 12,626 14,051 Production Ian n Ener 0 29,000 30,100 2,500 34,000 34,000 35,000 36,000 37,000 31,000 39,060 Sti casts af Foductlo 2,481 2,074 2,102 2,355 2,357 2,371 2,375 2,383 2,289 2,296 2,tt2 PWAats to Frtilinr llit (8,169) (12,12) (U,76) Itt,SS I1(10,2S01 I13,7101 (1,Wl 9(15,700) 115,0221 5,010 14,U3l IW nKeas 8,537 10,740 11,201 11,135 16,640 17,289 25,159 24,962 24,S61 23,9I 20,87 lit ckmn in aIP lavet" (911 3,126 1,046 654 (41) 775 08 441 493 397 397
TOtAlP6odKtlam Cost 75,038 131,076 140,681 141,660 I,190 1I3,486 171,6 1,923 1,193 114,ll86 5,42
B_inng Stock Fiolsd Prat 20,866 12,M 26,203 30,330 32,443 35,615 34,781 36,551 37,129 3,410 3,411 Eding StacKiFloisd Prectb 2,790 21,203 30,330 32,443 33,615 34,781 36,551 7,129 38,410 ,411 t,210
Total Cost of Sed kid 83,114 117,664 136,554 13,76 144,01 162,320 173,803 179,946 14,312 5,836 134,622
ross Proflti(Lssl 57,680 104,12 116,181121,672 1,55 131,127U5,914 135,7161,9 141,7251,047 frt.yrt & kvrkting
Tr_iprt 10,877 12,392 14,622 11,744 16,43 16,414 16,682 17,347 17,006 16,172 6,6 Pert FMs & intunl Trmnsport 5,263 1,578 5,798 6,098 6,295 6,473 6,676 6,62 6,976 7,128 7,27 Slm Expans. 3,100 2,659 2,M 2,915 3,000 3,155 3,2J3 3,314 3,425 3,49 3,567 iaks Offi 615 6 659 7 734 74 756 m 79 621 642
Total Trusprt a bktI 19,655 21,255 24,052 25,459 26,514 26,776 , 9 2,307 2,010 29,617 30,1
s"ba
dsn. &*ur,) [*nwiss 3,961 4,277 4,277 4,277 4,277 4,2m7 4,277 4,277 4,V7 4,277 4,277 bBekPeltifa 264 109 10 7S 51 42 37 36 32 32 31 Otber 5u es 1,769 4,120 4,120 4,12 4,120 4,120 4,120 4,120 4,120 4,120 4,120
Ttal o bn ts,994 8,507 8,504 8,476 8,449 8,440 ,435 9,434 6,430 8,430 8,429
pratIng ProfIitIass 2S,031 74,367 83,625 91,737 90,602 95,911 9,68S 98,976 98,497 103,679 tO,61
Fianil E q17la
totart I 5,163 8,021 8,540 8,510 9,714 10,026 11,606 10,601 11,401 11,31 U,427 Intsrt s Ut lov/Loa 0 337 1,105 2,163 3,069 3,381 3,13 4,110 4,890 5,752 6,741 8tkriwrmey RauUlt 4,347 1,693 0 0 0 0 0 0 0 0 0
Total Fliacl Expeess/(laclaI 9,710 26,17 7,434 6,347 6,625 7,447 6,471 6,491 6,511 1,162 4,62
iscella s lct 4,064 US us 11s US U5 us us 115 Us us hleullao lsagemars 0 0 0 0 0 0 0 0 0 0 0
Totl Kihllanas l1m _izm 4,084 U5 U5 11S U5 115 u5 us us 1ii us
Pretga o/( 22,405 47,905 76,306 85,505 80,09 08,179 91,521 92,00 92101 98,23 10477
Ia 9,197 16,767 26,707 29,927 29,432 31,802 32,034 32,410 32,235 34,381 3S,124
St lassl( l Aft Teo 13,206 31,138 49,5?? 55,179 51,660 57,576 19,491 60,190 9,6t6 G,651 61,9 ______SiR Oct. 1m - 88 - 3aababIia_ oflug. ANNEX6-2 16tb h bF Tage 2 oT 3
Cmalatad FiAl P,ujKtUs
Salus Sntsa "192-199 It 0001W1I3) am
crrut sts 1 1939 19 1991 12 1 1994 199 19 1997 199 altal poet Cuh 14,472 7,063 0,167 3,420 3,491 9,466 9,757 10,06910,37) 10,42 10,703 wLt-Trs Iattsu V71 6,M 15,6 42,059 64,474 N 4 13,2491,M 1m5,2292U0,2 ,41 Pnwd gown 1,78 4,24 4,436 4,537 4,486 4,347 4,7 5,07 1,226 1,n 1,410
kcmts rsivable 32,473 17,428 66,1W370,9 72,522 76,14 30,1,R 03 33,06Ot ,70 17,311
la statiuls S,2U 3,37 10,iO 10,256 9,W3 12,19 14,070 14,19 14,32 14,507 14,U 5Pa Wu 12, 12,311 10,311 10,000 10,000 10,000 0,00 10,000 10,000 10,000 10,000 1 1np u 7,00 10,73 12,130 1, 14,U12 14,274 I4,3 11,427 11, 1,316 16,7 Fikswd ps 12,7 26,203 304,0 32,44331,611 34,71 3,51 37,19 5,410 39,411 40,210 P tp 0e rg. 3,691 3,691 3,61 3,61 3,691 39 3,691 3,691 S,691 I,6 3,69
tMlCtrt aI t1,101 141,17016,424 200,323226,340 216,569 302,202 ,u9 361,93039,6g 941,120
LontT*r aIt
Gn Findbts 127,19 1,019 173,41017m,123 1 , 217,717261,398 337,099 39,342 344,sU s4,90 Las kcultd 1pw,atiu 61,13 ,2 3,469 94,"2 111,5 120,94 14100 m,u1 26,011 m7,94246,352
bt Find Isb 66,006 55,1 99,741 3O,441 4,293 123,33 107,293157,91 135,l 16,120 100,15
Caital brt Mr u,in 14s 36,312 22,936 49,670 71,031 4,100 62,6 0 20,071 45,00 62,m4 EquityIoustts 2,022 2,022 2,022 22 2,022 2,022 2,022 2,022 2,022 2,022 2,0M2 Loata n I nolotasoms( 30,412 41,442 35,916 30,391 24,36 19,340 13,814 6,23 2,763 0 0
TOtal1 t b uo1,87143 I,5 ,16 16,1 162,2 19,675 115,97413,292 140,17 13U 2 1,4U
tow t 226,379u,m 3on37,09 362, 400,51 452,24449,176 12,11 522,117 42,31t40,14
LusnM I miloma
Corit Unbliti.
coota ps.s 7,40 10,524 11,431 11,7 11,370 13,008 13,579 14,013 14,318 14,7 14,70B Tami le I,50 16,767 26,707 29,927 29,43231,002 32,034 3,410 32,235 34,3 3,24 3d1 Pable 1,13 11,291 13,8 16,116 19,73 22,479 24,370 27,14 29,20 31,529 3,973 Dtha yabIm 3,93 2,721 2,022 2,056 3,0o2 3,065 ,190 3,7 3,512 3,461 3,453 alrad n_awu 3,775 11,013 16,235 16,368 16,6g 19,039 20,139 21,084 21,40 21, a21,a0 £on t strtlatoL U,470 13,1U 1969 16,38214,419 12,6 11,710 14,9 1,,4 16,693 14,436 Srht-t is0lo 0 0 0 0 0 0 0 0 0 0
taul Carwt Liabilltin 45,721 74,494 U,492 "3,24,717 10,199 103,9321,011 116,289 2,97 123,74S
tur OMt 7e,441 ,70M 97,338 17,30 12,017 143,484114,765 145,592 13,O 142,34610,51 p,onusim 3,064 3,00 3,9 3,066 3,0 5 3,064 3,o06 3,063 3,062 3,062 3,062
TOa tuts Ualtis 31,707 93,776100,46 1tl0,93t 12,02 146,54 117,9261408,65 9,02 14,400 114,e2
tal ULbIlitin 17,430 160,27014,4 24,135 13,7W9247,747 2,E07 261,66 2s5,s 267,3s 27,765
br1dv E4ity
paidis Capital 34,200 34,200 34,200 34,200 34,200 34,2 34,2ee 34,200 34,200 34,200 34,200 IBMoP,uUe 21,38 21,38 21,300 21,300 21,300 21,500 21,300 21,380 21,300 21,30021,30 Coui y bn 22,241 22,21 22,241 22,241 22,201 22,241 22,241 22,241 22,241 22,241 22,241 Yhlotaiy Ri 14,401 14,4a1 14,411 14,431 14,481 14,431 14,401 14,481 14,431 14,431 14,481 , fnut 10 ,lo000IS,000 20,000 21,000 30,000 31,000 40,0o0 4,000 s0,000 1,000 htaliad Earsp 1,M 3,051 10,s9 36,37 U,93 62,767 n3,38 s3,1e 92,20913,212 U4,300 FarUllur hit Corrt bmt 0 2,656 9,214 15,43 I9,10 23,279 24, V7,345 4,463 60,760
ut muuslas Edty I,41,73 12,091 13,32 1m0,751 224,369240,44 tb,77 29,697 371
Total Uialitn bid s its 226,37927,003 317,0393623185 400,551 452,244 433,176 02,U1 122,3 62,212 00,546
NGIE Cotbr 1939 - 89 -
&smitb Uin6oO n ANE 6-2 Page 3 of 3 Integrated Ph_pte ProeEct
Coolidatud Flon ial Projacton
Swrcr and Application of Fwost 1918- 19ma Is 0001919 JlO
i196 1989 1990 199 im 1993 1994 1S 19 1997 19" Frm Owratoen ks al - P v j W-L dater Tax aid Fo 12,969 30,163 48,056 53,51 52,961 ,7 57,643 5,1 13,007 6"1, ,96 Upscaot 9,201 10,649 11, 11,213 16,691 17,321 25,196 26,011 24,89 23,93 211,3 ToalFaod froe OperaUt 2170 41,012 59,36 65064 69f,62 13,118 2,9 83,339 2,900 9,82 U
lcrie in: Sa ecoital 35,441 0 0 0 0 0 0 0 0 0 0 Luglna kbt 32,067 1,3313 20,64 26,834 32,596 30,072 23,048 ,762 1,762 23,o0 23,04 aiulationatLfglo-e Dt 16,r1 1,40 0 0 0 0o0 0 0 0 0 tn i3ty&ad o htt Pr ii 315 4 0 0 0 0 0 0 0 0 hacrn min gross Fld blots 0 0 0 0 0 0 0 0 0 0 Capitollorks inPra 0 0 34,781 0 12,113 50,960 0 6,4 0 0 0 Ipymt f mu-tem i tat lons 570 0 5,526 5,56 5,52 5,5n 5,52 5,526 5,526 2,763 0 Salenof ityloustints 0 0 0 0 0 0e 0 0 0 0 0
TOl la,o 109,00 71,169120,318 97,424l19,37 1,67 11,41 157,47 ",17 11,3 107,2
Invotmt is Finedbtst 4,320 500 4,391 1,913 20,54 61,851 3,681 75,701 2,243 4,772 4,792 Caital llerk in Progeue 7,262 23,874 21,401 26,733 33,474 25,429 17,0 o 20,0n 25,429 1,340 i,matmot inLon-TeomLan 21,67 0 0 0 0 0 0 0 0 0 0 lr tntmtin Fquitis 200 0 0 0 0 0o 0 0 0 0 0 DividedPnayt 5,130 11,291 13,329 16,556 19,788 22,479 24,870 27,194 Ig,320 1,529 33,973 PaYmtSto SPiiol t 0 9,07 u,370 11,064 6,74 13,5U3 12,901 1OSO 2,357 2,219 2,08 b,aluatost of Lr-tem loustet Lns 7,570 11,030 0 0 0 0 0 0 0 0 0 Repnaytof Lonr e Det 20,516 18,090 139 16,382 14,419 12,05 U,770 14,933 1,,364 16,693 14,43
SpplltilUs 66,663 73,07310,463 72,648 9496 135,927 70,562132,818 6N94 80,641 72,69
lit Chbaein lrig Caitl 41,415 (2,704) 14,85 24,776 24,918 23,749 40,S5 24,519 24, 31,21 34,723
tntal Applications 108,080 71,16910,310 9,424 11,s87 17,676 1,41 157,467 94,U7 1I6 W732
Rcucliuhn of Chng in lInb Cptal
miKUs DOaeILO CrMnt ats
PretrWipgd0vobn 1,830 0 0 0 0 0 0 o0 0 0 0 Fineue Productslootery 1,07611,413 4,127 2,113 i,1 1,U16 1,77o m on 1,001 19 lurk in Proce Inutnay 2,606 3,726 1,795 1,001 631 112 69 464 436 493 397 Ba leterials l1mtr 2,431 3,671 1,143 177 10 2,670 1,502 U1 13 177 l Spa PartsInventory 857 1,000) (1,0001 3511 0 0o 0 0 0 0 0 kccunts Rceliaible 4,96 ,955 8,735 4,232 2,127 3,625 3,97 1,?'8 1,71 1,95^ 1,550 Preid h_pn A r Currantkeats 1776) 2J,6 22 51 (51) 361 (10 251 19 (41 17 ah in Dks 12,687 (7,49 1,104 253 71 9 291 1U2 36 13 275 Shrt-la tmnts 0 6,38 ,697 26,433 22,415 21,320 37,455 27,52 24,452 33,034 33,112
et Chap in wCrnt tbs,62 26,0t9 24,653 33,909 26,007 30,229 45,6 21,618 28,111 36,709 36,490
Incre (DcraSa) in ContMtLailtIes
Ics ta PTayale 6,700 8,267 9,940 3,220 (495) 1,570 1,01O 376 (1751 2,146 1,143 Accred E rpoe 2,970 6,278 1,12 14 267 2,404 1,500 54 46 (2) 113 cntb Payable (11,612) 2,61 907 146 (167 1,630 572 434 0 57 3S Ote Paatbs 1,641 (1,257 101 35 216 (7) 124 1s 135 (IIU (1) Divid Payable 3,730 6,161 2,037 3,227 3,232 2,691 2,391 2,324 2,126 2,20 2,444 Short-Taoma Lam (19,178) 0 0 0 0 0o 0 0 0 0 0 Corrut turitis of Lgr7T ht (9,030) 6,660 (4,189) 2,413 (1,96) (1,014) (83) 3,163 431 1,329 (226W)
t chap in et Lbilti (24,787)28,M 9,98 9,134 1,091 6,482 4,783 7,29 3,219 ,698 1,769
lit age in W g CpItal 41,415 (2,704) 14,855 24,774 24,917 23,748 40,950 24,519 24,832 31,021 34,m
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HASNEHITEKINGDOM OF JORDAN
INTEGRATEDPHOSPHATE PROJECT
DocumentsAvailabla in the ProjectFile
GENERlL
1. JPMC Annual Reports, 1983-88
liF,CHNI 1. JPMC Feasibility Study, November 1988 2. U.S. Bureau of Mines. InformationCircular 9187; 1988 PhosphateAvailability and Supply,A Minerals Availability Appraisal 3. DetailodAr lysis of PhosphateRock InternationalTrade (Supply/Demand) 1987-2COO
FINANCIAL '-
1. JPHC - Mining Unit - DetailedProduction Plan, OperatingAssumptions and FinancialProjections 2. JPMC - FertilizerUnit - Detailed ProductionPlan, Operating Assumptionsand FinancialProjections 3. Detailed ProjectFinancial Analysis - BeneficiationComponent 4. Detailed ProjectFinancial Analysis - FertilizerComponent 5. JPMC - HistoricalRock and FertilizerExport Prices 6. JPMC - Mining and FertilizerUnit FinancialProjections 7. JPMC - Mine Production and Sales Plan 8. J9MC - Forecast Mine Production Costs
ECONOMIC
1. Detailed ProjectEconomic Analysis - BeneficiationComponent 2. Detailed ProjectEconomic Analysis - FertilizerComponent 3 Port Transit EceonomicCost
EM3IE November 1989 r- /
t 4 s o °~~~~~~io/ S Y R IA N kIgI94W. l'AARAB
/ A~~~~~~~~~~~~~~~~~~~~~~E s
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' f\t 3 EL H * ° ~~~~-NATIONAL HIGHWAYS
! t t X .X. tv N== .OTH RIER RAS
A AB" OCCUPIEDAREA OF POTE TERRITORIES N
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