No. Ministry of Industry and Minerals Preliminary Feasibility Study Report on Mining and Industrial Sector in Mid-Western, Iraq Final Report April, 2010 Japan International Cooperation Agency (JICA) UNICO International Corporation MITSUI & Co., LTD. Toyo Engineering Corporation MEE JR 10-003 Preface Japan International Cooperation Agency (JICA) conducted “The Preliminary Feasibility Study on Mining and Industrial Sector in Midwestern Iraq.” JICA sent the study team to Amman and Beirut three times from December 19 for 10 days, from January 22 for 9 days and from March 23 for 6 days, respectively to grasp the actual situation of the main industrial sectors in Midwestern Iraq and to examine a scenario of future development. The team held discussions with the officials concerned of the Government of Iraq, and conducted a field study at the study area. After the team returned to Japan, further studies were carried out. Then, a mission was sent to Beirut in Lebanon in order to discuss the draft outline, and based on this result, the present report was finalized. This Preliminary Feasibility Study report will be referred when Iraq and Japan consider the further cooperation on Mining and Industrial Sector in Midwestern Iraq. April, 2010 Letter of Transmittal We are pleased to submit to you the Preliminary Feasibility Study Report on Mining and Industrial Sector in Mid-Western region of Iraq. This survey was conducted by the Consortium of UNICO International Corporation, MITSUI Co., Ltd. and Toyo Engineering Corporation, under a contract to JICA, during the period from November, 2009 to April 2010. In conducting the survey, the study team collected the data and information of Mining and Industrial Sector to examine the feasibility and rationale of the project with due consideration of the present situation of Iraq and formulated the most appropriate outline design for the development of Mining and Industrial Sector. The Study team (Consortium of UNICO International Corporation, Mitsui Co. Ltd. and Toyo Engineering Corporation) made the best efforts to contribute to both Governments. We hope that the Study Report would be quite helpful and effective when both Governments will consider the feasibility of the project in future in more detail. Very truly yours, Isao Kawabata Project manager, Preliminary Feasibility Study Team for Mining and Industrial Sector in Mid-Western in Iraq The Consortium of UNICO International Corporation, Mitsui Co., Ltd. and Toyo Engineering Corporation MAP of the Iraq Al-Qaim Akaz Akashat Contents of Final Report Page Summary Chapter 1 Background of the Project 1.1 Purpose of the Study ..........................................................................................................1-1 1.2 Contents and Method of the Study.....................................................................................1-1 1.3 Study Structure...................................................................................................................1-2 1.4 Study Schedule and Overview of Study Trip.....................................................................1-3 1.4.1 Study Schedule.............................................................................................................1-3 1.4.2 Overview of Study Trip................................................................................................1-4 Chapter 2 General Information of Iraq and the Project Site 2.1 General Information of Iraq ...............................................................................................2-1 2.2 Al-Anbar Governorate........................................................................................................2-1 2.2.1 General Information .....................................................................................................2-1 2.2.2 Geography ....................................................................................................................2-2 2.2.3 MIM Sector in Iraq.......................................................................................................2-3 Chapter 3 Overview of Industry and Minerals Sector in Iraq 3.1 Overview of Industry and Minerals Sector ........................................................................3-1 3.2 History and Organization of the Ministry of Industry and Minerals..................................3-2 3.2.1 History of the Ministry of Industry and Minerals ........................................................3-2 3.2.2 Organization of the Ministry of Industry and Minerals................................................3-4 3.2.3 Outline of State Owned Companies in Industry and Minerals Sector..........................3-4 i Chapter 4 Current Status of and Development Strategies for the Industry and Minerals Sector in Iraq 4.1 Current Status and Issues of the Industry and Minerals Sector in Iraq ..............................4-1 4.1.1 Current Status...............................................................................................................4-1 4.1.2 Issues............................................................................................................................4-3 4.2 National Development Strategy and Positioning of the Industry and Minerals Sector......4-4 4.2.1 Overview of the National Development Strategy of Iraq.............................................4-4 4.2.2 Positioning of the Oil and Gas Industry .......................................................................4-5 4.2.3 Positioning of the Industry and Minerals Sector ..........................................................4-6 4.2.4 Positioning of the Chemical Fertilizer Industry ...........................................................4-8 4.3 Reconstruction Policies for the Industry and Minerals Sector ...........................................4-10 4.3.1 Recent Reconstruction Policies and their Outcomes....................................................4-10 4.3.2 Directionality of Reconstruction Policies beyond 2010...............................................4-11 4.4 Background and Results of Privatization Policies for the Mining and Manufacturing Sector..................................................................................................................................4-12 4.4.1 Privatization Policies of the Coalition Provisional Authority (CPA) ...........................4-12 4.4.2 Privatization Policies of the Ministry of Industry and Minerals and their Results.......4-12 4.5 Investment Law of Iraq and Examples of Introducing Private Capital ..............................4-14 4.5.1 Investment Law of Iraq (Original copy translated from Arabic to English is Attached to the Appendix)............................................................................................4-14 4.5.2 Example of Introducing Private Capital in the Industry and Minerals Sector..............4-16 4.6 Assistance by International Aid Agencies (Donors) ..........................................................4-17 4.7 Mining and Manufacturing Sector in Mid-Western Iraq....................................................4-18 4.7.1 Mining and Manufacturing Sector in Mid-Western Iraq..............................................4-18 4.7.2 Glass Industry...............................................................................................................4-20 4.7.3 Cement Industry ...........................................................................................................4-23 4.7.3.1 Overview of Three Cement Companies in Iraq....................................................4-23 4.7.3.2 Overview of Refractory Bricks in Iraq.................................................................4-26 ii 4.7.4 Chemical Fertilizer Industry.........................................................................................4-26 4.7.5 Projects concerning the Industry and Minerals Sector in Anbar Province...................4-27 Chapter 5 Market Trend of Chemical Fertilizer Industry 5.1 Global Market Trend of Chemical Fertilizer Industry .......................................................5-1 5.1.1 Nitrogen Fertilizer........................................................................................................5-1 5.1.2 Phosphate Fertilizer......................................................................................................5-7 5.1.3 Potassium Fertilizer......................................................................................................5-13 5.2 Trend of Chemical Fertilizer Industry in Iraq ....................................................................5-17 5.2.1 Production Trend..........................................................................................................5-17 5.2.2 Demand Trend..............................................................................................................5-21 5.2.3 Fertilizer Production, Consumption and Trade in Iraq’s Neighboring Countries and Other Major Countries...........................................................................................5-26 5.2.4 Fertilizer Prices and Related Government Subsidies in Iraq........................................5-32 5.2.5 Iraqi Trade Balance ......................................................................................................5-34 5.3 Chemical Fertilizer Demand Forecast in Iraq ....................................................................5-35 5.3.1 Agriculture Sector and Agricultural Policy in Iraq.......................................................5-35