VZCZCXYZ0001
RR RUEHWEB

DE RUEHAM #2683/01 2601249
ZNR UUUUU ZZH
R 161249Z SEP 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3537
INFO RUEHAD/AMEMBASSY ABU DHABI 1245
RUEHGB/AMEMBASSY BAGHDAD 6073
RUEHEG/AMEMBASSY CAIRO 3792
RUEHDM/AMEMBASSY DAMASCUS 3976
RUEHJM/AMCONSUL JERUSALEM 5167
RUEHME/AMEMBASSY MEXICO 0043
RUEHSK/AMEMBASSY MINSK 0003
RUEHOT/AMEMBASSY OTTAWA 0241
RUEHNE/AMEMBASSY NEW DELHI 0290
RUEHRB/AMEMBASSY RABAT 0419
RUEHRH/AMEMBASSY RIYADH 2022
RUEHTV/AMEMBASSY TEL AVIV 1331
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS AMMAN 002683 
 
SIPDIS 
SENSITIVE 
 
STATE PLEASE PASS TO USTR 
STATE FOR NEA/ELA, EEB/TRA, ISN/RA, ISN/NESS 
 
E.O. 12958: N/A 
TAGS: EAGR EMIN EINV JO
SUBJECT: CONTINUED HIGH WORLD PRICES LEAD TO RECORD REVENUES FOR 
JORDANIAN POTASH AND PHOSPHATE COMPANIES 
 
REFS: A) AMMAN 2654 
      B) AMMAN 1612 
 
¶1. (U) Summary: Growing world demand and rising prices resulted in 
rapid growth in Jordanian exports of fertilizer (up 126%), potash 
(52%) and phosphate (75%) in the first seven months of 2008 (ref A). 
 Correspondingly, revenues and profits at Arab Potash Company (APC) 
and Jordan Phosphate Mines Company (JPMC) also grew dramatically, 
although output levels were flat.  Despite record profits, the two 
companies continue to seek sustainable profitability, efficiencies, 
and opportunities.  APC, in an effort to rid itself of inefficient 
operations, announced the closure of its industrial salt facility 
and has offered to sell its fertilizer subsidiary.  JPMC, in 
coordination with the Jordan Atomic Energy Commission (JAEC), has 
contracted with researchers to conduct a feasibility study and 
design a facility to extract uranium from its phosphoric acid, which 
could be worth $1.5 billion annually.  End Summary. 
 
Rising Exports of Fertilizer, Potash, and Phosphates 
--------------------------------------------- ------- 
 
¶2. (U) Jordan's Department of Statistics reported in September that 
fertilizer and its ingredients potash and phosphate were the three 
fastest growing categories of exports and together made up 29% of 
national exports during the first seven months of 2008.  Jordan's 
fertilizer exports rose 126% from $211 million in the first seven 
months of 2007 to $476 million in the same period in 2008.  Exports 
of crude potash rose 52% from $174 million in 2007 to $266 million 
in 2008.  Exports of crude phosphate rose 75% from $120 million to 
$211 million in the same period.  India is a major market for Jordan 
exports of fertilizer and phosphate. 
 
¶3. (SBU) JPMC CEO Walid Kurdi told EmbOffs that phosphate is 
available worldwide, unlike potash which is found in only a handful 
of locations.  He added that the high world price of phosphate is 
encouraging other countries including Morocco, Syria, and Mexico, to 
increase investments in their phosphate mining industries.  He 
predicted phosphate prices would eventually fall as world production 
increased.  While high prices have been good for JPMC, Kurdi 
reported protests in Jordan by agribusiness, a small (less than 
three percent of GDP), but vocal sector. 
 
Profits Grow and APC Plans for Subsidiary Sales 
--------------------------------------------- --- 
 
¶4. (U) APC, licensed to extract minerals from the Jordanian side of 
the Dead Sea, saw its gross profits for the first half of 2008 grow 
95% to $179 million, compared to $92 million during the same period 
in 2007.  Potash sales volumes of 934,000 tons, however, were 
virtually unchanged.  APC, according to a September report by 
investment bank Jordinvest, is a "price taker," benefiting from 
global potash prices largely determined by the commodity's two major 
producers: Canada's Canpotex and Belarusian Potash Company (BPC). 
Along with revenue growth, APC's costs of production have grown with 
increased energy, freight and mining royalty rights costs, the 
latter almost doubling in March from $11 to $21 per exported ton, as 
part of an agreement negotiated with the GOJ. 
 
¶5. (SBU) APC has struggled with the management and profitability of 
its subsidiaries which were designed to develop downstream products 
(ref B).  APC has now formally put up for sale its subsidiary 
KEMAPCO which produces potassium nitrate fertilizer, di-calcium 
phosphate animal feed, and nitric acid.  APC is seeking an investor 
to purchase between 40 and 100% of the subsidiary.  APC also 
announced that it had closed its industrial salt unit, laying off 
140 employees and moving 60 employees into its potash operations. 
Jordinvest reported that the closure followed negotiations with the 
trade union and the Ministry of Labor to pay $4.2 million in 
severance to the employees. 
 
JPMC Reports Record Profits and Uranium Extraction Plans 
--------------------------------------------- -------- 
 
¶7. (U) JPMC is the only company licensed to extract phosphate rock 
in Jordan and is the largest mining and industrial employer in the 
country.  Jordan has an estimated 1.47 billion tons of rock reserve, 
roughly 12% of the global total and extracts phosphate from its 
three mines.  JPMC's net profits for the first half of 2008 reached 
a record $106 million, 438% higher than during the first half of 
¶2007.  Sales for the same time period totaled $431 million.  Kurdi 
told the local press that these results were achieved in spite of 
increased production costs, including energy and non-phosphate 
fertilizer raw materials. 
 
¶8. (SBU) In coordination with the Jordan Atomic Energy Commission, 
JPMC has contracted with researchers to study the feasibility of 
extracting uranium from phosphoric acid manufactured by JPMC's 
fertilizers plant.  Jordan has an estimated 130,000 tons of low-cost 
uranium and an additional 59,000 tons in phosphate deposits.  The 
head of the JAEC estimated in the press that uranium extraction 
could generate up to $1.5 billion in revenue annually, a figure 
equal to 9% of Jordan's GDP.  Studies to date have indicated that 
Jordanian phosphate used in manufacturing phosphoric acid contains 
about 50-100 parts per million (ppm) of uranium that can be 
extracted for the creation of yellow cake.  Salem Al Zaben, Chairman 
of Al Hasa Cement Company, opined that one reason India imports its 
phosphate from Jordan is because India is able to extract the 
uranium and thus buy uranium at phosphate prices. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman/ 
 
BEECROFT