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ICL acquires stake in Yunnan Yuntianhua for $250 million

January 18, 2016
Chemical Value Chain

Israel Chemicals Ltd. (ICL; Tel Aviv) says that it has completed a 15% equity investment in Yunnan Yuntianhua (Kunming, China), China’s leading phosphate producer, for approximately $250 million.

In October 2015, ICL and Yunnan Yuntianhua established a phosphate joint venture company, YPH JV. ICL’s investment in Yunnan Yuntianhua is part of forming YPH JV and will deepen the pair’s alliance, ICL says. YPH JV, which includes a mine producing about 2.5 million m.t./year of phosphate rock and a large-scale phosphate operation, is expected to be a leading player in China’s phosphate sector. It will include upstream mining, bulk fertilizers, and downstream businesses in specialty fertilizers as well as in specialty phosphates for the food and engineered materials markets. Yunnan Yuntianhua, which is listed on the Shanghai Stock Exchange, issued ICL 199,249,088 new shares through a private placement for Rmb8.24/share ($1.25/share). The investment was approved by China’s Ministry of Commerce (Beijing) and its Securities Regulatory Commission, ICL says.

As a strategic investor in Yunnan Yuntianhua, ICL will nominate 2 out of 11 Yunnan Yuntianhua board members, one of whom will be Stefan Borgas, ICL’s president and CEO. ICL’s representation on Yunnan Yuntianhua’s board and on a to-be-established phosphate business committee to provide advice and make recommendations related to Yunnan Yuntianhua ‘s phosphate business, as well as ICL’s right to appoint a deputy general manager for each Yunnan Yuntianhua and two of its subsidiaries, are expected to permit ICL oversight over these businesses, ICL says. Borgas adds, “[W]e believe that our representation on several Yunnan Yuntianhua governing bodies will help facilitate our efficient management of the YPH JV.”

ICL takes the lead managing the operation of YPH JV’s business, which has become a fully operating business unit of ICL and whose results will be consolidated into ICL’s financial reports. The jv is expected to provide ICL with a platform to penetrate growing Asian specialty phosphate markets, the company says.

Over the next five years, ICL and Yunnan Yuntianhua plan to build specialty plants and triple the jv’s white phosphoric acid capacity. The partners have also established a phosphate R&D platform at Kunming, China, which is focused on developing next-generation phosphate-based products and process technologies for YPH JV and their respective businesses.

By Deepti Ramesh

Source: Chemical Week

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