Although government last week confirmed that an 18-month moratorium initially placed on any marine phosphate mining activities in Namibian waters was never lifted, an Israeli manufacturer of products based on specialty minerals, Israel Chemicals (ICL), has confirmed that it signed a Memorandum of Understanding (MOU) with Lev Leviev Namibia Phosphate (LLNP) to conduct a feasibility study to mine phosphate and establish a world-scale phosphates and downstream production business in Namibia.
The feasibility study is expected to take 24 months and will estimate the average amount of time it would take to establish a local fertiliser factory.
ICL and LLNP currently estimate that establishing a fertiliser factory would take three to four years. The initial estimate is that a world-class fertiliser factory in Namibia will constitute an investment of between N$16 billion and N$24 billion.
The total operation will require marine mining, port operation and the fertiliser plants. According to ICL the main markets for the fertiliser manufactured in Namibia will be the local market, Southern African Development Community countries, as well as South America.
"The MOU with LLNP, a Namibian subsidiary of the Leviev Group, an international holding and investment company to perform a feasibility study to establish a world-scale phosphates and downstream production business in Namibia, including fertiliser-grade phosphoric acid, white phosphoric acid, bulk fertilisers (e.g. MAP and DAP) and specialty fertilisers.
"LLNP holds permits and exploration rights to mine phosphate deposits that are estimated to total approximately one billion tonnes," read a statement by ICL, in response to questions sent by New Era.
The statement by ICL went onto explain that the cost of extracting the phosphate is anticipated to be significantly more cost-efficient than to competitors, which, in turn, is expected to enable downstream production to deliver more affordable goods.
"Over the next several months, ICL and LLNP will finalise the technology development required to produce phosphate downstream products from marine deposits, including the establishment of a local industrial pilot plant. Upon its successful completion, a detailed feasibility study will be prepared to secure financing for the project," read ICL's statement.
ICL continued that the location of the plant on Namibia's shore, with close proximity to the marine mining site, is expected to provide major logistical advantages by virtue of its proximity to markets in North and South America and competitive freight rates to East Africa.
Also, the Port of Walvis Bay will be used to export goods, as well as to import raw materials required in the production process. The production plant is also expected to benefit logistically by its proximity to land-based transportation systems, including a railway line, serving areas with high demand in southern and West Africa.
"LLNP's parent company, Leviev Group, possesses unique technological knowledge of maritime mining based on its substantial experience in maritime mining in Namibia. This will greatly complement ICL's extensive experience, advantages and position as a world leader in the specialty phosphate market," read the statement.
ICL's partnership with LLNP follows the former's recent formation of a phosphate joint venture (JV) with Yunnan Yuntianhua, China's leading phosphate company. The Israeli-Chinese JV is comparable to the planned operation in Namibia based on a mine producing approximately 2.5 million tonnes of phosphate rock per year.
The Chinese JV with LLNP is part of the execution of ICL's 'Next Step Forward' strategy to diversify its sources of phosphate-raw materials in order to build its specialty phosphate business - in this case in the Americas and in Africa for the agriculture, food ingredients and engineered materials markets. These steps are expected to ensure the continuation of ICL's phosphate operations.
"We are delighted to enter into this partnership with the Leviev Group and to join such a long-standing and well-regarded investor in the country. Our joint platform will enable ICL to serve the evolving and fast-growing needs of the food and agro-markets on the African continent.
"In the short-term, we will focus on proving the technology required for this project and to demonstrate that it will enable us to operate as one of the world's cost leaders in integrated phosphate specialties. The majority of the substantial investment in the project is expected to commence in 3 to 4 years.
"This initiative is meant to serve as the next wave in ICL's expansion of its specialty business after most of our existing growth projects are completed. We do not expect this project to represent an additional financial burden on our company over the short-term," said Stefan Borgas, chief executive officer of ICL.
Meanwhile, Nissim Adar, president and CEO of ICL Fertilisers, added; "We are excited by the prospect of developing a large-scale phosphate mining and manufacturing operation in Namibia, which is one of Africa's most stable, liberal and democratic countries and known for its moderate political climate and strong interest in attracting foreign investment.
"We intend to carry out the project in close cooperation with the government to ensure the development of the local economy and its employment market, while ensuring environmental responsibility. We also look forward to working closely with LLNP and the Leviev Group to advance the first stages of this project in the months ahead, and to benefit from our respective strengths and capabilities over the years ahead in order to bring this important project to fruition."
The Leviev Group also said: "We are pleased to enter into the MOU with ICL, a global manufacturer of products based on specialty minerals that fulfill humanity's essential needs in the food and agriculture markets. Our cooperation is meant to answer worldwide needs in the fast evolving and changing food and agrochemical markets.
"LLNP possesses unique technological knowledge of maritime mining based on its long-term experience in maritime mining in Namibia. The company, which identified the mining business potential, has built and developed a vast phosphate-rich deposit, which shall contribute to turning Namibia into a leading player spearheading the world fertilisers industry."
Within the framework of the joint venture with ICL, including maritime mining of phosphate and the establishment of facilities to produce sophisticated downstream products, the companies say they will develop the raw materials required to produce high quality end products.
"The project has received the strong support of Namibia's Minister of Mines, and the parties will work in full coordination with the Namibian authorities and in accordance with approvals by the relevant parties in the country," added the Leviev Group.
"Within the framework of this cooperation, the companies will comply with a due diligence survey, including conducting stringent performance tests (EIA) related to evaluating the preservation of environmental quality. In addition, the fertilisers to be manufactured by the companies will contribute to the world's agricultural sector and food industry in general, and to Namibia's, in particular.
"Among the products to be manufactured by the joint venture will be fertiliser products that are specifically appropriate for Namibia's agricultural industry and that will help to provide richer agricultural products and alleviate difficulties experienced by Namibia's farmers. The project is also expected to provide numerous jobs in the country," noted the Leviev Group.
ICL produces approximately a third of the world's bromine, and is the sixth largest potash producer, as well as the leading provider of pure phosphoric acid. It is a major manufacturer of specialty fertilisers, specialty phosphates and flame-retardants.
ICL's mining and manufacturing activities are located in Israel, Europe, the Americas and China. The potash and phosphates that it mines and manufactures are used as ingredients in fertilisers and serve as an essential component in the pharmaceutical and food additives industries.
ICL says it employs approximately 14 000 people worldwide, and its sales in 2014 totalled US$6.1 billion.