Indian fertiliser firm increases stake in Senegalese phosphates producer

One of the world's largest fertiliser producers, Indian Farmers Fertiliser Cooperative (Iffco), has assumed a major stake in Senegal's key chemical firm after injecting $80 million into the cash-strapped company, Senegal's mines minister announced July 16. "This agreement allows us to pass on the control of Industries Chimiques du Senegal (ICS) to Iffco," Minister Madicke Niang said.

The Senegalese government, which previously held a 46.38 percent stake in ICS, will see its interests reduced to a minority shareholder with about 10 percent. Iffco's new stake in ICS was not immediately specified, but it would be the majority shareholder while the remainder of shares will possibly be split among the former partners of the company, especially India, Nigeria and Cameroon. IFFCO already owns 19.09 percent of ICS, with a further 6.97 percent held by the government of India. Under the deal, IFFCO will take control of ICS by leading a consortium investing $80 million to recapitalise the company.

Ridden by years of debt, ICS had stopped producing over the past eight months, costing the country between 1.0 and 1.5 percent in overall growth rate. The company shut down completely for part of 2006 after running up crippling debts of over $500 million that analysts have warned could threaten the stability of Senegal's financial system should the company collapse. The new investment is expected to help bolster Senegal's growth, which slumped to 2.1 percent last year from 5.5 percent in 2005.

With 2,500 permanent staff and some 12,000 casual workers, ICS is Senegal's top single private sector employer. At its peak it supplied 30 percent of India's demand for phosphoric acid, which is used to make agricultural fertiliser, according to an African Development Bank brief.

"ICS is basically a sound organisation," IFFCO Managing Director U.S. Awasthi said in Senegal's capital Dakar after signing the deal with Senegal's government. IFFCO hopes to return ICS to its pre-crisis turnover of 100 billion CFA francs ($210 million) by 2008, and then increase it by 25 percent a year thereafter, helped by a new cement factory it plans to build to exploit limestone on its phosphates mining concession, he said. Awasthi said ICS's current capacity was 1.2 million tonnes of phosphoric acid per year, equating to around 150 billion CFA ($315 million) in turnover.

Other minority shareholders, which include the states of Ivory Coast, Nigeria and Cameroon and other investors, will be given an opportunity to take a stake in the consortium, along with other investors from Senegal and elsewhere, Niang said.

Awasthi said ICS owed around 250 billion CFA ($525 million) in debts, and said "a major part has to be written off."

IFFCO, Niang and ICS's Managing Director Alassane Diallo met representatives from all but one of the company's commercial creditor banks as well as the French Development Agency (AFD), but could not specify how debts would be resolved.

NDTV