Fertilizer maker Coromandel International is set to acquire 45% equity stake in Baobab Mining and Chemicals Corporation (BMCC), a rock phosphate mining firm based in Senegal, Africa, for $19.6 million (about ₹150 crore).
Besides the acquisition through wholly owned subsidiary Parry Chemicals, there will be a loan infusion into BMCC of a further $9.7 million (about ₹75 crore), Coromandel said on Friday.
The move is aimed at helping strengthen backward integration and ensure long term supply security of rock phosphate, a key raw material in manufacturing of phosphoric acid, which in turn is used to make complex fertilizers, the company said. At full capacity, BMCC can meet up to one-third of the company’s rock phosphate requirement. The Senegal firm commenced active production from 2021 and has since stabilised its operations, it said.
The transaction, subject to the approval of the government of Senegal and satisfactory completion of conditions contained in the agreements, is expected to be completed in the second quarter of 2022-23.
A part of the Murugappa Group, Coromandel is the largest private phosphatic fertilizer manufacturer in India. It operates three units for manufacturing about 3 million tonne of phosphatic fertilizers. The company said it has strategic tie-ups with leading integrated players like Tifert (Tunisia) and Foskor (South Africa) for meeting phosphoric acid requirements. It has been also augmenting captive phosphoric acid production at Visakhapatnam plant and sourcing rock from various countries.
As part of a strategy to strengthen the value chain, Coromandel said it had been evaluating opportunities in the phosphate mining to secure its rock phosphate needs.
The investment in BMCC will be a step towards achieving long-term sustainability and supply security goals for meeting India’s fertilizer needs, said executive vice chairman Arun Alagappan.