Mitsubishi And Zuari Acquires Rock Phosphate Stake in Peru

Mitsubishi Corporation (MC) and Indian fertilizer manufacturer, Zuari Industries Limited (Zuari) have acquired a stake in Fasfatos del Pacifico S.A. (FOSPAC) from a major Peruvian cement manufacturer, Cementos Pacasmayo S.A.A. (Pacasmayo). FOSPAC is a subsidiary company of Pacasmayo dedicated to explorations and the production of rock phosphate in Bayovar, Piura Province, Peru. MC and Zuari have established a joint venture based in Singapore, MCA Phosphates Pte Ltd. (MCA), for MCA to acquire a 30% stake in FOSPAC. This will enable MC to hold 21% stake in FOSPAC through MCA. At the same time, MC and FOSPAC　have entered into an off-take agreement for MC to purchase FOSPAC ’s entire production for the export of rock phosphate, after FOSPAC’s fulfillment of local demand, for a minimum term of 20 years. FOSPAC is expected to have an initial production capacity of 2.5 million metric tons per year and commercial production is expected to commence in 2015. MC’s total investments, including the acquisition cost of the FOSPAC stake from Pacasmayo, are estimated to be around US$120 million. In keeping with the growing global population and economic development, there is a ongoing increase in food production and meat consumption, respectively. There is also an increasing demand for bio-fuel and a decreasing availability of agricultural land. Due to these above factors, the demand for worldwide fertilizer is expected to grow at an annual rate of 3-5%. Meeting future demand for rock phosphate, the key raw material of fertilizer, is expected to be difficult due to continued oligopoly caused by the small number of producing countries, scarcity of resources, and the export limits imposed by China, the largest producing country in the world. Low inland cost and shallow mining depth, which contribute to reduced mining costs, combined with the scarcity and eccentricity of resources are expected to help highlight the increased presence of Peruvian rock phosphate as a new supply source in the industry. By acquiring this stake in promising fertilizer, through the FOSPAC project MC will contribute to not only the stable supply of services to growing world markets, such as India, but also the economic development of Peru. Company Profile ・Cementos Pacasmayo SAA Pacasmayo is involved in cement and concrete businesses mainly based in northern Peru. Pacasmayo is a group company of Hochschild group, Peru’s fifth largest group company, which owns 67.5% stake. Listed on the London Stock Exchange, Hochschid’s core company “Hochschild Mining” operates gold and silver mining businesses in Peru, Argentina, Mexico and Canada. ・Zuari Industries Limited Zuari is the core company of Adventz group, listed on the Indian stock market, and is the largest private fertilizer company in both local production and sales, having also engaged in the import of fertilizer. ・MCA Phosphates Pte. Ltd. MCA is a joint venture set up by MC and Zuari in Singapore. MC holds 70% interest in MCA while Zuari holds a 30% stake.