Egypt’s Suez Canal Economic Zone on Tuesday signed a 2.6 billion dollars contract to build a methanol plant at Egypt’s Ain Sokhna port and industrial complex, it said in a statement.
The project will be executed in two phases, with the completion of the first by 2025 at an investment cost of about 1.6 billion dollars.
The second phase, with an estimated cost of about 1 billion dollars, is to be completed over a further three years.
The factory is expected to be constructed over a 1.6m sqm plot of land within the Suez Canal Economic Zone (SCZone) and would be 70 per cent funded through loans.
The project would be implemented over two phases, with the 1.6 billion dollars first phase providing an ammonia and methanol capacity of 400ktpa and 1mtpa, respectively.
The second phase, which will cost an estimated one billion, will add new production lines of acetic acid, MTO, and calcium ammonium nitrate.
Phase one will require a total equity investment of 480 million dollars, all of which would be funded through internally generated cash.
While the ownership structure of the project is yet to be announced, it was previously reported that Abu Qir Fertilisers would own 25 per cent, while Helwan Fertilisers would own 25 per cent, and Al Ahli Capital 50 per cent.
The timeline of the project is also yet to be determined, although it is expected that it will not be less than 4-5 years
Naeem Research views a positive development in the long-term for Abu Qir Fertilisers, especially given the advantage that the factory is likely to source the natural gas feedstock at a price of less than $4.5/mmbtu.
A similar positive benefit is likely to come from the expansion of the Abu Qir Fertilisers-3 urea production line, which is set to raise the company’s urea production bandwidth by 6 per cent-8 per cent at a cost of 80 million dollar-100 million dollars.
Naeem Research added that it continues to recommend a BUY on Abu Qir Fertilisers, with a TP of EGP 26.37/share.