Fertiglobe, the world’s largest seaborne exporter of urea and ammonia, has set up an Australian unit to operate newly acquired assets from fertiliser company Wengfu.
The company established Fertiglobe Australia after it completed the deal to acquire the assets, comprising eight warehouses across five ports, it said in a statement to Abu Dhabi Securities Exchange, where its shares are traded.
Fertiglobe, which acquired the Wengfu portfolio in May, said the Australian operation distributes up to 800,000 kilotonnes of fertiliser per year to more than 200 customers, with capacity to increase that to 1.1 million kilotonnes.
The value of the acquisition was not disclosed and will be financed using pre-arranged short-term loans, which are expected to be paid back within four months, without impacting on Fertiglobe’s dividend distribution plans, it said.
The deal is expected to generate incremental annual Ebitda of $23 million by 2030, Fertiglobe said.
Ebitda, or earnings before interest, taxes, depreciation and amortisation, is a key metric for profitability.
“Fertiglobe Australia’s platform across the Asia Pacific region creates new opportunities, expands our customer base and strengthens our supply chain efficiency,” said chief executive Ahmed El Hoshy.
“This acquisition diversifies our footprint, strengthens our resilience against seasonality and broadens our portfolio to include non-nitrogen fertilisers.”
Fertiglobe has a production capacity about of 6.6 million tonnes of urea and merchant ammonia, produced at four subsidiaries in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilisers in the Middle East and North Africa.
Before the acquisition, Fertiglobe already supplied about 600 kilotonnes of urea annually to Australia, with Wengfu being Fertiglobe’s largest customer in the country, to meet growing demand.
Agriculture as one of key sectors in Australia and the use of fertilisers continues to grow in the country. Agriculture accounts for about 55 per cent of Australian land use, as of the end of 2023, data from the country's Department of Agriculture, Fisheries and Forestry shows.
The fertiliser industry continues to encourage the investment of funds in education, research and development in the sector, according to the Australian Fertiliser Services Association.
Fertiglobe Australia expects to “unlock new opportunities for our business and benefit our customers through access to a strong global ecosystem”, its chief executive Paul Osborne said.
Established in 2009, Wengfu Australia covers south-east Australia. The company is a subsidiary of China's Guizhou Phosphate Chemical Group, the world’s third-largest manufacturer of phosphate fertiliser and chemical products.
