21 May 2010
South African chemicals company Omina has announced a R1.4-billion capital investment in the construction of a world-class nitric acid and ammonium nitrate plant and associated facilities in Sasolburg to meet growing demand in the explosives and fertilizer markets.
This demand has been driven by significant growth in South and southern Africa’s mining sector – 11% year on year in South Africa, in spite of economic downturn constraints, according to Statistics SA figures released in March.
It is also fuelled by an increasing demand for fertilizer to help South and southern Africa provide solutions to the world’s food security challenge, and drive sustainable development across the continent.
This will be the first nitric acid plant of its kind to be built in South Africa since 1984.
“We have been building the market for 10 years, and this investment will enable Omnia to meet increased demand in both explosives and fertilizers, allowing us to leverage supply side synergies between these businesses and ensure security of raw material supply by building world-class capacity at home,” Omnia group MD Rod Humphris said in a statement this week.
Omnia is sourcing the plant technology and licences as well as engineering design and critical component supplies from Uhde GmbH of Germany, one of the world’s leading engineering companies in the design and construction of chemical, refining and other industrial plants.
The new facilities will utilise best in class technology conforming to the highest standards of sustainable environmental development, and plant emissions will be significantly below legislation requirements.
The facilities will have co-generation capacity, and will generate sufficient energy for their own requirements while contributing 50% of the current factory’s energy needs, significantly cutting the company’s existing electricity supply requirements.
Omnia has set out to raise shareholder capital of R1-billion to partially fund the expansion through a fully subscribed rights offer. The remaining funding requirement for the project will be covered through a combination of internally generated funds and long-term project finance.
Omnia has furthermore secured the participation of Industrial Development Corporate (IDC), by the IDC committing R250-million to the R1-billion equity capital raising, and indicating appetite to fund at least R300-million of the envisaged plant project finance that Omnia intends to raise in due course.
Omnia’s shareholders will have the opportunity to follow their rights in the capital raising in order to maintain their shareholdings, although Omnia will seek shareholder approval to secure a minimum IDC investment of R150-million.
“We are thrilled by this vote of confidence from our shareholders and institutional investors,” Humphris said. “We would not have been happy to commit to this large investment without securing shareholder and institutional support upfront.
“We are also very pleased to have IDC participating in the funding of the project, and for IDC to indicate such significant support on both the equity and potentially the debt side of the total project funding requirement.”
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