Qafco's melamine project advancing.

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A Qatar Fertiliser Company (Qafco) revamp project for its first urea plant is making headway and is scheduled for completion by the end of this year.

The increase in urea production from 1,300 to 1,610 tonnes per day will be integrated into the up and coming melamine plant whose completion is set for the second quarter of 2009, said Qafco industrial relations manager Hamad Al Marwani Urea Casale of Switzerland has the engineering and procurement contract for the revamp of Urea-1. The melamine plant, belonging to Qatar Melamine Company, a joint venture between Qafco and Qatar Holding, is being constructed within Qafco's premises in Mesaieed and will have an annual capacity of 60,000 tonnes. Qafco is the majority shareholder with 60 per cent of ownership. The fertiliser company will also run both the operational and administrative aspects of the new plant. A licence agreement was signed with Eurotecnica Luxembourg for the supply of their proprietary high-pressure melamine technology, while a fixed contract was awarded to Eurotecnica Italy for engineering services, procurement of materials and equipment, provision of construction assistance and commissioning and start-up supervision. Qatar Engineering and Construction Company is overseeing the construction of both the melamine plant and the Urea-1 revamp project. "This points to the high level of expertise some local companies have attained, paving the way for them to achieve their full potential in the construction of chemical process plants," said Al Marwani. The Urea-1 revamp and melamine project are progressing in the midst of a major expansion in Qafco which will make it the world's largest single-site producer of ammonia. Already Qafco enjoys that status for urea. Currently the company has an annual production capacity of 2 million tonnes of ammonia and 2.8 million tonnes of urea from four ammonia and four urea plants. With Qafco-5, annual ammonia capacity will rise to 3.8 million tonnes and urea capacity to 4.3 million tonnes. The fifth train will come on stream by 2011, according to Al Marwani. The decision to set up Qafco-5 was taken in view of "strategic significance attached to diversifying the economy and expanding the national industrial base," said the official. "The project is backed by 35 years of experience and is encouraged by favourable fertiliser markets propelled by rising gas prices and a growing demand for food worldwide." Qafco's shareholders are Industries Qatar (75 per cent) and Yara International (25 per cent). The EPC contract for Qafco-5 was awarded to a consortium made up of Snamprogetti of Italy, the leader, and South Korea's Hyundai Engineering and Construction Company. The Italian firm is responsible for engineering and procurement while Hyundai is responsible for construction. "In addition to the added value arising from the production of ammonia and urea and the enhanced profitability the project is expected to generate, Qafco-5 will provide job opportunities for young Qataris and enable nationals engaged in Qafco's service to acquire high-level expertise in the design, construction and operation of large-scale industrial plants," commented Al Marwani. The $3.2 billion project is being partially covered by bank loans of $1.6 billion including $500 million as a revolving facility. The remaining $1.6 billion will come from Qafco's own reserves and cash flows generated from its operations. Late last year the company reached a financing agreement with a number of international, Middle Eastern and Qatari banks. Sace, Italy's export credit agency, is also participating in financing Qafco-5. Qafco also operates a urea formaldehyde-85 plant of Gulf Formaldehyde Company (GFC), of which it owns 70 per cent. Other shareholders are Qatar Manufacturing Industries Company (15 per cent), United Development Co (10 per cent) and Amwal (5 per cent). The GFC plant is located in Mesaieed and is part of Qafco's complex. GFC underperformed in fiscal 2007 primarily because of a decrease in demand from export markets, Qafco said. Production for the year was close to 27,000 tonnes, some 13.6 per cent below target. Most of the production was used by Qafco's urea plants. Exports were around 3,500 tonnes against 5,347 tonnes in the previous year. Qafco exports ammonia and urea to more than 35 countries worldwide and its primary markets are Southeast Asia, North America and Southern Africa. During 2007, more than 493,000 tonnes of ammonia left the Qatar's shores with India being the biggest importer, taking 71 per cent of that quantity. Jordan took in 23 per cent and the US 6 per cent. Ammonia exports were 16 per cent above what was envisaged in projections. With regards to urea, Qafco exported 2.8 million tonnes against the projected figure of 2.9 million tonnes. Again India was the biggest importer taking 16 per cent, followed by Australia, Brazil and the Philippines 7 per cent each, Iran 4 per cent, Sri Lanka, New Zealand and Argentina 3 per cent each and several other importers. Highlights of 2008 included a signing ceremony with a Vietnamese firm for the uptake of 250,000 tonnes of urea. "It is part of our strategy to strengthen our share in Qafco's traditional markets, taking into consideration current and future Qafco expansion," said its managing director Khalifa Al Sowaidi. Qafco's marketing manager Yousef Jeham Al Kuwari said the Vietnam market was one of the most important and strategic in the Far East and that the new pact made the company the leading exporter of fertiliser to that part of the world. To facilitate smooth loading and shipping of ammonia and urea to various world markets, Qafco operates two jetties and three berths with five ship loaders. These facilities enable three vessels to be loaded simultaneously with urea and ammonia. The company has four bulk halls with a total capacity of 390,000 tonnes to store granular and prilled urea. An elaborate HVAC system ensures proper storage. The bulk halls are also equipped with an automatic urea reclaimer. "Qafco has scrupulously adhered to the highest international standards of quality, safety and environmental protection. We have three ISO management system certifications, namely ISO 9001, ISO 1401:2004 and Ohsas 18001," said Al Marwani. Qafco made a net profit of QR2.54 billion ($697 million) in 2007, against QR1.81 billion in the previous year. The company has been in production since 1973 when it inaugurated its first plant with a design capacity of 900 tonnes of ammonia and 1,000 tonnes of urea daily.

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