Israel Chemicals, also known as ICL, a multi-national manufacturing company developing, manufacturing, and marketing fertilizers, metals and other special-purpose chemical products, is going to create a 50:50 joint venture with China’s Yunnan Yuntianhua. ICL is to invest $452 million to get 50 percent ownership of a joint venture that will run a fully operational and integrated phosphate business in China. ICL will also pay $269 million to acquire a 15 percent strategic holding in its Chinese partner, one of Asia’s major producers of phosphate rock. Yunnan Yuntianhua is traded on the Shanghai stock exchange having a market cap of $1.8 billion.
The joint venture will comprise a downstream phosphate operation, sales and marketing, primarily serving the Asian markets with focus on China as well as a mine producing 2.5 million tons of phosphate rock annually. ICL says that this strategic move will help its own and Yunnan Yuntianhua’s expertise in marketing, production and technology including a joint phosphate research and development centre situated in the Yunnan province. The alliance is also believed to develop process improvement as well as new products for both companies. Israel Chemicals is convinced that this major expansion will help the firm develop and transform from a fertilizer company to a specialty player in agriculture, engineered materials, and food ingredients. China is the world’s biggest consumer of fertilizers, accounting for approximately a third of the global consumption. Yet, as the country has only very limited potash production capability, historically about three thirds of potash have been imported.