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May 08, 2008

Mozambique awards Indian company fertilizer plant contract

Mozambique said on May 8 it had awarded India's Rashtriya Chemicals and Fertilisers (RCF) a contract to set up a $1.9 billion fertiliser plant as soon as local gas deposits can be used to power the project.

Agriculture Minister Soares Nhaca said the ammonia urea and phosphates plant would be funded by state-run RCF and South Africa's Industrial Development Corporation (IDC), who would also seek bank loans to supplement financing.

RCF and IDC will build and operate the factory, which will be jointly owned by them and the government of Mozambique, the minister said. "We have authorised RCF to build a $1.9 billion fertiliser plant as soon as possible in the southern province of Inhambane, but we need to discover gas first because this is a high energy consumption project," he said.

"The present gas availability in Mozambique is 3.5 trillion cubic feet, with more potential in Inhambane, and there are prospects for further exploration in central Mozambique, but we need to discover it (gas) first then we'll immediately implement the fertilizer factory," Nhaca said.

Mozambique is one of the world's poorest countries but has been one of the fastest growing economies in southern Africa in the last decade since the end of a 17-year civil war in 1992. Its energy resources include natural gas and coal reserves.

In June 2005, South Africa's fuels and petro-chemical group Sasol won an eight-year contract to prospect for oil and natural gas off the coast of Inhambane.

Nhaca said fertiliser production would increase Mozambique's crop yields and cut imports.

Mozambique wants to boost its agriculture output to avoid being hit hard by global food price rises which have triggered sometimes violent protests across the globe -- including in Africa.

Mozambique will need to import at least 1.25 million tonnes of maize, wheat and rice by August to cover food shortages caused by floods and cyclones this year, which have left at least 150,000 people in urgent need of food aid.

Reuters

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