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Al Yamamah Economic Offset Programme

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					              Commercial in Confidence




AL YAMAMAH ECONOMIC OFFSET PROGRAMME


  MANUFACTURE OF MICRONIZED SULPHUR




      A PROJECT PROPOSAL SUBMITTED BY


  A.H. ALGOSAIBI & BROS. COMPANY (ALGOSAIBI)

                       AND

             AGRINANOTECH, LTD.




                   March 20, 2007
                                           Commercial in Confidence


                                             TABLE OF CONTENTS
1 PROJECT DESCRIPTION ......................................................................................... 3
  1.1 Introduction .......................................................................................................... 3
  1.2 Potential Advantages to the Kingdom of Saudi Arabia ....................................... 4
  1.3 Linkages within the Kingdom .............................................................................. 5
2 MARKET.................................................................................................................... 5
  2.1 Target Customers ................................................................................................. 6
  2.2 How the Market is Currently Served ................................................................... 7
  2.3 Market Size .......................................................................................................... 8
  2.4 Export Potential ................................................................................................... 9
  2.5 Market Research .................................................................................................. 9
3 PRODUCTION ARRANGEMENTS ....................................................................... 10
  3.1 Production Process ............................................................................................. 10
  3.2 Raw Materials .................................................................................................... 12
  3.3 Products.............................................................................................................. 13
  3.4 Staffing............................................................................................................... 13
  3.5 Plant & Utilities ................................................................................................. 14
  3.6 Preferred Location ............................................................................................. 14
  3.7 Health, Safety & Environmental Aspects .......................................................... 15
4 TECHNOLOGY ....................................................................................................... 15
  4.1 Plant ................................................................................................................... 15
  4.2 Technology Transfer .......................................................................................... 15
5 PROJECT IMPLEMENTATION ............................................................................. 16
  5.1 Milestones .......................................................................................................... 16
  5.2 Implementation Plan .......................................................................................... 16
6 FINANCE ................................................................................................................. 16
  6.1 Estimated Project Size & Cost ........................................................................... 16
  6.2 Project Financing ............................................................................................... 16
7 OWNERSHIP STRUCTURE ................................................................................... 17
  7.1 Foreign Partner Agrinanotech Limited ........................................................... 17
  7.2 Saudi Arabian Partner Ahmad Hamad Algosaibi & Brothers Company ........ 17
8 SPECIAL FACTORS ............................................................................................... 18
                              Commercial in Confidence



                     Al Yamamah Economic Offset Programme
                              Initial Proposal Number –
                         Manufacture of Micronized Sulphur



1 PROJECT DESCRIPTION
1.1 Introduction
A.H. Algosaibi & Brothers Company (Algosaibi) and Agrinanotech, Limited
(Agrinanotech), a Canadian company with its facilities located in Calgary, Alberta
Province intend to form a joint venture (JV) to manufacture micronized sulphur for
use as an agricultural fertiliser.
The precise initial scope of the Project is still the subject of discussion between the
two partners but it is thought that the initial capacity will be 50,000 Tonne per annum
(Tpa) of micronized sulphur. The total investment cost for the JV is provisionally
estimated at US$ 15 Million and will be funded by a mixture of SIDF and commercial
bank funding supplemented by equity from the two partners. Algosaibi will hold 80%
of the equity with the balance subscribed by Agrinanotech.
However, the above scope must be regarded as provisional and will be the subject of
review when the necessary market studies and other market research are complete.
The nature of the process is such that the plant can be upgraded relatively easily to an
ultimate capacity of 150,000 Tpa micronized sulphur.
The Project’s main objective is to make and sell micronized sulphur for fertilizer
application. It is well known that there are three major plant nutrients: nitrogen (N),
phosphorous (P) and potassium (K). Sulphur is now recognized as the fourth major
plant nutrient. Sulphur is required by plants in much the same quantity as nitrogen,
but its function and role in plant biochemistry is broadly similar. Sulphur occurs in a
number of amino acids (e.g. cystine and methionine), enzymes and vitamins. It also
occurs in other essential plant oils such as garlic and mustard.
However, dressing soil with elemental sulphur fertiliser is relatively new and is the
result of changes in agricultural practice to more intensive crop production. In
countries such as China and India, crop plantings occur twice a year, increasing the
rate of depletion in soil nutrients. Since sulphur is not routinely applied in normal
fertilizer products, the result is increasing evidence of a growing sulphur deficiency in
soils in many regions of the world. A slight deficiency affects crop yield and quality;
but a severe shortage of sulphur causes a form of chlorosis (yellowing of the foliage)
and dwarfism of the plant. It also reduces the ability of legumes to attract nitrogen-
fixing bacteria to their roots. Agrinanotech estimates that the current sulphur fertilizer
deficit is approximately 8 Million Tpa and forecast that it will reach 11 Million Tpa
by 2010.
To be effective as a fertiliser, the elemental sulphur must have a very small particle
size. The oxidation of the sulphur into a soluble sulphate salt is the essential first step
in transferring the element into the root system of the plant. Moreover, the batch-to-
batch variation in particle size should be low so that the product has consistent
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properties as a fertiliser. The technology that will be used by the joint venture was
originally developed by the Alberta Research Council (ARC) but then acquired, in its
entirety by Agrinanotech. ARC is incorporated into the University of Alberta and was
founded in 19--; it has devoted much effort into finding profitable uses for the
considerable quantity of by-product sulphur produced from processing the sour oil
and gas found in the province.
As might be expected, Saudi ARAMCO is strongly supportive of the Project. It too
would like to find commercial applications for the large quantities of by-product
sulphur that it produces. SAUDI ARAMCO has indicated that it would take a
supportive role in commercialising the Project but does not intend to invest directly in
the Saudi Arabian facility.
1.1.1 Role of British Offset Office (BOO)
The Partners approached BOO to request that the project be developed under the
auspices of the British Offset Programme for the following reasons:
(a) The use of BOO can facilitate and accelerate the implementation of the Project.
(b) Agrinanotech seeks support from the BAE SYSTEMS Project Finance Initiative
    (BPFI) loan scheme.
(d) BOO will work with Algosaibi in developing other niche fertiliser projects (for
    example, the manufacture of micronutrient fertilisers where there is a potential
    linkage with the Ethyleneamines Project) and other uses for by-product sulphur
    (for example sulphur chemicals, ammonium sulphate products and sulphur
    construction materials).
Saudi ARAMCO concurs with the Partner’s request that the Project be developed
under the Offset Programme. Letters of support from Algosaibi and Agrinanotech are
attached in Section 8.

1.2 Potential Advantages to the Kingdom of Saudi Arabia
The potential advantages of the project to the Kingdom are:
(a) The Project will provide an export-orientated outlet for a significant quantity of
    Saudi ARAMCO’s by-product sulphur, with considerable value addition. The
    average world price for by-product sulphur at the time of writing (March 2007) is
    $52.00 per Tonne and for micronized sulphur the value is above $200 per Tonne.
    Furthermore, the new and unique combination product of micronized sulphur plus
    ammonium sulphate is above $295 per Tonne.
(b) The Project will add sulphur (S) to the range of plant nutrient products
   manufactured in Kingdom and, thus, complement the existing range of bulk
   fertilisers made by SABIC and that will be made in future by Ma’aden.
(c) The Project will provide an investment opportunity and create a range of
    managerial, professional and operating jobs for Saudi nationals.
(d) This venture will demonstrate to Saudi Arabian investors that there are worthwhile
    opportunities in inorganic chemicals.
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1.3 Linkages within the Kingdom
The important linkages within Saudi Arabia are:
(a) The Project will link well with the existing bulk fertiliser business of SABIC and
    that under construction by Ma’aden. SABIC produces urea (N), diammonium
    phosphate (DAP), which contains N and P, and compound fertilisers containing N,
    P and K. Ma’aden will also produce N and P fertilisers. Neither company has a
    product that features sulphur in its content; therefore the micronized sulphur can
    be incorporated in their product blends.
(b) The by-product sulphur produced by Saudi ARAMCO is increasing rapidly and
    new market outlets must be secured. Current production by Saudi ARAMCO is
    around 2.7 Million Tpa and is forecast to increase to more than 3.2 Million Tpa by
    2010. Having an alternate market for sulphur will ease the operational burden of
    handling these increased volumes. New markets will allow the company to
    disperse these increased volumes into the market.
(c) The Partners intend the JV to become a research-based speciality fertiliser
    manufacturer. Accordingly, the JV will collaborate with universities and
    agricultural colleges in Kingdom on soil amendment research and training.

2 MARKET
Elemental sulphur production occurs in almost all section of the world. Worldwide
production of sulphur was 46 Million Tpa in 2004 and is forecast to grow to 60
Million Tpa by 2010. The table below shows that most sulphur is produced as a by-
product of the oil and gas industries. On-purpose production of sulphur has declined
considerably in the last 20 years and now accounts for only 2% of total production.


                           Worldwide Elemental Sulphur
                                   Production

                 Total Production 2004             46 Million Tonne

                 Source:

                 Sour Gas Processing                            52%
                 Sour Crude Oil Processing                      42%
                 Oil Sands, Coal etc                             4%
                 On-purpose Production                           2%
                 Total                                        100%

                 Source: Fertecon Research


There are three major sulphur producing regions, all of which are in surplus: North
America, the former Soviet Union and the Middle East. The major sulphur deficit
regions are Africa and Asia, both of which import their requirements. Western Europe
is virtually in balance.
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Sulphur recovery in Kingdom occurs as a direct result of the processing of natural gas
and from refineries in Jubail and other regions. Saudi ARAMCO forecasts that
sulphur production will increase from about 2.7 Million Tpa (2006) to 3.2 Million
Tpa by 2010. Not all the recovered sulphur has to be traded on the international
market. Local demand in Saudi Arabia is about 60,000 Tpa and Ma’aden is expected
to lift sulphur in the second half of 2009 for conversion to sulphuric acid for the
treatment of phosphate rock. Ma’aden’s forecast offtake is 1.28 Million Tpa at full
capacity from 2011 onwards.
Sulphuric acid is the most important industrial use for sulphur and as the table shows
accounts for 89% of total sulphur consumption:

                    Sulphur Industrial Use                           %

                    Pulp & Paper Processing                         0.3
                    Agricultural Chemicals                          2.8
                    Other Chemical Manufacture                      1.6
                    Oil Industry Consumption                        0.9
                    Other Chemical Industry Use                     1.1
                    Other Industrial Uses                           4.6
                    Manufacture of Sulphuric Acid                  88.7

                                    Total                         100.0

                    Source: Fertecon Research


Agrinanotech estimates that the total usage of sulphur as a fertiliser is 3.7 million Tpa.

2.1 Target Customers
The target markets for the micronized sulphur that will be produced by the JV will be
located in Asia, Indian Sub-continent and Africa. The important countries will be
those that import prilled sulphur and include China (2-3 commercial crop plantings/
year), India (2 plantings/year), Pakistan, Bangladesh and Australia.
The ultimate customer is the farmer or grower. However, the product will largely be
sold through fertiliser distributors and co-operatives. These groups have established
distribution chains reaching from the sea ports through to the rural areas and are
interested in extending their product offerings. A partial list of clients is attached to
this document.
As was noted in 1.1 Introduction above, the sulphur deficit is currently estimated to be
8 Million Tpa. At the same time, farmers across the world are facing increased
demands for higher crop yields and faster growing cycles. In turn, this is altering the
pattern of fertiliser usage. The trends responsible for the change are:
       (a) Farmers are devoting more attention to the production of cash crops.
       (b) Farmers are more concerned with crop yield and quality
       (c) There is greater pressure and constraints on agricultural land.
       (d) There is an increasing use of artificial irrigation.
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Farmers across the world are becoming more knowledgeable and there is a shift away
from commodity type fertilisers to speciality products optimised for the crop and
growing conditions.
The Partners believe that therein lies the opportunity to establish the JV in the sulphur
plant nutrient market and make use of the flexibility inherent in the manufacture of
the product (see § 3.3 Products below) in order to be able to design sulphur fertilisers
needed for specific conditions. They believe that this will enable the JV to
differentiate itself and its products from the large commodity fertiliser producers and
command a premium in the market.

2.2 How the Market is Currently Served
The market for sulphur fertilisers is presently supplied largely by dealers and
distributors as well as by indirect means, such as acid rain in some developed
countries. For example, ammonium sulphate was used as a source of nitrogen (it
contains 21%N). However, since it also contains 24%S (sulphur), which is present as
the sulphate anion, the combined solution serves as a soluble carrier to transport the
sulphur into the soil for absorption by the root system of the crop. Therefore, when a
dressing of ammonium sulphate is made by the farmer to provide nitrogen to his crop,
it brings the additional benefit of also providing sulphur. Some farmers have not
understood the need for sulphur and have been unaware of the benefit of using
ammonium sulphate and other fertilisers that incorporated sulphur or sulphate in their
composition. Another form of indirect application has come from powdered sulphur
used as a treatment for plant foliage as a fungicide or acaracide. This form of
application has the added benefit of bringing sulphur to the plant.
Modern farming practices require minimum tillage and “one pass” application of
nutrients and seed. These practices reduce costs substantially. The call then is for high
analysis fertilizers which precisely address the nutrient required based on soil
sampling. There is a growing recognition that a high analysis sulphur is required.
The net result of the changing trend in fertiliser products, coupled with the trends that
are changing the farming economic environment, is a growing sulphur soil deficiency.
Sulphur depletion is increasing due to inadequate S application, high crop utilization
and reduced availability of natural sources.


A sample of companies supplying sulphur fertiliser is shown in the table below:
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Europe Sulphur Fertilizer Producers
Company                                    Products
BASF AG                                    Ammonium Sulphate
DSM Agro BV                                Ammonium Sulphate
Fertiberia SA                              Triple Super Phosphates
Norsk Hydro ASA                            Ammonium Sulphate, Triple Super
                                           Phosphates

North America Sulphur Fertilizer Producers
Company                                Products
Agrium                                 Ammonium Sulphate
AlliedSignal Inc.                      Ammonium Sulphate
BASF                                   Ammonium Sulphate
Big Quill Resources                    Potassium Sulphate
Cameco Corporation                     Ammonium Sulphate
Cargill                                Triple Super Phosphate
Cogema Resources Inc.                  Ammonium Sulphate
Cominco Limited                        Ammonium Sulphate
DSM Chemicals NA Inc.                  Ammonium Sulphate
Keg River                              Elemental Sulphur
Martin Gas                             Elemental Sulphur
PSC Asask                              Potassium Sulphate
Sherritt International                 Ammonium Sulphate
Tiger Industries                       Elemental Sulphur

None of the current sulphur fertilizer producers makes micronized sulphur. However,
preliminary research has indicated that micronized sulphur in combination with some
of the existing fertilizer blends can be a strong and effective fertilizer that can be
tailored to meet specialty needs of individual farmers.

2.3 Market Size
The total sulphur deficit is stated by Agrinanotech to be currently about 8 Million
Tonne and is forecast to reach 11 Million by 2010. The world market for sulphur
fertiliser is summarized below:
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                                        Total
                                                     Realistic
                                      Sulphur
                                                     Sulphur        Available
  Region           Country            Required
                                                   Consumption       Market
                                      by Crops
                                                       (mt)
                                        (mt)
               USA                     2,809,021      1,123,609    $429,666,340
  NAFTA        Canada                    420,033        168,013     $64,247,989
               Mexico                    153,467         61,387     $23,474,174
    EU         Western Europe          1,282,539       513,015     $196,176,414
               India                   1,383,204       345,801     $132,233,823
               China                   2,741,142       685,285     $262,052,190
              Indonesia                  483,147       120,787       $46,188,658
 Far East     Malaysia                   290,511        72,628       $27,772,742
              Pakistan                   345,738        86,435       $33,052,447
              Bangladesh                 140,506        35,127       $13,432,349
              Thailand                   145,357        36,339       $13,896,056
 Oceania       Australia/NZ              238,700        95,480       $36,511,425
  South        Brazil                    875,088       218,772       $83,658,065
 America       Argentina                 492,178       123,044       $47,052,009
  Africa      South Africa               103,505        25,876        $9,895,070
              Iran                       110,846        27,712       $10,596,878
  Middle
              Turkey                     228,440        57,110       $21,838,812
   East
              Egypt                      135,338        33,835       $12,938,307
              Russian
  Former      Federation                 466,570       116,643       $44,603,968
  Soviet      Ukraine                    259,554        64,889       $24,813,320
  Union       Uzbekistan                 114,823        28,706       $10,977,008
                              Total   13,219,400     4,040,300    $1,545,078,043



The regional market to be addressed by the Joint Venture was selected based on
opportunities detailed in the above table. The selected regions are; the European
Union, Middle East, Africa, Australia/New Zealand and the Far East. These regions
have a 7.6million Tonne sulphur requirement representing $815 million USD revenue
potential.

2.4 Export Potential
As described by the above table, the Joint Venture will primarily be an exporter since,
in contrast to the other selected markets; the Middle East has a relatively small
agricultural industry. The primary export markets are stated to be Australia, China,
New Zealand, Thailand, Malaysia, the sub-continent (India, Pakistan and Bangladesh)
and certain African states (Egypt and Morocco).

2.5 Market Research
The initial studies for the Project were carried out by Agrinanotech using their
internal resources supplemented by market research commissioned from independent
consultants from the fertiliser industry and on-the-ground- crop testing by prominent
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soil and agronomic researchers. Crop tests in both India and China have demonstrated
that the addition of micronized sulphur would deliver 15 – 30% crop yield increases.
These yield increases are significant.
Further work will be commissioned by the Partners as part of a commitment to on
going research into fertilizer application and crop benefits.




3 PRODUCTION ARRANGEMENTS
3.1 Production Process
The earliest processes for producing a pure powdered form of sulphur was to sublime
molten sulphur and condense the very fine resulting powder, which was traded as
Flowers of Sulphur. This process is still used, for example, in rubber vulcanisation.
Other processes were devised in the late Twentieth century to produce large quantities
of sulphur powder. Outokumpu Oy, the Finnish company developed an air prilling
method, which was operational from 1962-1977. Other companies, particularly in
USA and Canada developed safer processes where the molten sulphur was rapidly
cooled and quenched in water producing “popcorn” sulphur or pastilles.
It is from that background that the Alberta Research Council (ARC) developed their
micronization process. The process breaks down into three separate manufacturing
units (see the attached flow sheet).
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  Saudi Agritech, Co. Company
  Arabian SulfurTech




(a) Micronization Unit
The raw material sulphur is melted (the melting point of sulphur is 113ºC) and passes
through a filter (comprising two filters in tandem) at the inlet to the micronization
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unit. The liquid sulphur is pressurised in the hydraulic unit and flows to the specially
designed injection nozzles.
The liquid sulphur is injected at high velocity into the target vessel, which contains a
dilute solution of carboxymethylcellulose (CMC)1. The slurry of sulphur in water is
transferred to the centrifuge and the rejected aqueous phase is returned to the
recycling tank where make up CMC solution and water are added. The contents of the
recycling tank are pumped back into the target tank as necessary.
(b) Agglomeration Unit
The micronized sulphur that emerges from the centrifuge in the micronization unit
passes into a pug mill2 to prepare the sulphur slurry for polarisation.
The pug mill consists of a U-section trough with inside it two shafts. The shafts carry
paddles staggered in a screw-thread pattern. The two shafts rotate in the opposite
direction and mix, knead and transport the slurry to the discharge port in the mill.
Inside the pug mill, bentonite (to act as a binder) and sodium lignosulphonate 3 (shown
as Na-L-S on the flow sheet) and other ingredients, including solid ammonium
sulphate (shown as AS in the flow sheet), micronutrients or other fertiliser materials,
can be incorporated into the slurry.
The output from the pug mill passes to a Khal or CPM pelletiser and then to a
sphereniser for rounding and smoothing. The granules are then screened (i.e. sieved)
and those with the correct dimension pass to the dryer. Those granules that are out of
range (either too large or small) are recycled back to the pug mill.
(c) Finishing and Storage
The granules are dried, bagged and stored for shipment. Depending on the
requirements of the client, finished goods in bulk, “mini-bulk” 1000Kg bags or
22.5Kg bags are shipped by container.

3.2 Raw Materials
The raw materials that will be consumed in the plant are:




                Raw Material                                     Consumption
                                                                   (KMTY)

                Sulphur                                     50 to 150
                Bentonite                                   1
                Sodium Lignosulphonate                      2.5 to 7.5
                Ammonium Sulphate                           35
                Micronutrient Chelates                      Client dependent
                Protein binder                              5


1
  The carboxymethylcellulose acts as an emulsifier and stabilising agent to protect the slurry of finely
powdered sulphur in water.
2
  Pug Mills are used extensively in the fertiliser, clay and cement industries for comminuting and
mixing materials.
3
  Sodium lignosulphonate is used as a dispersant and emulsifier.
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3.3 Products
The basic product is a granulated straight fertiliser, which is compatible in size and
shape with the common N, P and K fertilisers. The product can be incorporated into
mixed or compound fertilisers without problems of separation of the constituents
occurring on prolonged storage or in shipment. Moreover, the sulphur granules have a
high crush strength and abrasion resistance so that dust formation is minimised.
However, a unique and important factor which ensures successful long-term
marketing of the output of the plant is the ability to vary the formulation of each
single granule to match the precise nutrient needs of the crop and growing conditions.
The incremental cost (net of raw material cost changes) for varying the formulation is
virtually zero and is a consequence of the ability to blend in other constituents in the
pug mill. The two most common blending constituents are:
(a) Ammonium Sulphate Highly sought after in the world is a product incorporating
ammonium sulphate into the single granule which includes micronized sulphur. It
provides a quick acting source of easily soluble sulphur as well as nitrogen to provide
an immediate boost to the crop as well as the long term sulphate available from the
micronized sulphur.
(b) Micronutrients Plants require a number of nutrient substances and, whilst N, P,
K and sulphur (S) are the major plant nutrients, there exists a group of other elements
that are required by plants in relatively small amounts, including boron, magnesium,
manganese, copper, iron, molybdenum and zinc. A farmer will testify that the major
challenge with attempting to employ micronutrients is the very small requirements
and thus the difficulty in applying accurately to the field. In acid soils (that is pH
below about 6) soluble salts of the metals can be safely used but at higher pH it is
necessary to deliver the metal as a chelate (or complex) compound that will remain in
solution (and, therefore, accessible by the plant) in the alkaline soil conditions.
In a world first, the technology employed by the joint venture allows for accurate
incorporation of micronutrients into each granule thus resolving these significant
challenges.

3.4 Staffing
The number of employees planned for the company will be approximately 28 and the
job descriptions are as follows:
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                                             Micronized Sulphur Plant in Saudi Arabia

                                              TYPICAL TECHNICAL & PRODUCTION PERSONNEL

JOB DESCRIPTION                                         Total No.

PRODUCTION
 Technical & General Manager                               1
Secretary                                                  1
Supervisor                                                 1
Operators                                                  3
Unskilled / Contract Workers (main plant)                  3
forklift driver                                            1
LABORATORY
Chemists                                                   1
MAINTENANCE
Maintenance Technician                                     1
Electrical/Instrm./Auto.Technician                         1
Spare parts shop                                           1
TOTAL OPERATIONS                                        14
                                        ADMINISTRATION & SALES PERSONNEL


JOB DESCRIPTION                                           Total
                                                           No.
ADMINISTRATION
Secretary                                                  1
Accountant                                                 1
Govt. Relations Assistant                                  1
Security Personnel                                         3
Driver                                                     1
Marketing Manager                                          1
Sales-coordinator                                          3
Procurement Officer                                        1
Warehouse Labourers                                        2
TOTAL ADMINISTRATION & SALES                               14
TOTAL MANPOWER                                             28
AVERAGE US$/PERSON



3.5 Plant & Utilities
Configuration of the plant will be substantially as described in §3.1 Production
Process. The exact location of the plant is still the basis of discussions between the
Joint Venture and Saudi Aramco (see discussion below). The physical building will
be a one story steel fabrication structure seated on a cement floor. The utility
requirements will include potable water, electricity, sales gas (exact volumes of each
of these are to be determined after the engineering studies are completed).

3.6 Preferred Location
The preferred site for the plant is at or near the Berri Gas Plant near Jubail because of
the available space for production facilities, a ready supply of liquid and prilled
sulphur, nearby dock facilities for importation of raw materials and the loading
facilities for export containers and bagged product.
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3.7 Health, Safety & Environmental Aspects
Micronized sulphur is comprised of 95% elemental sulphur. The remaining portion of
the product includes small amounts of binder material and is therefore
environmentally safe. Sulphur can ignite if a heat source is applied to it. However,
once the heat source is removed, the material will stop burning. There are no known
environmental or health hazards associated with elemental sulphur. Micronized
sulphur is safe to apply as an agriculture fertilizer and contributes to the health,
growth and yield of targeted plants.


4 TECHNOLOGY
4.1 Plant
The proposed joint venture plant incorporates the patented technologies of
micronization and agglomeration in a facility constructed on a modular skid of 25,000
to 50,000 metric tpa each. Manufacturing is simplified as is shipping, installation and
commissioning since assembly and some testing occurs prior to shipment to the site.
Also, as upgrading is required, additional skids can be ordered, installed and
commissioned with minimal interruption of existing production units.
Each skid incorporates a full sulphur micronization process. Each contains equipment
for the injection of molten sulphur under high pressure into a water vortex in a target
vessel to produce very small, spherical sulphur particles. The size of these particles
depends on several controllable factors including:
     Temperature of the molten sulphur
     Temperature of the water vortex,
     Velocity of the vortex
     Pressure of the molten sulphur
     Size of the injection nozzle orifice
     The number of injection nozzles in a cluster

Hot liquid sulphur is fed to injector nozzles at a constant temperature and pressure. A
continuous feed of water slightly cooler than the vortex water in the target vessel
maintains this water at the desired temperature by the absorption of heat from the
liquid sulphur. The sulphur/water mixture forms slurry, which is then directed into a
centrifuge for partial removal of water followed by the addition and mixing of binding
agents and other additives in a mixing tank. The resulting putty-like mixture is fed
into the custom pelletizer and pellet surfacer. The finished product is carried away via
an air-drying conveyor to packaging. The entire process, unlike customary grinding
methods is virtually free of potentially hazardous and unpleasant sulphur dust.

4.2 Technology Transfer
Agrinanotech has acquired the technology to manufacture micronized sulphur from
Alberta Research Council who owns the global patents. The Joint Venture will have
an exclusive license to utilize and modify the technology in the production and sale of
micronized sulphur in the Middle East region. A transfer agreement will allow
Agrinanotech to build and operate a facility to make micronized sulphur in Saudi
Arabia.
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5 PROJECT IMPLEMENTATION
5.1 Milestones

Implementation Schedule

                                                                Months
                     Activity          1   2   3   4   5    6    7   8   9   10   11   12
      Company formation
      Feasibility Studies
      Process Package
      Engineering
      Procurement
      Construction
      Commissioning
      Start up & commercialization




5.2 Implementation Plan

Project implementation will follow the schedule as described above. The actual start
up of project activities is now well underway and the parties are addressing several of
the requirements that will be needed to complete the implementation schedule. It is
expected that as soon as preliminary government approval for the formation of the
company is obtained, the Joint Venture will move into a more focused mode and
implement the remaining steps to achieve plant start up as soon as possible. It is
anticipated that plant operations will begin by 1st Qtr 2008.


6 FINANCE
6.1 Estimated Project Size & Cost
The estimated total project plant will produce 50,000 MTY of micronized sulphur and
will cost approximately $15 Million.

6.2 Project Financing
The Partners plan to finance the Project as shown below:
                                  Commercial in Confidence


                      JOINT VENTURE FINANCING (%)
  SIDF                                                                  50

  Bank Loans
       Brit Offset Debt Guarantee                             12.5
           Algosaibi Commercial Loan                          12.5
           Total Bank Loans                                             25
  Equity
           Saudi Partner                                      12.5
           Technical Partner
                 Tech Partner Equity                 6.25
                 Bae Non-Recourse Loan               6.25
                 Total Technical Partner Equity               12.5
           Total Partner Equity                                         25

  Total Joint Venture Financing                                       100




7 OWNERSHIP STRUCTURE
7.1 Foreign Partner                Agrinanotech Limited
Agrinanotech Limited is a Canadian company with its head office in Calgary, Alberta
Province. It acquired the sulphur micronization and agglomeration technology
developed by the Alberta Research Council. Agrinanotech Limited licences, designs,
builds, commissions and co-ventures facilities for producing very finely divided
sulphur for agricultural use. It will licence the technology to the Saudi Arabian joint
venture.
The company has commissioned field trials of various fertiliser combinations in Asia.
In China, the trials in a number of locations included the following crops: rice, oilseed
rape, wheat, corn, vegetables, citrus fruit, peanuts, longan and soyabeans. Trials also
have taken place in India in different locations covering: paddy-field rice, cowpea,
frenchbeans, Linseed and soyabean. All the trials yielded favourable results.

7.2 Saudi Arabian Partner Ahmad Hamad Algosaibi &
Brothers Company
Algosaibi has developed a large and diverse portfolio of business activities since the
company’s inception sixty years ago. The Algosaibi Group currently operates in the
financial, contracting, real estate and trading sectors.
In addition, it has developed a diverse range of manufacturing interests including
carbonated beverages, packaging, foodstuffs (vegetable oil and snack foods), pipes
and resins.
Algosaibi Chemical Industries is a shareholder in many of the Kingdom’s chemical
companies (including Saudi Chevron-Phillips and NAMA) and is developing other
projects with BOO.
                            Commercial in Confidence


8 SPECIAL FACTORS
The letters of support from Algosaibi and Agrinanotech follow.
                              Commercial in Confidence


                 Table of Micronized Sulphur Customers
AUSTRALIA
       GETAX AUSTRALIA PTY LTD         AMIT GUPTA            DIRECTOR

BANGLADESH
      HONEYBEE PVT LTD/GREENFIELD FERTS, ISHTIAQ MAJID       MANAGING DIRECTOR
CHINA
      AGROSIN PTE LTD BEIJING         LI HUA                 MANAGER, EXPORT DEPT.
      ANHUI HUI LONG AGRI GROUP CO LTD
                                      LI YONGDONG            CHAIRMAN
      ANHUI RUI FENG CHEMICAL FERTILIZER CO. LTD.
                                      WANG CHUANYOU          GENERAL MANAGER
      BEIJING G-LINK TRADING CO LTD   YUBIN LI               MANAGING DIRECTOR
      CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                      GUO YANMIN             VICE PRESIDENT
      CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                      HAN SHAOZHONG          G.M. INTL TRANSPORTATION CO
      CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                      J. Y. CHUNG
      CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                                             LI JIANGWEN VICE MNGR INTL
                                                             NIT & POT FERT CO
        CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                        LIU FUMING           GEN MNGR INTL PHO. &
                                                             COMPOUND FERT
        CHINA NAT. AGRI. MEANS OF PROD. GRP. CO. (CNAMPGC)
                                        LUO DEQIANG          GEN MNGR NITROGEN &
        POTASH FERT
        DH CHEMENERGI TED. LTD.         XIE XIAO YAN         MANAGER
        GUI ZHOU KAI LIN GROUP LTD      LIAO HUI             GENERAL MANAGER
        SUMITOMO/INTERACID              TONY MILES           GENERAL MANAGER - Sulphur

HONG KONG
       CANPOTEX (HONG KONG) LIMITED ESTHER CUMMER
       CANPOTEX (HONG KONG) LIMITED HOWARD CUMMER            MANAGING DIRECTOR
       TRANSAMMONIA AG (HONG KONG) MOHAMMAD ABDULLAH         VICE PRESIDENT
INDIA
       FERTIPLANT ENGINEERING CO      SANJEEV DOSHI          DIRECTOR
INDONESIA
       PT BINTANG BAJA SINAR CEMERLANG
                                      GABRIEL TRI SWASTONO   PRESIDENT DIRECTOR
       PT INDEVCO INTERNUSA           HASKIN PIONATA         MANAGING DIRECTOR
       PT PETROKIMIA GRESIK (JAKARTA) ARIFIN TASRIF          PRESIDENT DIRECTOR
       PT PETROKIMIA GRESIK (JAKARTA) FIRDAUS SYAHRIL        TECHNICAL & DEVPT DIRECTOR
       PT PUPUK KALIMANTAN TIMUR I B AGRA KUSUMA             MARKETING DIRECTOR
JAPAN
       ITOCHU CORPORATION             HIDEYA IZUTANI         DEPUTY GEN MGR, INORGANIC
                                                             CHEM DEP
        MITSUBISHI CORPORATION         YUMIKO FUKUI          MARKETING MANAGER
        MITSUI & CO LTD                HIROYUKI TAKAHASHI    GENERAL MANAGER
KOREA
        DAEYANG SHIPPING CO. LTD.      PARK KIL HO          REPRESENTATIVE
        DAEYANG SHIPPING CO. LTD.      PERRY JUNG           HANDYMAX OPERATION TEAM
        JIERSHIN KOREA                 QUAN YONG            MANAGER
MALAYSIA
        AGRIFERT MALAYSIA SDN BHD      CHIEW LENG DING      GENERAL MANAGER
        AGRIFERT MALAYSIA SDN BHD      KAR HEANG LENG       GENERAL MANAGER
        AGRIFERT MALAYSIA SDN BHD      PETER SZE            MANAGING DIRECTOR
        ARAB POTASH CO - KL            AMMAR AL. SAAD       CHIEF REPRESENTATIVE
        CCM FERTILIZERS SDN BHD        ALI SABRI            DIRECTOR
PHILIPPINES
        MARMAN TRADING                 MILAGROS T. ONG-HOW  PRESIDENT & CEO
        PHILPHOS FERTILIZER CORP       BIENVENIDO SANTOS    PRESIDENT
SINGAPORE
        BEHN MEYER AGRICARE            CHONG YIEW ON        DIRECTOR
        BEHN MEYER AGRICARE             KHOO SU CHIN        MANAGING DIRECTOR
        HELM FERTILIZER ASIA (SINGAPORE) PTE. LTD.
                                       FLORIAN POPPE        GENERAL MANAGER
THAILAND
        ASIA PACIFIC RESOURCES LTD     JOHN BOVARD          PRESIDENT & CEO
        ASIA PACIFIC RESOURCES LTD      LESLEY BOVARD
        BANGKOK AGRO CHEM LTD.         WATCHAROJ PHROKSERE (JACK)
                                                            PRESIDENT
VIETNAM
                    Commercial in Confidence

BACONCO JOINT-VENTURE      NGUYEN THANH PHONG   FACTORY DIRECTOR
BARIA SERECE               NGUYEN THU TRANG     DEPUTY GENERAL MANAGER

				
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