WASHINGTON, D.C., June 29, 1999 – The International Finance Corporation has signed an agreement to loan US$65 million to the leading fertilizer producer in Brazil, Fertilizantes Fosfatados S.A. (Fosfertil) to upgrade in the face of new international competition.
Fosfertil is the country's biggest fertilizer producer with one third of the domestic Nitrogen and Phosphate market. The Brazilian fertilizer market has grown at an average rate of 10 percent since 1992, while domestic production has not kept pace. It has lost market share as privatization of Brazil's ports and railroads has lowered the delivered cost of imported fertilizer and introduced new competition. The investment will help Fosfertil to retain its market and continue to operate as the industry's lowest cost producer.
Mr. Jean-Philippe Halphen, IFC Director for Chemicals, Petrochemicals, and Fertilizers said that IFC's investment comes at a crucial point in the expanding Brazilian fertilizer market as new capital will allow Fosfertil to upgrade operations in the face of foreign competition. By increasing competitiveness the company will remain a low-cost producer able to successfully compete with the best in the market.
IFC's financing for the $214 million project consists of a loan of $20 million for its own account and a syndicated loan of $45 million for the account of participants. The investment will be used to expand production of core products, retrofit an ammonium nitrate plant, and upgrade and expand port facilities to increase operational flexibility and reduce freight costs.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.