Saudi Arabian Fertilizer Company (Safco) has invested heavily in an expansion programme, Safco-III, which came onstream in January.
Safco-III produces 600,000 tpy of ammonia and 500,000 tpy of granular urea and boosts Sabic to number two in the worldwide export of urea fertiliser.
"This expansion further strengthens Sabic's and Safco's competitiveness in the international fertiliser market by meeting growing customer requirements besides supporting the Kingdom's agriculture development plans," says Sabic vice chairman and managing director Mohamed Al Mady.
Safco has lifted the Kingdom to number two position in the worldwide export of urea fertiliser, behind Russia.
Safco is now using the most advanced technologies to ensure product quality and consistency. Brown & Root technology is being used for the first time by Sabic to produce ammonia, while the urea plant continues to use the tried and tested Stamicarbon and Norsk Hydro technologies.
Safco is a venture between Sabic (41 per cent), Safco employees (10 per cent) and private Saudi shareholders (49 per cent).
Together with National Chemical Fertilizer Company (Ibn Al Baytar) - itself a 50:50 joint venture between Sabic and Safco - Safco has achieved major cost reductions through consolidation to help overcome a downturn in the global fertiliser market of the past two years.
Manpower has been reduced by 35 per cent since 1998, despite the expansions.
A high-volume producer, Safco was badly hit by the fall in international fertiliser prices, a fact reflected in losses last year, but the company has emerged as a much more efficient, stronger operator now.
But how can Safco justify expansions in an oversupplied market? President of Safco and Ibn Al Baytar, Abdallah Al Assaf says: "When the going is good, when you have excellent prices, industries execute expansion projects, frequently adding much more than the demand growth, resulting in a downward pressure on prices. Once that oversupply is consumed through demand growth, prices rebound again. We have gone through these phases before, and have come back to make profits.''
Consolidation between Safco and Ibn Al Baytar began several years ago, and have helped achieve considerable savings and an overall improvement in efficiency with merger and trimming down of various departments. Ibn Al Baytar uses methane, ammonia, sulphuric acid, potash and urea feedstocks to produce ammonia, granular urea, compound and phosphate fertilisers.
Consolidation has had a positive effect on Saudisation too. "Achieving a leaner and more efficient organisation means cutting the fat as much as possible,’’ explains Al Assaf. "Saudisation is a goal and a policy which we have adhered to while making changes.Our general strategy has been to replace expatriate employees at the end of their contract term, to be replaced by Saudis. But consolidation and rationalisation has resulted in surplus Saudi manpower. Today, 85 per cent of employees are Saudi.''
Safco and Ibn Al Baytar boast an excellent environmental record, sticking strictly to the Royal Commission for Jubail and Yanbu’s stringent standards. The reorganisation of Sabic into SBUs has also been of benefit to the two affiliates, says Al Assaf.
"There is improved communication between us and Samad (Al Jubail Fertilizer Company) and it helps to promote the Sabic identity," he explains.
"The feeling that we are part of a bigger group enables us to share experiences, compare cost levels and work together on matters of mutual interest,'' he adds.
