Elixir sells monocalcium phosphate plant to French Roullier
Elixir Group has signed an agreement on strategic business and technical cooperation with one of the world's leading agribusiness companies, France's Roullier Group.Source: NIN
The deal with Roullier Group member Phosphea concerns the segment of the group's business related to feed phosphates.
This French group owned by Daniel Roullier owns 25 mineral fertilizer factories and six feed phosphate production plants, earns an annual income of around USD 3 billion and employs about 8,000 workers. Phosphate production plants, located in Spain, France and Tunisia, are part of Phosphea currently ranked first in this business in Europe and second worldwide.
Through cooperation with Elixir Group and acquisition a monocalcium phosphate plant in Prahovo, Phosphea assumes the position of the world's largest feed phosphate producer. The signing of this strategic contract between Roullier and Elixir is certainly a major event especially for eastern Serbia, where there are almost no economic activities.
The world's largest producer of feed phosphate comes to the village of Prahovo, where it will continue to develop production and sales of these products worldwide.
As NIN reported two years ago, Elixir Group has, with its experts and foreign consultants, developed a new product and started to manufacture monocalcium phosphate. Until then, monocalcium phosphate was not produced in Serbia, nor was there was a factory for this production. Until the start of production in Prahovo, this essential raw material for production of animal feed was imported from Russia. The quality of monocalcium phosphate from Elixir Prahovo is best illustrated by the fact that in the first year this product was sold in 20 countries, and in the second year in 50.
The volume of production from the initial 30,000 tons has been continuously increasing to reach 100,000 tons annually. It appears on the world map for the first time in 2015, when Elixir Prahovo was recognized in various agency reports and expert conferences as a new producer of monocalcium phosphate from Serbia. In a very short time it occupies the fourth place in Europe, and 93 percent of production is exported to countries of the region, the European Union, as well as in Africa, Asia, South America. Seven percent of production is placed on the domestic market.
For comparison: the French partner Roullier, as a global leader, is exporting to 90 countries in the world, while in less that three years Elixir Prahovo conquered the market and started exporting monocalcium phosphate to 50 countries.
Monocalcium is a very important raw material for production of fodder containing macroelements of phosphorus and calcium, necessary in animal nutrition, for regulation of protein synthesis and proper bone formation.
NIN asked the president of the business system of Elixir Group, Stanko Popovic, whose initiative it was to cooperate with Roullier.
Popovic: I can say that it is a great honor for Elixir Group as well as for our country that a great global company wants to cooperate with us. They have been attracted by our great success in a short time, and, it can almost be said that we have been an obstacle to their development path.
Last year they expressed a desire to buy from us a factory for monocalcium phosphate production in Prahovo. Negotiations lasted several months until we agreed on the other's demands. In October last year, we harmonized everything and - shook hands. They then sent audit firms to check the business and other items necessary to meet the conditions that precede the signing of a contract. When it was confirmed that everything was in order, we signed the contract in February this year.
- What contractual terms have you had to fulfill, as a condition for the validity of the contract?
Popovic: In order for the monocalcium phosphate plant to operate as an independent entity, we had to, within six months, separete this facility from the industrial complex Elixir Prahovo, which meant that we would construct a new warehouse for the finished product, independent infrastructure and access to public transport, independent supply of energy products and build a fence around the new feed phosphate production complex. We had to tear down some facilities that were of no importance to us, then to build internal roads, parking lots, a guard house, a freight scale. We will finish everything by the end of July, and a gentlemen's agreement has been reached that they will take over commercial sales and related business activities as of July 1, and officially take over the factory and the whole newly-formed feed phosphate production complex on August 1.
- Will the French factory, without financial incentives from the state, as required by some foreign firms, hire new workers?
Popovic: They have already opened their offices in Belgrade and for a start hired 10 workers, and will keep all employees from the production facility in Prahovo. As they plan to further increase production, they will surely employ new workers.
- What odes the sale of the monocalcium phosphate plant mean for Elixir Prahovo?
Popovic: Production unit for monocalcium phosphate makes up only five percent of our assets. The Elixir Prahovo industrial complex spreads on about 70 hectares, while the newly formed feed phosphate complex take up a total of three hectares.
This transaction has in no way disrupted our business, even on the contrary. We will use the funds from the sale of this part of our business to finance new investments and further development of all members of Elixir Group. The Strategic contract with Roullier Group envisages that they will continue to use our raw materials, that is, to buy phosphoric acid produced by Elixir Prahovo and domestic calcium carbonate, and will use our port and rail for transporting their goods.
The arrival of a large French investor in Serbia, who has recognized working with Elixir Group as a good business opportunity to expand its production capacities, is also encouraged by the fact that Serbia has been recognized as a potential for safe investment.
- Besides Elixir and the state of Serbia, what does Negotin and the village of Prahovo get from the arrival of the French company?
Popovic: It can be said that the arrival of a large global company to a village in eastern Serbia is a step in the realization of the plan for equal development of Serbia and its regions. New investments, new employment, directly and indirectly, raises the level of financial resources circulating in the local community. The rule is that if a large company is developing, it pulls into development its environment as well: small businesses, catering and hospitality activities, craft stores, restaurants, hotels - virtually the entire population livens up. They will employ our people, will use our raw materials, our port, railway, our energy products, engage domestic companies for the transport of goods and maintenance of factory plants. From our raw materials they will also export the finished product to 100 countries around the world, which is certainly one of the most desirable examples of foreign investments in our country.
- In what direction will Eliksir Prahovo will continue to operate?
Popovic: As a group, with the sale of this facility, we have reduced our credit indebtedness, thus improving our financial status and convincing our partners and creditors that we do what we do well. We have provided further development for Elixir Prahovo and the entire Elixir Group, and what we will talk about in one of the coming editions of NIN is a serious and big project that will be seen in Serbia for the first time, all for the benefit of our industry, the city of Negotin and the state Serbia.
After the acquisition of IHP Prahova from bankruptcy in 2012, an abandoned factories that was not working for five years, we have been investing continuously for five years and are continuing to develop this chemical industry complex. At the beginning of this year we put into operation a new NPK fertilizer factory whose production is 300,000 tons a year. Now Elixir Prahovo together with Elixir Zorka produces 600,000 tons of NPK fertilizers annually, about 35 percent is sold in the domestic market, and 65 percent is exported to the countries of the region and the European Union.
We are all particularly fond of this plant in Prahovo where we mastered, on our own, production of monocalcium phosphate as a brand new product. However, its sale has opened up many opportunities for strong further development of Elixir Prahovo and we are aware of the rule that you must sometimes give up something, if that will bring about betterment. The sales of the monocalcium phosphate production and brings betterment and then some - for the further development of the entire Elixir Group.