Lenders drop $1.25bn to back Indorama’s fertiliser expansion

• For third production line of 1.4mmt capacity

• Firm agrees to greenhouse gas strategy 

Cynthia Ezekwe

Indorama Eleme Fertiliser and Chemicals Limited, a leading producer of urea in sub-Saharan Africa, has secured a significant financing package worth $1.25 billion to enable the expansion of its fertiliser production capacity. This investment is expected to have far-reaching benefits for food production and security in the region and globally, as well as for employment and the local economy in Nigeria.

Indorama’s $1.25 billion financing package has been provided by a consortium of lenders, including the International Finance Corporation (IFC), the African Development Bank (AfDB), Bangkok Bank, British International Investment (formerly CDC Group), Citibank, the German Investment Corporation (DEG), DZ Bank, and the Emerging Africa Infrastructure Fund (EAIF). This diverse group of lenders highlights the widespread support for Indorama’s expansion plans and their potential to make a significant impact on the global fertiliser market.

The package also includes funding from Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), a Dutch development bank, the Export-Import Bank of India (India Exim Bank) and Export-Import Bank of Korea (KEXIM), two important export credit agencies in their respective countries. Standard Bank Group and Standard Chartered Bank, two major banks in South Africa and the United Kingdom, respectively, are also part of the financing package. The United States International Development Finance Corporation (DFC) rounds out the group of lenders.

The financing package will allow Indorama to fund the construction of a third nitrogenous urea production line, with an annual capacity of 1.4 million metric tonnes. The new line is expected to make a significant contribution to the company’s overall production capacity, which will help to meet the growing demand for urea fertiliser around the world.

One of the key components of the financing package is Indorama’s commitment to implementing a greenhouse gas (GHG) emissions strategy, which is designed to reduce the emissions from its petrochemical complex by 32 percent by 2026. This will be achieved through a variety of measures, including a significant reduction in gas flaring and other process improvements. The GHG emissions strategy is aligned with Nigeria’s pledge to eliminate routine gas flaring by 2030, as part of the Global Gas Flaring Reduction Partnership (GGFR).

The financing for Indorama’s petrochemical complex will support the construction of a new urea fertiliser production line, in addition to an export terminal, which will significantly increase the country’s urea production capacity. This is critical for supporting Nigeria’s agricultural sector, which accounts for approximately 25 percent of the country’s GDP and employs around a third of the workforce. In addition, the new facility is expected to create up to 8,000 direct and indirect jobs.

Commenting on the project, Amit Lohia, group vice chairman, Indorama Corporation, expressed gratitude to the company’s financial partners for their unwavering support and confidence. 

He added: “This financing demonstrates the strong collaboration and alignment of interests between the public and private sector to drive sustainable development and create value for all stakeholders. 

“Indorama remains dedicated to playing a vital role in supporting global food security by ensuring consistent supply of high-quality fertilisers in Africa, and beyond, while contributing to Nigeria’s broader economic objectives.”

Manish Mundra, group director for Africa, Indorama Corporation, said the establishment of this fertiliser plant underscores Indorama’s unwavering commitment to Nigeria’s industrial growth, economic diversification, and leveraging its strategic geographic location. 

“This landmark financing represents a pivotal moment in Nigeria’s journey towards becoming a major player in the global fertiliser market. With the addition of this third line, Nigeria is prepared to significantly ramp up its export capacity, thereby enhancing its position as a key exporter of fertilisers to Africa and the world.

“Furthermore, the establishment of this fertiliser plant will not only address critical issues such as broader food security but will also stimulate agricultural growth and create employment opportunities in Nigeria,” Mundra stated.

Sérgio Pimenta, IFC vice president for Africa, noted that this investment represents a significant vote of confidence in the Nigerian economy and its agricultural sector. He also highlighted the fact that the financing is being provided by a diverse group of partners, including those from Africa, Asia, Europe, and the United States. Pimenta further noted that Indorama is a vital player in the global food chain, and the expansion of its operations will have a positive impact on food security around the world.

Benson Adenuga, head of office and coverage director for Nigeria at British International Investment, said, “We are delighted to partner with IFC, other impact investors, and the development finance community on this project, which will boost fertiliser production in Nigeria, support food security and create jobs. Our ongoing commitment to back Indorama’s expansion will also help to elevate Nigeria’s export potential and support the diversification of its economy.”

Ousmane Fall, the acting director of the industrial and trade development department at the AfDB, highlighted the Bank’s long-standing partnership with Indorama and IFC on projects that are critical to the development of the African continent. He noted that the latest project is in line with the bank’s strategic priorities to feed Africa and industrialise the continent, while generating significant development outcomes in Nigeria.

According to Freddy Ong, head of client coverage at Standard Chartered Bank, the investment in Indorama is a significant contribution to IFC’s strategy to foster diverse and inclusive growth and create job opportunities in Nigeria. He noted that IFC’s support for the country’s manufacturing, agribusiness, healthcare, infrastructure, technology, and financial services sectors is helping to spur economic development and improve the lives of Nigerians.