Jordan - Second Arab Potash Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6365-J O STAFF APPRAISAL REPORT JORDAN SECOND ARAB POTASH PROJECT December 24, 1986 Induistry Department This docment has a restricted distribution and may be used by recipients only in the performance of their official duties. Its eontents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of October 24, 1986) JD 1.00 - US$2.92 US$1.00 3 JD 0.342 WEIGHTS AND MEASURES 1 Metric ton - 1,000 Kilograms (Xg) 1 Metric ton - 2,204.6 Pounds 1 Kilometer (Km) - 0.62 mile PRINCIPAL ABBREVIATIONS AND ACRONYMS USE) AMC - Arab Mining Company APC - Arab Potash Company CIF - Cost, Insurance and Freight EMC - Entreprise Miniere et Chimique FOB - Free on Board GOJ - Government of Jordan IsDB - Islamic Development Bank JFI - Jordan FertLlizer Industries JPMC - Jordan Phosphate Mining Co. KC1 - Potassium Chloride (Muriate of Potash) K20 - Potassium Oxyde mtpy - million tons per year tpy - ton per year USAID - US Agency for International Development FISCAL YEAR January 1 to December 31  FOR OMCIAL USE ONLY JORDAN SECOND ARAB POTASH PROJECT Table of Contents Page No. I. INTRODUCTION I** ****.....*....**.******* 1 II. JORDAN INDUSTRIAL SECTOR ............... 0.00 .......... 2 A. Background 2 B. Industrial Strategy Issues 3 C. Bank Role and Sector Lending Strategy ...00*.......5 D. Rationale for Bank Involvement in the Project ...... 5 III. WORLD POTASH INDUSTRY AND TRADE .. ................... 6 A. World Potassium Reserves 6 B. World Potash Supply and Demand 7 C. Potash Trede ..........l10 D. Potash Prices ..12 IV. MARKET AND MARKETING OF JORDANIAN POTASH ................ 12 A. APC Market and Competitive Position .... ............ 12 B. APC Marketing Arrangements and Policies * ........... 15 C. Impact of Proposed Capacity Increase on APC Market Position e 16 V. THE ARAB POTASH COMPANY ..................... 17 A. Board of Directors ..................... , 18 B, Management and Information System 9................ 19 C. Staff and Organization ......................o...... 19 D. Reorganization of the Operations Function .......... 20 go Trainiug ..o....o..ooo.o...oo.o..oe...ooo..o........o.oo.. 21 VI. THE PROJECT e 22 A. Background .o...o..o...... .o .... ....... ............o.. 22 B. Project Scope and Description ...................... 23 (a) The Investment Component ...................... 24 (b) The Technical Assistance Component ............ 25 (c) The Financial Rehabilitation Program .......... 26 This report was prepared by Samir El Daher and Luciano Borin of the Industry Department. Mesdames Greaves, George and Johnson provided word processing assistance. This document has a restricted distribution and may be used by rec