Israel Chemicals Buys Stake in Yunnan Yuntianhua

Israel Chemicals (ICL) has completed the acquisition of a 15% stake in Yunnan Yuntianhua, China’s leading phosphate producer, for about $250 million. The investment is part of the formation of the company YPH JV, which was set up in October last year and includes a mine producing around 2.5 million t/y of phosphate rock as well as a large-scale downstream phosphate operation.

ICL expects the alliance to nearly double its phosphate market share, transforming it into the world’s leading specialty phosphate player. YPH JV is also expected to improve ICL’s cost competitiveness by providing access to low-cost phosphate rock and phosphoric acid.

The Tel Aviv-based company said it sees major potential for phosphate specialties in China that it would be well-positioned to leverage through the joint venture, which also adds ammonia-based fertilizers to ICL’s portfolio.

YPH JV expects to invest about $340 million over the next five years in building specialty plants and tripling its white phosphoric acid (WPA) capacity. Both companies have agreed to produce and sell WPA in China exclusively through the joint venture within five years of its closing.

Last August, the partners set up a phosphate R&D platform in Kunming, Yunnan Province, to focus on developing technologies and providing technical support for the business. Nearly 12 projects have been launched since the R&D unit opened.

YPH JV will be controlled by ICL, which will merge its existing businesses in China into the joint venture.  As a strategic investor in Yunnan Yuntianhua, ICL will nominate 2 out of 11 of the Chinese company’s board members, one of whom will be ICL’s president and CEO, Stefan Borgas.