BizNews: How would you describe today’s investment and business environment in the Kingdom?
Brend E. Heimann (BH): The company I’m seconded form, PotashCorp is Canadian, and the decision to invest here in Jordan dates from 2003. A big part of the decision to invest in Jordan is thanks to King Abdullah’s vision, the business environment he tried to create and continues to work on. We very much enjoy being here for 14 years now. This investment is very strategic and very sound for our company back in Canada and we are very happy with the environment here.
The challenge is about managing energy costs. The general costs are reasonable in other areas, but energy costs are the highest in the industry. At the time of our investment, they were at the industry average but now they are two to three times higher than the ones our competitors face. With the exception of the energy costs we have been and are very happy.
BN: Arab Potash Company-APC received last year, coinciding with its 60th anniversary the Independence Medal of the First Class by His Majesty King Abdullah II in recognition of your support for the national economy, employment and services in local community development. APC also continued to be among the major contributors to the Treasury and is among the highest contributors to the foreign currency reserve in Jordan. In this regard, the Prime Minister H.E. Hani al-Mulki recently visited you to see how your contribution to Jordan could be further enhanced. How would you describe the relations with the public sector?
BH: We have a very good relationship with the government. You mentioned the Independence Medal of the First Class, since 2003 our contributions to the Government have been 1.2 billion JOD, around 2 billion USD, and that does not include our CSR activities, which are a separate contribution to the government. In the past 4 years they have been around 8 million JOD per year. Last year it was well over 10% of our net income, that’s unheard of many companies.
BN: As your Chairman Mr. Jamal Ahmad Al Sarayrah stated, it is important to bear in mind that the long-term prospect for the potash market remains positive. Demand for potash will keep increasing in the actual global context and, even with a conservative and prudent outlook on the short term, APC continues with its ambitious future plans. In that regard you are working on different projects such as using gas to generate your own electricity, you are conducting feasibility studies to build a railway to reduce costs, together with the construction of 3 dams. How do you expect these projects will impact the business and even attract investments?
BH: I mentioned earlier the high energy costs. We had to take matters into our hands and we have now a gas contract to generate our own power, we are going to leave the Jordanian grid and be self-sufficient on power, otherwise it would be difficult for us to expand. This gas contract will reduce our production costs by 10 to 15 dollars a ton next year, which is significant. That will put us into a better position to expand to about 180,000 tons per year. Our current capacity is 2.3 million tons a year, so we will be close to 2.5 million tons. We have to get our costs down to be more competitive and then the step after that will be to expand. The power generation project is in progress, the gas line is built and the equipment to convert it in electricity is on order. The expansion has all the engineering done and we have to decide on the timing of when to start. As for the railroad, it is very much in the infancy stage, it is being studied, and it is not certain that it will reduce costs. It is more suitable for other industries, we need more volume to make it feasible, but it is certainly a possibility. We are in talks with the government about the railroad as there are other needs, other companies or even the transport of people or goods that could benefit from it in Jordan. Right now, we have a fleet of truck drivers that transport the product from Safi to Dead Sea to the port of Aqaba with 80 to 90 trips a day.
BN: When we asked the Governor of the Central Bank or the Chairman of the Amman Chamber of Commerce where Germany could play a bigger role they talked about infrastructure and especially railway, so there might be an opportunity there. What do you think?
BH: We see the railroad as a BOT project, a company could come and build it and we would guarantee a certain volume at a price every year if they would invest in it. There are companies in Germany that could potentially do that and we will guarantee them a certain amount every year.
BN: When we met H.E. Prof. Adel Tweissi, Minister of Higher Education & Scientific Research we discussed something in line with the MoU you signed with Mutah University; this is to promote cooperation between educational institutes and industrial companies in developing solutions to the problems that the industrial sector faces. What areas will the MoU focus on?
BH: The MoU is very broad and we see this as a win-win cooperation, for the students to get a chance to work in the real world and at the same time help us find solutions. It can be anything that help us improve our energy consumption and our production. We are working on reducing our costs, but it could be great if we could also reduce our energy and water consumption.
The other focus is that we have the rights to the minerals of the Dead Sea, other than potash, and we look at other opportunities that we could take to the market. We have a joint venture that is making bromine and bromine derivatives and we have another division in Aqaba that is making potassium nitrate, which is a specialty fertilizer, and we also have salt.
There are other minerals in the Dead Sea that are not being exploited because either it has not been a good market or there were no good commercial means of extracting them, but with the help of the University, we may find some profitable projects. We have to make sure there will be demand for those minerals. But downstream activities will play a big role this year for us.
BN: Arab Potash has one of the best track records among Jordanian corporations in the areas of work safety, good governance, sustainable community development, and environmental conservation. Despite last year’s challenges, APC’s CSR contributions as a percentage of the Company’s profits remained one of the highest in the world. What is the responsibility companies such as APC have towards the communities and the environment they work with?
BH: I think that is a very big part of who we are. We do give money to the communities, but we focus in hospitals and in education, especially in the areas we operate in, which are the poorest in Jordan. We have a commitment to the people and the environment. 40% of our workforce comes from those areas and we want to preserve their environment within the community. We have a done a lot to reduce our emissions.
BN: In June last year you were appointed as the Chairman of the Technical, and Health, Safety and Environmental (SHE) Committee by the International Fertilizer Industry Association (IFA). What are your main priorities at the international level, and how are they also applied in Arab Potash?
BH: IFA is the largest fertilizer association, where all the large producers are members. I have been part of the Technical Committee since 2009 and more recently the Chairman. The point is to discuss environment, technology and safety with colleagues from around the world, because if you have a problem here, people probably face the same problem elsewhere. It is a large resource pool we can use and bring back to Jordan. At the same time, we can share our expertise as well. We recently hosted a Safety Symposium here and we had around 120 delegates from around the world coming to Jordan. What we did was a tour in our plants, and during this tour we got 5 or 6 suggestions on which improvements we can make, which was great.
BN: Germany has long enjoyed close and friendly political relations with Jordan, being indeed one of the most important partners of Jordan. What competitive advantages does the Kingdom offer?
BH: If German investors are looking at anything in the Middle East region, Jordan has to be on top of their list, for the stability and for the support of His Majesty and the government. Regardless of whether it is to invest in the chemical or mining sector like ourselves, telecommunications, automobiles or anything in the area have potential. I think it is the place to be in the Middle East, and it has lower costs than other countries in the Gulf for example.
BN: You have achieved remarkable goals already, but what is the ultimate goal you would like to achieve before leaving office?
BH: A big change I have been trying to make since my arrival is that every person in this company has a chance to advance and move up for their hard work and efforts. I try to make it more of a meritocracy.
