Chemplex Corporation which also owns ZimPhos is in need of US$60 million to boost operations
Walter Muchinguri Assistant Business Editor
THE Industrial Development Corporation will finalise the execution of share subscription agreements relating to Chemplex Corporation within the first quarter of this year after 11 investors expressed interest in the company.
IDC intends to dilute its shareholding in Chemplex, the largest fertiliser and chemical manufacturing company in Zimbabwe, to raise US$60 million to boost production at the corporation, which is into mining and manufacturing.
About US$40 million will be dedicated to the refurbishment of plant and equipment. This would help the company achieve a 15 percent profit before tax and a return on investment of 9 percent.
The eleven companies include two local investors; four from South Africa and one each from India, China, Singapore, Canada and Egypt. The investors are part of 40 potential investors that received non disclosure agreements from IDC.
A subscription agreement is a popular form of soliciting funding for businesses when the holding company does not have the resources to go public or work with venture capitalists.
They often seek out individual investors. This is a binding contract that exchanges a one-time trade of money for a specific number of shares in a company.
According to the IDC evaluation of the expressions of interest by the 11 and due diligence exercises are on-going.
“Execution of share subscription agreements is expected to be finalised in the first quarter of 2014,” the company said.
The refurbishment of the corporation’s mining and manufacturing plants will result in an increase in production of phosphates rock concentrate, sulphuric acid, phosphatic fertilisers as well as aluminium sulphate to meet domestic and export demand for phosphate rock concentrate.
Historical demand for fertilisers before the country’s economic crisis was around 500 000 tonnes per year. About half of this was top dressing and ammonium nitrate while NPK compound fertilisers constituted the other half at around 250 000 tonnes.
However, under the Zimbabwe Agenda for Sustainable Socio- Economic Transformation policy framework, covering the period between 2014 and 2018, increasing the production of cereal and minor crops will require 1,95 million tonnes of fertiliser for maize; 200 000 tonnes for wheat, 400 000 tonnes for small grains.
In addition 300 000 tonnes each of Compound D and Top dressing and 50 000 tonnes of seed will be required.
Chemplex mines and beneficiates phosphate rock which is used in the manufacture of fertilisers and also manufactures sulphuric acid which is then converted to other industrial chemicals.
The Corporation has six companies ZimPhos, Dorowa, Chemplex Marketing, Chemplex Animal & Public Health, GD Haulage and G&W Industrial Minerals. It employs over 1 000 people including more than 100 engineers, chemists, technicians and other skilled professionals.
To meet the high standard manpower required, the company trains graduates and apprentices every year and thus contributes to national manpower development.
It supplies chemical raw materials and finished products for various sectors that include agriculture, food processing and preservation, horticulture, rubber technology, packaging industry, leather tanning, mining, animal and public health, metallurgical, dry cleaning, textile, detergent manufacturing and water treatment services.