Project Financing and Loans for Mineral Fertilizer Plant

Project Financing and Loans for Mineral Fertilizer Plant

Project Financing and Loans for Mineral Fertilizer Plant

Published Aug 1 

The high demand for agricultural products alongside mineral fertilizer is overwhelmingly growing within the global conglomerates. That being, the high demand is geared through the lack of fertilized

Mineral fertilizers are in high extension in the world market. It is on record that the market will arrive an approximate of US$200 BILLION by 2029. this is despite shifts in the interruption of COVID-19 and economic recession yet the trend for Mineral fertilizer remains unquestionable.

Circumstances surrounding the agricultural mainstay is in complex and to overlooking the prudent of the products will leave the entire world population into hunger.

In recent times, the production of Mineral fertilizer production is situated in South and East Asia, primarily in the People’s Republic of China, but also in the EU, Russia, Canada, the United States, and others. Governments continue to provide strong support to producers in the form of subsidies, preferential long-term loans and tax incentives, all of which help the industry as a whole. Plants are being built all over the world, requiring multimillion-dollar capital investments and active use of capital-intensive innovations such as new chemical formulations or nano-fertilizers.

Havelet Finance Limited has a numerous platform of leading global experts in financing and project management. We offer loans for the construction of mineral fertilizers plant project financing in Europe and beyond. Kindly contact us.

Cost of Construction for Fertilizer Plants

Industrial revolution and speedy technological advancement and quality standards and environmental requirements gave rise to higher costs for new production facilities.

Project Financing and loan cost of mineral fertilizer plants construction depends largely on the accepted technology, capacity, location and a number of other factors. On average, such facilities cost a few tens of millions of dollars.

Be it as it may, the cost of some facilities runs into hundreds of millions of dollars An explicit of it is the popular Africa/Nigerian business mogul Dangote Fertilizer Plant in , worth $3.5 billion). The recommended factors apply in financing a loan for a fertilizer plant, as well as any other major project, is its economic feasibility, since the desire of investors to participate in the launch of the enterprise is closely linked to the expected return on investment.

The feasibility plans of fertilizer plant will look as below:

1} An analyses of expenditure requirements and operating costs.

2} A comprehensive analysis of the profitability and viability of the project as a whole.

3}Assessment of funding options for the project. Initial costs refer to the capital required to implement the project, i.e., all planning, land purchase, permitting, engineering design, construction, and commissioning activities in accordance with generally accepted regulations and applicable industry standards. Pre-project costs refer to the capital that needs to be invested before the project can begin.

The above requirement costs is in regards with project management, preliminary construction research costs, and research costs to determine the quality of the product and the safest, most efficient, and economical method of obtaining it. In general, the pre-project costs are small compared with the total investment costs and amounts.

Cost of Investment Structure of investment for Fertilizer Plant

Expenses and cost remain the most essential module for prime investment. That is an integral part of capital planned to buy and installation of equipment and materials for the fertilizer plant. Due to depreciation and aging, assets lose value over time. Of the total amount of capital expenditures, only a small portion intended for the purchase of the site can be fully recovered through the subsequent sale of the land. Of the rest of the capital, investors can obtain only a small portion corresponding to the market price of the used equipment.

A lot of methods to evaluate the fixed capital of industrial enterprises, mostly multi-factor methods, which allow a minimum error of 10%. These methods are based on the relative value of various components of the plant under construction, including production equipment, construction materials, etc. The list of the most expensive equipment for building a fertilizer plant includes special chemical resistant tanks, feed hoppers, reactors, pumps, filters, conveyor belts, steam boilers, compressors, etc. As with any equipment for the chemical industry, the selection of reactors requires an individual approach to projects depending on the specific chemical process.

Irrespective of the extensive range of off-the-shelf equipment from the world’s leading manufacturers, the customization of equipment can affect the final cost of a project. Numerous potash, nitrogen and phosphate mineral fertilizer production technologies have been developed around the world, each based on different process schemes and equipment

Cost of Financing and Loans for Mineral Fertilizer Plant :

Land and Buildings: Depending on the layout of the plant, the share of civil engineering in the total cost estimate may exceed 30%. The cost of structures for a fertilizer plant can be high due to the use of special technologies, such as waterproofing of flooring, fire protection, construction of swimming pools and tanks. Services related to heating, air conditioning, lighting, water use, and compressed air are also costly.

Machinery and Equipment: The sum up of all cost required for equipment fitting, Materials and alongside labor. The cost of materials needed to accomplish this task (metal structures and more). This category of costs can make up from 30 to 50% of the total cost of the investment project.

Automation: measuring and control devices. Given the current trend toward automation of fertilizer plants, the cost of purchasing computers and electronic equipment can be very significant.

Piping: The procurement and fitting of piping, valves, hoppers and tanks for solid or liquid substances can reach a part of total costs, depending on the type of plant and fertilizer production technology.

Insulation: Any chemical production facility depends on effectively maintaining optimum temperature at critical points in the process. The cost of materials and labor to install thermal insulation depends on the technology chosen, the climate zone, and the availability of outdoor areas.

Electrical Fitting: Plants requires and electric energy connection to a moderate voltage. Power line and a whole range of electrical installation work on site (eg, the connection of electric motors and control equipment).

Havelet Finance Limited provides a financial model and loans for the construction of fertilizer plants. We provide professional advice at all stages of the project, develop personalized financing optimization schemes.

Project Finance for Construction of Mineral Fertilizer Plants

Project Financing are well known organized platform to funding a Large construction projects. During the pandemic era and economic recession, many entrepreneurs did experienced challenges in finishing ready and alongside implementing a new constructions. projects. This is achieved by creating a legal entity independent of the initiator — the Special Purpose Vehicle, or SPV. The company must obtain financing and implement the investment project.

In the absent of project finance, many large competitive market development projects involving both private and public interests would not succeed.

Stages of an investment project

Project Finance stages includes planning and comprehensive study of investment opportunities,. These are the planning and the bidding phase, the construction phase, and the operation and income generation phase. During the planning and due diligence phase, potential investors conduct a detailed technical, legal, and financial evaluation.

The due diligence report is considered a key tool for evaluating the project. This report includes a description of the project’s legal framework and a detailed analysis of legal, technical, environmental and financial risks. The legal evaluation is an analysis of the statutory documents of the SPV and the contracts it enters into in the context of the applicable laws of the host country and international law.

Special Purpose Vehicle (SPV)

Special Purpose Vehicle is a separate legal entity that is created for the purpose of undertaking a project. It offers limited liability to the sponsors involved in the project and provides banks a way to control their exposure on a project-by-project basis.

It can be thought of as a special purpose company, but with additional features.  SPV’s are created by the sponsor(s) who fund it with equity and with any debt required. The SPV then undertakes the project, which may be financed by multiple sources of finance including banks, other institutional investors and possibly private equity investors (see below).

If you want to implement a mineral fertilizer plant project financing, contact Havelet Finance Limited. We have a wide network of business partners all over the world. Contact us to find out more



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