(MENAFN- The Peninsula)
Sachin Kumar | The Peninsula
Industries Qatar (IQ), one of the region's industrial giants with holdings in petrochemicals, fertilizer and steel producers, plans to invest around QR3.2bn as capital expenditure (capex) in various projects in its fertilizers segment over the next five years.
The group had invested around QR135m in form of capital expenditures for this segment during 2020. 'In terms of capital expenditure for the future, the segment is expected to invest QR3.2bn in various projects over the next five years.
The main projects the segment will invest during the next five years will include projects related to HSE, plant reliability, regulatory compliance, infrastructure, productivity, periodic maintenance turnarounds and other PPE additions, said IQ in its latest annual report.
'These projects are not only intended to improve segment's profitability and cash flows, but also would improve plants' longterm plant life and HSE footprints, it added. Through its subsidiaries and joint ventures (the group companies), IQ operates in three distinct segments: Petrochemicals, Fertilizers and Steel.
F e r t i l i z e r s e g m e n t remained stable during the year. This was primarily due to robust demand and firm product prices.
The segment was the least impacted by the COVID-19 pandemic or the weaker crude price environment.
Like other segments within the Group, the core strategy within the fertilizer segment is also to optimize the value of operating assets, via maximizing the production, minimize the operating costs, and thereby enhancing the free cash-flows to the segment, noted the report.
IQ's fertilizers business segment comprises a 100 percent owned subsidiary, QAFCO (Qatar Fertilizer Company Limited). QAFCO has two subsidiaries, Gulf Formaldehyde Company and Qatar Melamine Company.
QAFCO together with its subsidiaries is engaged in the production of ammonia, urea, melamine and formaldehyde condensates. QAFCO's production capacities of key products are Ammonia, Urea, Urea Formaldehyde Condensate and Melamine.
A significant portion of the ammonia produced by QAFCO is used internally as a feedstock for urea production, while the urea produced by QAFCO is in either prilled or granular form. Urea Formaldehyde Condensate is an anti-caking agent which is added to urea products to improve their strength.
The principal use of melamine is in the construction industry. Melamine is used in the production of high-pressure laminates, which are used for a number of construction related activities. Melamine is also used in the production of kitchen utensils and plates.
During the year, the Group successfully completed the acquisition of 25 percent stake in QAFCO at a purchase consideration of $1bn. With this acquisition, IQ now controls QAFCO with 100 percent ownership.
In addition, and as part of the same transaction, QAFCO acquired Qatar Petroleum's 40 percent stake in QMC, for a purchase consideration of QR109m.
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