Saudi Ethanol Project in Sudan

The Sinnar state government in Sudan signed a partnership with the Saudi Tala Company to produce sugar, ethanol and bio-fuel from Jatropha. The project’s size would be 165,000 acres and its costs $650 million.

If this project is implemented it would be a new trend. Internationally, over half of  announced land aquisitions have been for biofuel projects according to Oxfam., but the Gulf countries have mainly focused on food production so far.

The ethanol production at the Kenana Sugar Company in Sudan, which is half owned by Saudi and Kuwaiti capital is an outlier. Its ethanol production makes better use of molasses by-products of sugar production and takes advantage of European subsidies for ethanol, but is hardly an end in itself.

If implemented, the Jatropha project of Saudi Tala would be a first as far as Gulf investors are concerned.

Increasing Gulf LATAM Ties

Interesting article in the FT about the increasing ties between the Gulf and Latin America. Agriculture ranks high beside investments in mining and other companies.

Al Gharrafa, a subsidiary of state owned Qatar Holding now holds about 10 percent of the shares of Adecoagra. The company has investments in Brazil, Argentina and Uruguay and Pampas Humedas, an affiliated company of US billionaire George Soros is a major shareholder.

Such investments are part of a larger trend. If Gulf countries actually put money on the table and not just announce investments it is rather in developed agro-markets and in partnership with experienced local partners. In contrast investments in risky developing countries like Sudan have not materialized in many cases.

As Brazil and other developed agro-exporters like Thailand or Ukraine have put limits on foreign land ownership to keep cash producing assets national, partnerships are also the vehicle of choice to participate in their farming operations.

Saudi Russian Grain Deal

Saudi company Najd Trading and General Contracting has inked a contract with Russian SAHO over guaranteed grain sales by Russian SAHO.

SAHO has 400,000 hectares of land in in its home region Novosibirsk and southern and central Russia.

Saudi Arabia imports more than 40 percent of globally traded barley for its livestock industry and Russia is one of its main suppliers.

SAHO wants to become one of the top three firms in Russian grain marketing which is so far dominated by international traders like Glencore. Glencore in turn has also attracted Gulf investors during its recent IPO.

Qatar Now Largest Urea Exporter

With the launch of the  Qafco-6 project Qatar is now the world’s largest exporter of urea, with a 15 percent market share. In terms of production it ranks number 4 globally. Saudi Arabia contributes another 10 percent to global urea exports, underlining the Gulf’s importance in global fertilizer markets.

Qatar’s annual capacity for urea is  5.6 million MT. Last year it produced 3.6 million tonnes of ammonia and 4.3 million tonnes of urea.

With ample natural gas supplies globally in the wake of new production techniques like hydraulic fracking there is no shortage of nitrogen fertilizers for the foreseeable future. Yet countries in the Middle East may think how they can leverage competitive fertilizer production for agricultural investments as I have argued elsewhere.

This is particularly true for phosphorus, which is mainly produced from phosphate rocks without alternative production possibilities as in the case of nitrogen and natural gas. Morocco has over three quarters of global phosphate reserves after the recent upgrade of USGS estimates and Saudi Arabia will be also an important producer once the Al-Jalamid project in the North of the country is up and running in 2014.