Egypt reaches $540 mln settlement agreement with Canada’s Nutrien company

Egypt’s ministries of finance, petroleum and mineral resources have reached a final settlement agreement with the Canadian Nutrien Ltd Company (formerly Agrium), Egypt’s Ministry of Finance announced on Monday.

The agreement was reached under the supervision of the Egyptian ministerial committee for settling investment contract disputes, ending a 12-year dispute.

The finance ministry said that this action reflects the Egyptian government’s determination to create a suitable environment for investment and to attract more foreign capital.

The agreement was made to settle all disputes between the Canadian company and its affiliated corporations on one side, and the companies in which the ministries of finance and petroleum own shares on the other.

The agreement dismisses the investor-state tribunal case, which was pending before the Permanent Court of Arbitration in the Hague. It also dismisses the commercial tribunal case against Misr Fertiliser Production Company (MOPCO), which was pending before the International Chamber of Commerce in Paris.

Moreover, 100 percent of Nutrien Ltd.’s shares in MOPCO (around 59.6 million shares), will be transferred to Egypt’s finance ministry in prices to be negotiated later and that are subject to customary closing conditions.

On 20 December, MOPCO was given a letter from Egypt’s cabinet approving the dispute settlement and share purchase agreements between MOPCO’s Egyptian Nitrogen Products Company (ENPC) and Nutrien Ltd.

On 18 December, Nutrien Ltd announced it would sell its entire stake in MOPCO to Egypt and settle related arbitration claims for total gross proceeds of $540 million. It added that its investment in MOPCO had historically contributed $15 million to $20 million annually to its adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA).

Nutrien Ltd is one of the largest providers of crop inputs and services globally, distributing 25 million tonnes of potash, nitrogen and phosphate products worldwide.

In 2008, Agrium Inc announced that MOPCO would acquire its Egypt’s Agrium (EAgrium) project through a share swap in which EAgrium would become a wholly-owned subsidiary of MOPCO and the shareholders of EAgrium would become shareholders in MOPCO.

Accordingly, Agrium would own a 26 percent interest in the combined entity and it anticipates earning contributions as of the fourth quarter of 2008.

In the same year, Egypt’s government cancelled a planned $1.4 billion Agrium fertiliser plant and said that MOPCO would acquire the shares of Agrium’s Egyptian subsidiary.

In 2006, Agrium inked a deal with the Egyptian government to build a factory for the manufacturing of ammonia-based fertilisers in Ras El-Bar city in Damietta.

The factory construction began in 2008, which faced opposition from local officials in the city and residents concerned about public health and environmental issues, saying that the projects would cause air and water pollution.

This opposition was taken to the Egyptian parliament, which responded by advising that the factory be moved to Suez, although this was never implemented and eventually the government announced the project would be cancelled and Agrium given a 26 percent stake in the Egyptian fertiliser company MOPCO.

However, the Agrium’s factory construction began again in November 2011, sparking protests that resulted in the death of one person.