The Syrian President Bashar al-Assad approved a contract between the Ministry of Oil and the Russian company Stroytransgaz Logistics, a daughter of Stroytransgaz, whose main owner is Gennady Timchenko, for the extraction of phosphate from the Ash-Sharqiya mine in Palmyra, Enab Baladi newspaper reported. The deposit is located 45 km south-west of Palmyra. According to the publication of Al Watan, a share in 30% of the production received the Syrian Institute of Geology and Mineral Resources. The contract is concluded for 50 years, the annual production capacity will be 2.2 million tons, the total reserve - 105 million tons.
Timchenko began to prepare for the extraction of phosphates in Syria not today - in June of last year, Stroytransgaz began work on the restoration of the largest phosphate development in Syria. A source close to the government of Syria informed RBC that initially Damascus wanted to give the contract for the restoration of the mines to Iran, but in the end the choice was made in favor of Russia.
Before the war, Syria exported phosphate ore, but its share in world production at that time (2011) was small - about 3.5 million out of 180 million tons. Since then, world phosphate production has increased significantly - up to 260 million tons, Forbes told the deputy director of the corporate ratings group ACRA Vasily Tanurkov. Accordingly, the volume that is going to produce Stroytransgaz, will be less than 1% of global production. According to the expert, Russia today almost completely provides itself with phosphate raw materials, the main producers are "Fosagro", which systematically increased production, and Acron, which several years ago started the extraction of phosphates at the Oleniy Ruchey mine. At the same time, Russia is one of the world's largest exporters of phosphate fertilizers, only about 20% of manufactured products are consumed domestically.
As for the Middle East, local deposits are, in principle, profitable, Tanurkov believes. "The production in Syria is likely to be economically attractive due to the low cost of labor and the fact that the field was developed earlier and recovery of production may not require the same large-scale investments as the launch of a new mine," he explains. For a new phosphate mine investment phase can go up to 5 years. In the case of the recovery of production, one can expect that this interval will be significantly reduced, the Forbes interlocutor notes. Favorable for the investor and the conditions for the division of products (30/70). The average price of a ton of apatite concentrate over the past 12 months was in the range of $ 80-100, that is, with the extraction of 2.2 million tons, the annual revenue may amount to about $ 200 million, the analyst concludes.
To whom Timchenko is going to sell phosphates, it is not yet clear. Both he and Stroytransgaz are under US sanctions. Washington imposed sanctions against both the Syrian government and the local business elite. And this means that neither the US nor the countries traditionally supporting their sanctions regimes will purchase this ore.
At the same time, Timchenko was not subject to EU sanctions and could trade with European partners. The EU imposed sanctions against Syria, Europeans are banned from buying oil, gas, military and dual-use goods and goods to suppress the population, but phosphates are not banned. Also, India and Latin America are major importers of phosphates. Specifically for Syrian products, the likely market is Iran, Tanurkov said.
Phosphates Timchenko's interests in Syria are not limited. He started work there before the Civil War - in 2005 Stroytransgaz won a contract for the construction of the South Middle Area Gas Exploitation Project (GPP-1), located 50 km east of Homs. In 2009 the plant was put into operation. In 2007, the company signed a contract for the construction of another plant, GPZ-2, 75 km southeast of Al-Rakki and 205 km east of Homs. The design capacity of the plant is -1.3 billion cubic meters. m of purified gas, 41,600 tons of liquefied propane-butane and 136,200 cubic meters of gas condensate annually. It was supposed to be launched in 2011, the plans were prevented by the war, during which most of the projects were frozen. But in December 2017, specialists of Stroytransgaz started construction of GPP-2. The profitability of gas processing depends very much on local tax conditions. If there is no heavy hard tax burden, it is usually cost-effective, says Vasily Tanurkov. "I think that in Syria for a Russian investor the conditions should be quite attractive," he explains.
In Damascus, Timchenko's efforts seem to be valued. "In Syria they want to see Russian specialists for the reconstruction of the country, relying on the experience of Stroytransgaz. This company works even on projects that are in the danger zone ", - said the Prime Minister of Syria, Vael Nadir al-Khalqi.