São Paulo – The Egyptian Orascom group has signed a contract for the establishment of a joint venture with Brazilian distributor FITCO International. The deal, announced last week, is aimed at distributing products from the Egyptian company’s fertilizer division in Brazil and South America. Orascom is one of the largest business conglomerates of Egypt and operates in the areas of telecommunications, building, cement, fertilizers, hotel management and information technology.
In March this year, both companies had already signed an agreement for the import and distribution of granulated urea and ammonium sulphate throughout Brazil. Now the company, named FITCO-Orascom, should also distribute fertilizers produced in Egypt in countries like Colombia, Argentina, Chile, Uruguay and Peru.
Each of the partners has 50% of the business, whose capital was not revealed. Up to the moment, FITCO has already traded 170,000 tonnes of fertilizers imported from Orascom, totalling US$ 75 million. The expectation for 2010 is for sales to exceed 250,000 tonnes, according to FITCO director, Marcelo Simionato.
Initially, FITCO-Orascom should be headquartered in São Paulo, but Simionato says that there are plans for the opening of branches in Uruguay and Argentina. The operations in Brazil should begin in 2010.
Before the establishment of the joint venture, sales of Orascom products represented around 25% of FITCO operations. According to Simionato, it is still not possible to make forecasts with regard to how much this figure should grow, as this depends on market conditions. According to the executive, due to the crisis, the fertilizer market suffered a 5% retraction in 2009. “I imagine that growth should return in 2010.”
“We believe that the new joint venture should promote a platform for future growth in Brazil and potentially in other markets in South America. We will continue evaluating new opportunities through the joint venture recently established to better supply our clients in the region,” said Simionato.
To the CEO at Orascom, Nassef Sawiris, the new joint venture is the result of the success of the “strategic alliance” established early this year. “Establishing this new society for trade and distribution, we will be strengthening this partnership with FITCO, which is going to allow Orascom to have permanent presence in Brazil.”
FITCO also represents Moroccan company OCP in Brazil, as well as importing products from Tunisia and Jordan.
*Translated by Mark Ament
