Brent Heimann, CEO, Arab Potash Company (APC): Interview

Interview: Brent Heimann

How have electricity and water tariff increases — both important inputs for the sector — affected Jordanian industry?

BRENT HEIMANN: The increase of these tariffs has had different effects on the various companies within the industry sector. With regard to potash, the production process is intensive in its use of water and energy. In 2014, the cost of energy and electricity increased by about 15% compared with 2013, and the cost of water increased by 14%. These sharp rises, coming after similarly high rises in the previous year, did not help the competitiveness of APC in the global market. Until 2008 we were one of the lowest cost producers per tonne in the world, and after these increases we became one of the highest. In the face of such increases, producers must look to cut back on costs and streamline production where possible. APC, for example, has embarked on a major adjustment process to reduce production costs, increase efficiency, control stocks and diversify sources of energy, which includes increased reliance on renewable energy in order to reduce the energy bill. For water, we signed an agreement to finance the construction of Wadi Ibn Hammad Dam to harvest rainwater, which will address some of our water needs as well as provide local communities with drinking water. Although measures such as these will allow companies in the sector to remain competitive, it would have been more helpful to have a dialogue through which the rises would be phased in over a longer period of time, in order to allow industry to adjust.

What are the economic implications of the agreement signed in 2014 with Noble Energy to import liquefied natural gas (LNG)?

HEIMANN: This agreement, between APC and Jordan Bromine Company on the one hand, and on the other NBL East Mediterranean Marketing, which is owned by Texas-based Noble Energy, is part of our efforts to diversify our sources of energy. We conducted extensive studies before the agreement, which showed that the conversion to natural gas is the optimal energy solution, and after exploring realistic possible source of gas, this agreement emerged as the most reliable and cost-effective option.

Natural gas is more ecologically friendly than heavy fuel, so the shift will have a positive ecological impact. In terms of immediate savings for the company, the shift is projected to produce total cost savings of JD235m ($330.7m), or average savings of JD11 ($15.50) per tonne of potash produced.

What impact is Aqaba’s new LNG import capacity expected to have on the industrial sector?

HEIMANN: The LNG delivered to Aqaba will be a great benefit for power generation and for industry in Aqaba. It will also be beneficial to industrial firms that can easily tie into the gas pipeline running north from Aqaba. Our agreement with Noble Energy will address some of our energy needs. The agreement stands, but it does not stop us from considering available energy options to address the rest of our needs. The industry sector will continue to look for the best value for money and the best environmental impact solutions. Aqaba’s new capability to import LNG is one of the options that will be considered.

How can renewable energy sources play a role in powering industrial companies?

HEIMANN: Although potash production is a clean industry that does not produce toxic waste, we have explored all options in order to minimise the company’s carbon footprint. Jordan is endowed with extensive prospects for harnessing solar energy. Our board, for example, has approved a 33-MW solar energy project, and engineering design work is under way. The project will contribute to reducing production costs, and it is expected to be completed in two years.