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Jordan’s mining sector in trouble

Nov 27,2016 - Last updated at Nov 27,2016

Available data indicates that Arab Potash Company is making money, although the main part of it is derived from non-operational activities, while Jordan Phosphate Mines Company is registering relatively big losses even though both companies are exporting to the same market in South East Asia, a region that needs huge amounts of fertilisers to produce food to feed its people, as the standards of living in the Far East countries have recently risen sharply as a result of achieving very high economic growth rates.

Profits are on the decline in Arab Potash Company, and losses are on the rise in Jordan Phosphate Mines Company. 

However, referring to the statistics of Jordan’s foreign trade during the first eight months of this year, we find that phosphate exports declined by 6.3 per cent year-on-year, while potash exports dropped by a staggering rate of 38.9 per cent, indicating that the mining sector is in a deep trouble.

It is a riddle to figure out how the increase in phosphate exports during the first half of this year by 2.7 per cent resulted in big losses, while the drop of potash exports by 42.4 per cent was accompanied by profits.

Mining industries, namely phosphate and potash are seen as the petroleum of Jordan, they represent a major export activity.

The value-added in mining industries is very high. They provide the only major raw material produced in Jordan, a country very poor in natural resources, including oil and water.

Phosphate and potash are a major source of earning foreign exchange to feed the country’s balance of payments.

Going back to national statistics, we find that the mining sector, important as it may be, contributes no more than 2 per cent of the gross domestic product, very low in view of the potential.

Potash and phosphate industries were among the most important sectors to undergo the privatisation process, even though natural resources are normally the last to be privatised, just like petroleum and gas.

Unfortunately, the privatisation of potash and phosphate companies turned out to be a disappointment in that no major expansion of operations took place, and no new large-scale manufacturing industries were established to utilise the local raw materials, instead of exporting them in their raw state.

The government is still a shareholder in both companies. It has representatives in the management and boards of directors.

It seems that those representatives are not playing an active role in drawing production and marketing policies of the two companies. 

They do not even ask the right questions!

It is no surprise to see that some political activists use the shortcomings of the phosphate and potash companies to call for recovering them to the direct domain of the government, a step which, if taken, will be a setback and a step backward.

The government is there already, but doing nothing.

 

It is the duty of the professional management of the two companies to turn them around to the high profitability they deserve.

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