Identifier
Created
Classification
Origin
05AMMAN6849
2005-08-24 12:32:00
UNCLASSIFIED
Embassy Amman
Cable title:  

JORDAN BROMINE INVESTMENT DISPUTE RESOLVED

Tags:  EINV EIND EMIN JO 
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Cable 
Text: 
 
 
UNCLAS AMMAN 06849

SIPDIS
CXAMMAN:
 ACTION: POL
 INFO: RAO ISU USAID CONS RSO DCM AMB PA ECON

DISSEMINATION: POL
CHARGE: PROG

APPROVED: CDA:CHENZEL
DRAFTED: ECON:REASON
CLEARED: POL: ECARLSON

VZCZCAJI208
PP RUEHC RUEHTV RUCPDOC
DE RUEHAM #6849/01 2361232
ZNR UUUUU ZZH
P 241232Z AUG 05
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC PRIORITY 4535
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 3767
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 AMMAN 006849 

SIPDIS

E.O. 12958: N/A
TAGS: EINV EIND EMIN JO
SUBJECT: JORDAN BROMINE INVESTMENT DISPUTE RESOLVED


UNCLAS SECTION 01 OF 02 AMMAN 006849

SIPDIS

E.O. 12958: N/A
TAGS: EINV EIND EMIN JO
SUBJECT: JORDAN BROMINE INVESTMENT DISPUTE RESOLVED



1. (U) SUMMARY: The Jordan Bromine Company (JBC) is the
largest U.S. investment in Jordan. The company's Dead Sea
plant produces bromine and related products for export and
has just reached profitability ahead of schedule. An
investment dispute involving operational control over the
company has been resolved in favor of the Albemarle Company,
the U.S. investor behind Jordan Bromine. JBC now has plans
to expand its $120 million investment substantially, to the
tune of as much as $50 million in new investment. Resolution
of this dispute not only ends a long-running irritant in
U.S.-Jordan bilateral economic relations but it removes a
cautionary note for other foreign companies interested in
potential investments in Jordan. END SUMMARY.


2. (U) The U.S. company Albemarle began negotiations to
establish a bromine plant on Jordan's side of the Dead Sea in
1989 and in 1999 received a commitment from the government of
Jordan from the late King Hussein to maintain operational
control of JBC in a 50-50 joint venture with the Arab Potash
Company (the Jordanian government owns 26% of APC and has a
veto over APC decisions).


3. (U) JBC's plant began operations in October 2002,
eventually producing up to 50,000 metric tons of bromine per
year as well as increasing amounts of additional bromine
derivatives. (NOTE: Bromine and its derivatives are used in
a wide range of products, including gasoline additives, flame
retardants, solvents, pharmaceuticals and electronics. END
NOTE.) JBC has completed every phase of its operations on
time and reached profitability in January, a year ahead of
schedule.


4. (SBU) Unfortunately, problems arose in October 2003 when
the Jordanian government sold its 26% interest in APC to a
Canadian company, PCS, which is one of Albemarle's main
international competitors. The sale, in effect, created a
situation in which Albemarle's rival, PCS, could, through its
share in APC, block major decisions in Jordan Bromine.


5. (SBU) Over the past year and a half, the Embassy had
been working with Albemarle to urge the Jordanian government
to resolve the situation. One suggestion was that JBC sell
the original government share of 26% to the Social Security
Corporation, Jordan's pension plan investment agency, thereby
ending PCS's ability to block all substantive decisions in
JBC.


6. (SBU) This impasse came to a head over the past six
months when APC was blocking Albemarle's plans to expand
JBC's operations to meet growing world demand for JBC's
products. In Albemarle's view, APC was reneging on past
commitments to fund jointly expansions of the plant. This
added to continued Albemarle frustration over its lack of
operational control over JBC, for which Albemarle had brought
in the funding and technology for construction of the Dead
Sea plant.


7. (SBU) Jordan's Ministry of Industry and Trade maintains
the controlling interest in APC and, indirectly therefore, in
JBC. The Embassy has urged, through a succession of
Ministers of Industry and Trade, for resolution of the
dispute. As the largest U.S. investment in Jordan, JBC plays
a key role not only in promoting Jordanian exports but in
serving as a gauge of Jordan's investment climate for other
potential foreign investors.


8. (SBU) During a series of intense negotiations between
JBC and APC over the past three months, the Embassy was
closely involved in urging the new Minister of Industry and
Trade, Sharif Zu'bi, to find a compromise which would allow
this flagship U.S. investment to grow. Minister Zu'bi, in
close contact with the Embassy, was directly involved in
bringing these negotiations to a successful conclusion.


9. (SBU) The final compromise gives Albemarle operational
control of JBC and the ability to finance continued expansion
of its plant in Jordan. In a recent visit by Albemarle's
President and CEO, he told ECOUNS that, if the dispute could
be resolved, Albemarle planned to expand the plant
substantially. Plans include adding new production lines to
the plant, increasing employment and, all told, bringing in
up to $50 million in new investment to Jordan. Now that the
dispute is over, Albemarle will move ahead with its expansion.


10. (SBU) COMMENT: Reaching a compromise in this drawn-out
investment dispute has been a long, hard slog. The final
success is due to two factors: Embassy persistence in
pressing the issue on the GOJ and the dynamism of Jordan's
new Minister of Industry and Trade, Sharif Zu'bi. We have
heard that other foreign companies had been tracking
Albemarle's travails in Jordan closely, factoring them into
their decisions on whether or not to take the plunge and
invest in Jordan. Resolution of this dispute should improve
the reputation of Jordan's investment climate and could help
attract new investors. It can also be seen as an early
success of Jordan's new reformist cabinet.


HENZEL