NINEWA: SULFUR PLANT REPRESENTS HUGE UNTAPPED

UNCLAS BAGHDAD 002052 SENSITIVE SIPDIS FOR TFBSO AND USAID E.O. 12958: N/A TAGS: ENRG PGOV EPET EINV IZ SUBJECT: NINEWA: SULFUR PLANT REPRESENTS HUGE UNTAPPED POTENTIAL ¶1. (U) This is a Ninewa Provincial Reconstruction Team (PRT) message. ¶2. (SBU) Summary: The Mishraq Sulfur Plant in south-central Ninewa Province contains half a billion tons of recoverable sulfur. Repairs and reconstruction to the plant following a fire in 2003 would be inexpensive when compared to revenues generated from potential production and sale of one to two million tons per year. Worldwide sulfur demand for steel, rubber fertilizer and other products and chemical/petrochemical processes is high. No repairs to the facility have been made to date, but sales of stockpiled sulfur are occurring to unidentified buyers. Employment at the plant when it was in operation was 1,880 and is now about 600, including security. End Summary. Damaged by Fire and Never Repaired -------------- ¶3. (SBU) The Mishraq Sulfur Plant, originally built in the 1970s by Freeport McMoRan and under the control of the Ministry of Industry and Materials, sits atop 500 million tons of sulfur. The sulfur is extracted through the Frasch Process, pumping superheated water and hot air into the ground through the outermost two of three concentric pipes and retrieving the sulfur foam that is forced to the surface through the innermost pipe. While most sulfur worldwide is produced as a byproduct of crude oil refining, the Frasch process is still used to extract sulfur in parts of Texas and Louisiana. ¶4. (SBU) The plant was destroyed by fire in 2003 and has not been repaired. Since 2003 the price of sulfur has risen from around USD 40 per ton to between USD 400 and USD 500 per ton. Sulfur is used in the production of steel, fertilizer, rubber, explosives, animal feed, paint, inorganic chemicals, pharmaceuticals and other products and in chemical processes for refining petroleum and sugar. Current Plans for Rehabilitation, Sales -------------- ¶5. (SBU) The sulfur harvested at the plant is slightly contaminated with oil and requires additional purification. Plant management estimates replacement cost of the purification facility at USD 50-60 million, and a like amount to restore the rest of the plant, for a total of USD 100-120 million. Baghdad-based ministry officials have mentioned at various points in the last year that they plan to inject some funds to rehabilitate and eventually sell off the plant, though local officials have seen no action yet. Employment at the plant when it was in operation was 1,880 and is now about 600, including security. ¶6. (SBU) Management estimates of leftover product at the plant have varied over the last year between hundreds and hundreds of thousands of stockpiled sulfur ready for export. Coalition Forces have seen as many as 70 trucks at a time leaving the facility, though no one has information on who is buying that product. Comment: Need Guidance from TFBSO/USAID -------------- ¶7. (SBU) A full inspection by international and Iraqi engineers and industry experts familiar with current sulfur technology and marketing could indicate whether the facility represents an opportunity for immediate employment, future privatization and profitable U.S. investment. PRT would appreciate reaction/guidance from TFBSO/USAID, specifically regarding the advisability of a possible USG-facilitated visit by international customers of bulk sulfur and possible paired financing for equipment rehabilitation. CROCKER