Electrochem seeks $445m to expand operations

One of West Africa’s largest salt mining firms, Electrochem Ghana Limited, has started the implementation of a plan to raise $445 million from the capital market and private placements to help expand its operations in the next two years.

The additional capital is required to complete all engineering works on the multi-million-dollar project, automate engineering infrastructure, construct pumps and pipeline infrastructure, a jetty at Ada West for bulk export, procure vessels and barges, construct a salt refinery, caustic soda plant, the production of industrial parts, acquire mining equipment and establish a research focused university.

When completed, the project will enable Electrochem Ghana, a subsidiary of the McDan Group of Companies, boost production capacity from about one million tonnes to five million tonnes of salt per year.

It would also create additional jobs, enhance investment returns for shareholders and support the country’s economy in general.

This came to light when the acting Chief Executive Officer (CEO) of MIIF, Justina Nelson, led a delegation to Electrochem Ghana Ltd at Ada Songhor in the Greater Accra Region last Wednesday.

The Ada Songhor salt works lies on a 41,000-acre concession owned and operated by Electrochem Ghana through an infrastructure project funded from a combination of equity from the Minerals Income Investment Fund (MIIF) and debt from Ecobank Ghana.

MIIF investments in the project currently stands at $30 million (GH¢363 million).

The visit formed part of MIIF's ongoing commitment to visit all institutions in which the Fund has equity stake. 

It is also intended to help the acting CEO of MIIF to be abreast of the operations of those companies and to ensure that their activities fell in line with the objectives for which the funds were invested to yield the needed returns for the state.

The MIIF delegation was received by the Executive Chairman of the McDan Group, Daniel McKorley; Group CEO of McDan Group, Kwaku Ampromfi; the CEO of Electrochem Ghana Ltd, Abdul Razak Adam, and other staff of Electrochem Ghana. 

Phased approach

The Group CEO of Electrochem stated that so far over $120 million had been spent on the Ada Songhor salt project through a phased approach.

“We have also targeted the development of the project from the completion of the salt works which is the actual infrastructure to produce raw salt at the cost of $120 million,” he said.

"We want to do value addition and so we want to build a refinery at the cost of between $30 million and $40 million.

Beyond the refinery, we also want to move into the chemical space because salt is the major ingredient used to produce most chemicals,” Mr McKorley said.

Chemical production

The Group CEO of McDan Group said the plan was to move from producing raw salt into refined salt and chemical production with the caustic soda plant at the cost of $85 million.

He said the company sought to produce between three and five million tonnes of salt annually.

“To be able to move those volumes of salts, we need to build a port at a cost of about $100 million.

We also want to build an industrial park to attract different companies within the salt value chain and establish a research university with a special focus on salt production and its derivatives,” Mr Ampromfi said.

Stock exchange 
The Group CEO said the company had taken steps to raise additional funds from the capital market and through private placement.

He said that the company was awaiting the formation of the Securities and Exchange Commission board for approval of its prospectus to be able to list on the Ghana Stock Exchange (GSE).

“Our original plan was to go public last year, by June of 2024 the term of office of the SEC board had ended and so, we could not go ahead with the listing process.

“However, we are awaiting the board. Going on the public exchange was part of the initial arrangement with MIIF,” Mr Ampromfi added. 

Viable investment

After taking a tour of the facility, Mrs Nelson said the project was a viable investment for the country.

She described the facility visit as timely as it would afford the new management of MIIF an opportunity to ascertain things for themselves and also help guide in taking strategic decisions that would impact positively on the operations of Electrochem Ghana and all other companies in which MIIF has equity.

“We realised during the tour that Electrochem Ghana has been able to utilise the funds invested by MIIF but there are more discussions we have undertaken behind closed doors for them to list on the Ghana Stock Exchange and generate more dividend for the government.

"We want to intensify our royalty collections for not just Electrochem Ghana but for all the companies the government have stakes through MIIF,” the MIIF CEO said.

Strategic positioning

Electrochem is strategically positioned to leverage over two decades of expertise and resources to invest in and maximise returns from the salt and chemical industries.

The company’s concession is to supply salt to the local market and for export. It is expected to become the largest salt mine in Africa.