BRIEFS
Urea boost
Aditya Birla Nuvo and Tata Chemicals might lead $US9 billion of spending to increase India's urea capacity by almost 50 per cent, spurred by a government policy guaranteeing returns on investments. Producers of the nitrogen-based soil nutrient, including state-run companies and co-operatives, might add 10 million tonnes of capacity over the next five years, said S.C. Sharma, an officer at the country's Planning Commission. The government will assure new urea units a profit margin of 12 per cent to 20 per cent. Government control on the price of urea and ambiguity over natural gas feedstock costs have deterred new investments in the sector for more than 10 years, leading to an increase in imports and state subsidies. An increase in urea capacity will also boost agricultural productivity, helping feed two-thirds of India's 1.2 billion people who live on less than $2 a day, and contain inflation that averaged 7.5 per cent in 2012.
FINANCE
Bond drive
Sumitomo Mitsui Financial Group, Japan's second-largest bank by market value, may sell a record value of dollar-denominated bonds next year to fund loan expansion abroad. The company's lending unit has targeted two issuances that could total as much as $US4.5 billion, matching this year's amount as the most in Sumitomo Mitsui's 11-year history, company president Koichi Miyata (pictured) said. The two sales would range from $US1 billion to $US3 billion each, he said. Japan's three mega-banks are increasing lending overseas as deflation and economic contraction hit credit demand and loan profitability at home. Selling bonds and collecting deposits in dollars was vital for Sumitomo Mitsui to expand lending abroad, Mr Miyata said. "We're going to trim dependence on yen-based funding," he said.
OIL
Russia benefits
The TNK billionaires, who agreed to sell out of their oil venture with BP for $US28 billion, say they plan to invest most of the proceeds in Russia after President Vladimir Putin said he "hoped" they would. "Russia was and always will be the basic platform for investment" for the shareholders' separate business interests, said a statement on Tuesday from Mikhail Fridman and German Khan's Alfa Group, Len Blavatnik's Access Industries and Viktor Vekselberg's Renova Group. "In Russia, in particular, they plan to invest most of the proceeds from selling their shares in TNK-BP." BP and AAR, which represents the billionaires in the TNK-BP oil venture, are ending a contentious, almost decade-long, partnership with each selling its half to state-run OAO Rosneft. The deal, Russia's largest, is set to make Rosneft the world's biggest publicly traded oil producer by volume.
Frequently Asked Questions about this Article…
The planned expansion — roughly a $9 billion program to boost urea capacity by almost 50% (about 10 million tonnes over five years) — is being driven by a government policy that guarantees returns on new plants. The article says Aditya Birla Nuvo and Tata Chemicals might lead the investment, alongside state-run companies and co‑operatives.
Adding up to 10 million tonnes of urea capacity is expected to boost agricultural productivity, helping feed large parts of the population. The report says this could also help contain inflation — which averaged 7.5% in 2012 — by reducing shortages and import dependence that have contributed to price pressure.
The government plans to assure new urea units a profit margin in the range of 12% to 20%, a policy meant to overcome a decade of weak investment caused by price controls and uncertainty over natural gas feedstock costs.
Two main barriers noted are government control of urea prices and ambiguity over natural gas feedstock costs. Those issues blunted new investment for more than 10 years, increasing imports and state subsidies.
Sumitomo Mitsui plans to sell dollar-denominated bonds to fund loan expansion overseas and to reduce its dependence on yen-based funding. The lending unit has targeted two issuances that together could total as much as $4.5 billion, with each sale ranging from $1 billion to $3 billion.
The shift signals Japanese mega-banks are increasing overseas lending as domestic demand and profitability are hit by deflation. For investors, it means banks like Sumitomo Mitsui are diversifying funding and geographic loan exposure, which could change risk and currency profiles of their business.
The TNK billionaires agreed to sell their stake in the oil venture with BP for $28 billion, with each half sold to state-run OAO Rosneft. The billionaire shareholders — represented by AAR and groups such as Alfa, Access Industries and Renova — say they plan to invest most of the proceeds back in Russia.
The deal makes Rosneft the world’s biggest publicly traded oil producer by volume, according to the article. That consolidation increases Rosneft’s scale and could shift investment and production dynamics in Russia’s oil sector, a point everyday investors may want to monitor when tracking global oil company rankings and exposure.
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