US embassy cable - 05AMMAN6849

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