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Cablegate: Ninewa: Sulfur Plant Represents Huge Untapped

VZCZCXYZ0001
RR RUEHWEB

DE RUEHGB #2052 1851133
ZNR UUUUU ZZH
R 031133Z JUL 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 8109
INFO RUCNRAQ/IRAQ COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEKJCS/DIA WASHDC
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHMFISS/HQ USEUCOM VAIHINGEN GE

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

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