Perdaman Chemicals and Fertilisers, the company behind the 3.5 billion urea plant near Collie, has awarded an engineering and construction contract to a Korean and Indonesian consortium.

The company has signed a heads of agreement for engineering, procurement and construction (EPC) work with Korean firm Samsung Engineering Co and Indonesian business P.T. Inti Karya Persada Tehnik.

Samsung will act as the lead contractor of the work.

"We selected Samsung and IKPT because they demonstrated the experience, technical ability and financial strength to successfully complete a project of the size and complexity of the COllie Urea Project to within 2013 timeframe," Perdaman managing director Vikas Rambal said.

Perdaman has received in-principle approval from the state government for the project, which will be built at Shotts Industrial Park.

The plant has capacity to produce 2 million tonnes of urea per annum which will be primarily exported, generating some $820 million of export earnings for WA each year.

Perdaman has already arranged private equity funding and is in the process of securing bank debt, with agreements expected early next year.

The company is also working on securing the necessary government approvals for the project.

The announcement is below :

Perdaman Chemicals and Fertilizers (Perdaman) has signed a binding heads of Agreement for the EPC (Engineering Procurement and construction) work for its Collie Urea Project in Western Australia involving Samsung Engineering Co. Ltd of Korea and PT. Inti Karya Persada Tehnik (IKPT) of Indonesia. Perdaman will invest a total of A$3.5 billion to develop the plant that will transform sub-bituminous coal into urea, a widely used form of fertilizer, using innovative and low emissions coal gasification technology.

The Collie Urea Project, South of Perth is strongly supported by the Western Australian Government which is establishing the new shotts Industrial park, enabling the urea plant to be located adjacent to the coal resources required for its production process.

Perdaman and the State Government believe the Collie Urea Project will provide a major boost to the Western Australian economy by generating on average around 1,500 jobs during the three year construction phase. On completion the plant will provide 200 permanent jobs in the Collie area.

With the capacity to produce 2 million tones of urea per annum, primarily for export, the plant will generate in excess of A$850 million per annum in export earnings for Western Australia.

Samsung will act as the lead contractor for the EPC world which consists of the gasification island, which is central to the conversion of coal to hydrogen rich gas, the product island, which converts gas to urea, and the various utilities. The contract comprises Phase 1 work up to financial close for the project during the firs quarter of 2010, and for Phase 2 construction work schedule start later in 2010.