The Arab World

The Arab world is in turmoil because of all kind of issues going from social unrest to ethnic strife, religious clashes and environmental protest. And this is affecting one of the key sources of fertilizer production. The Arab countries are key suppliers of fertilizer raw materials. The Arab countries currently account for some 14-15% of the global natural gas production, compared to an 8 percent in 1990 and 2 percent in 1970. Morocco and Western Sahara is the third largest phosphate rock producer, Tunisia is the fifth, Jordan ranks eight, Egypt nine, Syria twelve, and also Algeria has a significant domestic output. Egypt has the eight biggest ammonia capacities, and also Saudi Arabia, Algeria, Qatar, Oman and Abu Dhabi have large capacities. Egypt, Saudi Arabia, Qatar and Libya are important urea makers. Jordan is the sixth largest global potash supplier. Saudi Arabia and Abu Dhabi are key sulphur suppliers.

Demonstrators protesting pollution from an Egyptian nitrogen plant partially owned by Agrium, blocked a main road to the northern port of Damietta, which effectively shut down operations. The port has reopened, but the closure cost, according to Egyptian authorities was of USD 5.8 million a day. The country’s GDP is falling, factories are closing, and the nation’s finances are worsening. Egypt’s fertilizer producers benefit from cheap access to raw materials such as phosphate rock and natural gas. Egypt accounts for roughly 3% of global urea production and 8% of global urea exports.

In Tunisia, protests affected the phosphate rock supply to the Gabes plant, limiting the DAP production at their 330,000 tpa plant. TSP output at M’dhilla remains down with GCT starting about a one month maintenance programme recently due to the civil unrest that has interrupted the supply of phosphate rock to the facility, forcing its closure. In the early December, force majeure on sulphur imports was still on place.

In the shifting sands of the Middle East and North Africa nobody really knows what is going to happen. Not all looks bad. In their last Montreal meeting on May 2011, the IFA established that “on a global basis, the net addition to merchant grade acid capacity is estimated at 1 Mt P2O5, of which 0.86 Mt will come from two large stand-alone units in Tunisia and Jordan. In the 2014-15 there are expected the commissioning of large-capacity phosphate projects planned in Morocco. Saudi Arabia will become a key DAP supplier. But there are enough reasons to be concerned.

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Romania: Ameropa to get a majority stake in Azomures

Swiss-registered Ameropa Holding AG has acquired a majority stake in Romanian fertilizers producer Azomures SA through a series of agreements signed on November 25, 2011. It has been reported reported that the privately held Ameropa may pay more than 100 million euros (US$133 million) for the majority stake in Azomures.

Up to now, six Turkish investors controlled 76% of Azomures ownership, which is Romania’s largest publicly traded fertilizer maker. At their chemical complex in Targu Mures they have nameplate production capacities for 280,000 tpa ammonia (in two lines), 20,000 tpa urea, 100,000 tpa of ammonium nitrate, and 100,000 tpa NPK. The AN-CAN is exported mainly to Europe, Turkey, East Africa and Nigeria, while the stabilized ammonium nitrate (SAN) is shipped to Western Mediterranean destinations and Mexico.

Iran: Oman to Withdraw from the Nitrogen Fertilizer Project in Assaluyeh

Oman refused to continue with the project to build a petrochemical plant in southern Iran after a dispute about the price of raw materials. The deal to construct the plant in the southern port town of Assaluyeh, was signed between the two countries in August 2009. Iran expected the Hormuz plant, which requires an investment of over USD 500 million, to produce one million tonnes of ammonia and 650,000 tonnes of urea annually. Iran is targeted by international sanctions because of its proved attempt to get military nuclear capabilities, but the Iranian authorities tried to deny that the Oman’s decision was triggered by the imposition of international sanctions against their country. The Oman decision is a serious blow to the project, which was to be financed on a 50-50 basis by both sides.

Jordan: Saudis to build a phosphate complex in Al Hasa

The Saudi Arabian mining company Al Hamdi Group plans to build a NPK and DAP fertilizer complex in the Al Hasa site. It is called the Badr Complex, and the cost is of US$ 1.4 billion. In the first stage it will include a 310,000 tpa phosphoric acid line, whose capacity will be increased in a late stage to 620,000 tpa, adding another line.

The first phase is expected to begin construction in the second quarter of 2012 and forecasted to be commissioned in less than two years. They expect to gain shares mainly in the fertilizer markets of India, Pakistan and some African countries.

India: SPIC could sell its phosphate business

Southern Petrochemicals Industries Corporation Limited (SPIC) could soon enter into an agreement with Greenstar Fertilizers to sell its phosphate business, which includes sulphuric acid, phosphoric acid, DAP, NPK, SSP and aluminium fluoride, for an undisclosed amount. The operations are based at Tuticorin and while the cost of the purchase has not been disclosed, some anticipate that the company will raise at least Rs 3 billion from the sale. Spic is one of South India’s prominent industrial houses, with interests in fertilizers, chemicals and petrochemicals.

Greenstar Fertilizers was incorporated in August 2010 to distribute imported fertilizers and micronutrients, in addition to entering into fertilizer production and the production of associated products. It is understood that the SPIC group company, Sicagen India, earlier invested Rs 500 million in Greenstar Fertilizers for 11% non-convertible redeemable cumulative preference shares worth Rs 100 each.

The sale of its phosphate business is intended not only to reduce SPIC’s large debts but also to allow the company to keep operating and raise production rates at its urea plant in Tuticorin. The plant was restarted in September 2010 after being closed for more than three years. SPIC was previously a market leader in southern urea markets and wants to ensure that it maintains its presence in the urea market. In 2010 the Jordanian JPMC acquired the majority of the company shares. Now SPIC is planning to convert its urea plant at Tuticorin, Tamil Nadu, to run on gas from naptha.

Canada: K+S decided to move forward with the Legacy Project

End of last November, German K+S AG, Europe’s largest producer of potash, decided to go forward with the Legacy Project, which it purchased for C$434 million by taking over the Canadian company Potash One. It is located  some 50 km from the Moose Jaw city, in southern Saskatchewan, and initial infrastructure construction works in the areas of water supply, electricity and road developments as well as drilling activities have already begun at the site. The start of production and first volumes are expected in 2015 and by 2017 they expect to reach an annual capacity of 2 million tonnes of MOP, with a further increase to 2.86 million tonnes MOP in 2023. K+S website states that a further expansion of production capacity to 4 million tonnes of potassium chloride p.a. is possible in the long-term. At about 18%, the Legacy K2O content is significantly higher than that of the German sites, and its useful life has been calculated in more than 55 years, including the ramp-up curve.  The German potash deposits are the fourth largest in the world and their recoverable reserves are estimated in some 0.8 billion tonnes of K2O. The K+S Group revenues were in 2010 of EUR 4.6 billion, compared to EUR 3.2 billion in the previous year. Of it the Potash and Magnesium Products sector contributed in 2010 with EUR 1.9 billion, compared to EUR 1.4 billion in 2009. The financial results of the K+S Group for the whole of 2011 are expected to be significantly higher than in 2010 due to better than predicted demand and price trends witnessed in January-September. K+S is the fifth largest potash worldwide producer, buy they are a rather high-cost manufacturer. Half of their revenues are originated in Europe, and the other half overseas.

China: Controlled-Release Fertilizer and the Agroecological Environment

China, which has as much arable land as India, is set to achieve fertilizer self-sufficiency within a couple of years as it has continuously acquired assets in Africa and Latin America and is now about 90 per cent self-sufficient. But the current use of fertilizers in China is highly unbalanced. N use exceeds N removal by crops, P use and P removal appear to be in the same order of magnitude but K removal exceeds by far the use of mineral potash fertilizers.

Pilot programs of promoting the controlled-release fertilizer have been expanded to more than 20 provinces, compared with five in 2008, the NAESC, a department under the Ministry of Agriculture, said recently at a seminar held in the northeastern province of Jilin.

The move is aimed at reducing pollution caused by the excessive use of fertilizer to protect the environment and save energy, the NAESC said.

The controlled-release fertilizer is an energy efficient fertilizer to synchronize fertilizer release with crop absorption according to the preset program.

NAESC director Xia Jingyuan said the use of controlled-release fertilizer can help increase agricultural production by 5 percent to 10 percent on average, or as much as by 30 percent.

Last year, China’s grain output rose 2.9 percent year on year to 546.41 million tonnes.

France: GPN Environmental Assessment of Nitrogen Life Cycle

The main French fertilizer maker GPN and InVivo conducted an environmental assessment of the three major forms of nitrogen (ammonium nitrate 33.5, urea and UAN) over the entire process from production to usage.

The results of this study are clearly in favor of the ammonium nitrate produced by 33.5 GPN: lower environmental impact and improved energy balance. This was due both to differences in production processes, with differences of gaseous emissions in the field and to a greater agronomic effectiveness of the ammonium nitrate.

Emissions of greenhouse gas emissions were almost 40% lower with AN than with nitrogen solutions. The primary energy consumption was 50% lower with ammonium nitrate than with urea.

Paris-based GPN was formerly known as Grande Paroisse S.A. and changed its name to GPN S.A. in May 2007. All the GPN production sites are located in France, in the heart of the major cereal production areas: the Grandpuits plant in Seine-et-Marne and the Grand-Quevilly plant in Seine-Maritime. They are a 100% subsidiary of the TOTAL Group and have 1,876 employees.

UK: ICL considering production of polyhalite-based specialty fertilizers

Cleveland Potash Ltd. (CPL), a UK-based company in the ICL Fertilizers group, has performed geological research that indicate that there are more than one billion tons of polyhalite ore beneath the potash layer in its mine. Polyhalite is a mineral that can be used in its natural form as fertilizer for organic agriculture or as raw material in the production of specialty fertilizers. ICL is considering constructing a plant to produce specialty fertilizers and industrial products based on polyhalite in the Tees Valley area, near its potash mine in the UK. The British government announced last April that it views with importance the establishment of a production plant and increased mining activities in that it will result in increased employment in the area, therefore it intends to assist and support the establishment of the production facility through a £15 million grant.

Belarus: Haifa Chemicals could invest in a potassium nitrate project

Israel’s Haifa Chemicals Ltd. could invest USD 100 million in Belarus in a potassium nitrate project. One problematic issue is the volume of nitric acid required, as the local nitrogen producer Grodno Azot do not has sufficient capacity, albeit it was reported that additional facilities would be constructed. Haifa Chemicals has production sites in the Haifa Bay, in the Negev desert, and in France (Lunel), with a combined annual nameplate capacity of 0.5 million potassium nitrate.  Under private ownership since 1989, Haifa is owned by an American Holding Company, Trance Resource Inc (TRI), controlled by the Trump Group. In the 2010 they had annual turnover of some USD 650 million.

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