Fertilizer International 509 Jul-Aug 2022
31 July 2022
Fertilizer Industry News
Fertilizer production to end at Ince
CF Fertilisers UK is to permanently close its fertilizer production site at Ince in north west England with the potential loss of 238 jobs.
The company, a subsidiary of US-headquartered CF Industries, is proposing to consolidate UK fertilizer production at its sole remaining manufacturing site at Billingham on Teesside.
Ince is located on 124 acres of land next to the Manchester Ship Canal in Cheshire. It employs around 400 workers and produces one million tonnes of fertilizers annually. The site is the UK’s largest producer of compound fertilisers (NPK+S). It also manufactures ammonium nitrate for agriculture (Nitram) on a large scale.
The production complex at Ince includes a 380,000 t/a capacity ammonia plant, together with 575,000 t/a of downstream ammonium nitrate (AN) production capacity, and three NPK plants with a combined capacity of 415,000 t/a. The site has not produced ammonia since September last year due to high feedstock costs.
CF’s other manufacturing operation at Billingham is the UK’s largest ammonia, AN and carbon dioxide (CO 2 ) producer. The Teesside complex combines a 595,000 t/a capacity ammonia plant with 625,000 t/a of ammonium nitrate and 410,000 t/a of nitric acid capacity.
The planned closure of Ince ends 50-60 years of ammonia and fertilizer production at the Cheshire site. Its ammonia plant was originally built and owned by ShellStar (Shell/Armour Star) in 1965 and compound fertilizers have been produced on-site since 1969.
Announcing the decision to close the Ince production site, Brett Nightingale, CF Fertilisers UK’s managing director, said:
“The people and facilities that make up CF Fertilisers UK are part of a proud, 100-year history of providing customers in the UK with products vital to the country’s food security and industrial activity. However, as a high-cost producer in an intensely competitive global industry, we see considerable challenges to long-term sustainability from our current operational approach.”
“Following a strategic review of our business, we believe that the best way to continue our legacy of serving customers in the UK is to operate only the Billingham manufacturing facility moving forward while addressing cost pressures throughout our business.”
CF halted operations at Billingham and Ince in September 2021 after unprecedented rises in natural gas prices made ammonia production at both sites unprofitable. Billingham did, however, restart later that month, after the UK government agreed to cover the costs needed to restart the ammonia plant so it could produce vital supplies of industrial CO 2 for the UK market.
The amount of funding received from the UK government has not been disclosed. However, CF Fertilisers UK said that its £35 million employee costs (salaries, bonuses and payroll expenses) since September were “several times larger than the government support provided”.
CF believes that Billingham is better positioned than Ince as a sustainable British production centre. It says the site has enough capacity to meet all of the UK’s forecast demand for AN fertilizer. Manufacturing is also more efficient with production costs per tonne around 10-20 percent lower than at Ince.
Billingham also has industrial contracts in place for ammonia and nitric acid. These provide a mechanism for passing on natural gas costs to customers, so helping to ensure profitability. The presence of a 40,000-tonne ammonia storage tank at the site, and the ability to import lower-cost ammonia if necessary, also provide Billingham with greater operational flexibility.
Ince’s fundamentals, in contrast, were much less attractive, according to CF Fertilisers. “The company offers products manufactured at Ince – NS and NPKs – that have historically made a minimal contribution to gross margin. This is a situation that is not expected to improve due to a significant increase in the price of the raw materials – ammonium sulfate, phosphoric acid, potash – used to make these products,” it said.
CF’s domestic sales of AN fertilizer are on the decline, having fallen by nearly 30 percent since 2017/18 due to intense competition from lower-cost imports. As a result, even with both its UK plants producing AN at minimum levels, CF has not been able to sell its entire production volume domestically at a profit for the last four years.
CF Industries gained complete ownership of Billingham and Ince, the UK’s two remaining ammonia-based fertilizer production sites, seven years ago. The Illinois-headquartered company renamed the business CF Fertilisers UK in 2015, having bought Yara’s 50 percent equity stake in GrowHow UK.
Looking ahead, CF expects operating conditions to remain challenging for nitrogen producers in the UK and Europe.
“For many producers globally, more than 70 percent of the total cost to produce ammonia is from the cost of natural gas. Natural gas forward curves suggest that nitrogen facilities in the UK and Europe will be the world’s high-cost marginal producers for the foreseeable future, presenting a constant challenge to the sustainability of current operations,” the company said in a statement.
The Dutch TTF gas price soared to the third highest level ever on 6th July, ICIS reported, closing at $51.20/MMBtu in response to maintenance in Norway and news of reduced Russian gas flows. This price level translates to a production cost increase of 60 percent, according to ICIS, potentially making nitrogen fertilizer production in Europe unviable.
UNITED STATES
$500 million fertilizer production grant
The Biden administration has doubled the funding for a US fertilizer production grant programme to $500 million.
The grant is designed to remedy the effects of high fertilizer prices and reduce reliance on supplies from Russia, the world’s top fertilizer exporter.
As part of a package of new measures, the US Department of Agriculture (USDA) is also streamlining its precision agriculture service. This offers expert advice to farmers and provides access to funds for switching to precision fertilizer, pesticide, and seed applications.
Speaking on a farm visit in Illinois on 11th May, President Biden said: “It’s critical to get this done,” referring to the grant to boost US fertilizer production.
“Farmers are worried about rising fertilizer costs. That’s why, earlier this year, the US Department of Agriculture announced it would invest $250 million to boost fertilizer production. Literally on the plane out here, I said double that – make it $500 million – it’s so desperately needed. We can’t take chances,” Biden added.
He was speaking ahead of a G7 agriculture ministers meeting in Germany in May. “They’re going to see what actions we can take to increase fertilizer suppliers globally, and identify how we can work together to prevent export restrictions on food and agricultural inputs and bring more global production to market, which will stabilize prices and bring more certainty to our farmers and keep people from dying of hunger,” Biden said.
Biden described US farmers as “the breadbasket of democracy” and announced new steps to expand farm production. “We’re reducing the red tape so it’s easier for farmers to conserve inputs and double-crop.”
The new measures announced in May include a 50 percent expansion in counties where USDA offers insurance for double-cropping. This should help growers who harvest wheat in early summer and then plant soybeans for harvesting in the fall.
If there’s bad weather or other trouble, “then the timing of everything is off,” said Biden. “But it’s a risk we need to take. That’s why my administration is looking at how to extend crop insurance coverage to give financial security to farmers… who practice double-cropping.”
Nutrien planning world’s largest blue ammonia plant
Nutrien is carrying out an engineering study for a large-scale ‘blue’ ammonia plant at its Geismar, Louisiana manufacturing site.
This will look at the feasibility of combining the latest process technology with carbon capture and sequestration (CCS) to achieve a reduction in CO2 emissions of at least 90 percent. Nutrien has commissioned an initial front-end engineering design (FEED) study before making a final investment decision next year.
If go ahead is given, the new Geismar plant will produce 1.2 million t/a of ammonia from low-cost natural gas using autothermal reforming (ATR) to achieve the lowest carbon footprint. This will then be combined with downstream CCS infrastructure to capture at least 90 percent of production emissions, permanently sequestering more than 1.8 million tonnes of CO2 annually in a dedicated geological storage site.
Nutrien says there is potential for this plant to move to net-zero emissions in future with further modifications.
“Our commitment to the development and use of both low-carbon and clean ammonia is prominent in our strategy to provide solutions that will help meet the world’s decarbonization goals, while sustainably addressing global food insecurity,” said Ken Seitz, Nutrien’s Interim president and CEO. “Leadership in clean ammonia production will play a key role in achieving our 2030 Scope 1 and 2 emissions reduction goals, as part of our Feeding the Future Plan.”
The ATR plant and associated CCS infrastructure is expected to cost approximately $2 billion. If approved, construction would begin in 2024, with full production of blue ammonia expected by 2027.
Nutrien has signed a ‘term sheet’ with its carbon capture partner Denbury allowing it to expand the existing volume of carbon sequestered from the Geismar site. Nutrien has also signed a letter of intent to collaborate with Mitsubishi for the offtake of up to 40 percent of the plant’s expected blue ammonia output. This will supply the Asian fuel market, including Japan, when the plant eventually enters production.
NETHERLANDS
OCI triples Rotterdam terminal size
OCI will proceed with the large-scale expansion of its ammonia import terminal at the Port of Rotterdam.
The Netherlands-headquartered nitrogen producer made the final investment decision for the initial phase of the expansion project in mid-June. This will increase the ammonia throughput capacity of the terminal from 400,000 t/a to 1.2 million t/a.
The cost of the project’s first phase is expected to come in below $20 million with completion slated for 2023. The project’s second phase, if this proceeds, would further increase annual throughput capacity to more than three million tonnes, and includes the construction of a new world-scale ammonia tank at the terminal. OCI has already completed the basic engineering for this storage tank.
“As a global leader in ammonia production, trading and distribution, this project is a very logical step,” said Ahmed El-Hoshy, OCI’s CEO. “We are pleased to announce this milestone, enhancing a key ammonia import and future bunkering hub and aggregation point for low-carbon ammonia at a world-scale port, which will serve as an important avenue for clean ammonia imports from our global facilities.”
Allard Castelein, CEO of the Port of Rotterdam Authority, added: “OCI’s decision to invest in tripling its ammonia import capacity in Rotterdam perfectly fits our plans. Our ambition is to be a carbon neutral port in 2050.
“Ammonia is not only a hydrogen carrier and a feedstock for the chemical industry, it’s also an important renewable fuel for the shipping sector. We’re working hard together with the business community and public authorities to have the regulations and safe handling procedures for ammonia bunkering operations in place in time.”
INDIA
HURL commissions Sindri plant
A new 1.27 million tonne capacity urea plant at Sindri in Jharkhand state is on course to begin commercial production in August, according to its operators Hindustan Urvarak and Rasayan Ltd (HURL)
The plant is currently at the commissioning and testing stage. Initial production is expected to begin at the end of July and then ramp-up during August.
The plant is due to be formally inaugurated by India’s prime minister Narendra Modi at a ceremony in the first week of September.
FRANCE
Agrofert to buy Borealis nitrogen business
Borealis Group has received a binding e810 million offer from Agrofert for its fertilizer, melamine and technical nitrogen business.
The purchase by Agrofert includes production sites across Europe and an accompanying sales and distribution network.
Austrian-headquartered Borealis is a key European producer and supplier of straight nitrogen and complex NPK fertilizers. The company manufactures ammonium nitrate (AN) in France and calcium ammonium nitrate (CAN) in Germany. It is also a significant supplier of complex fertilizers and operates around 60 warehouses across the continent with a holding capacity of 70,000 tonnes.
Borealis is jointly owned by Austrian petrochemicals company OMV (75%) and Abu-Dhabi based Mubadala (25%). It has been seeking a buyer for its European nitrogen business since February 2021. Earlier this year, Swiss-headquartered but Russian-owned fertilizer producer EuroChem Group made an offer to acquire the business for e455 million (Fertilizer International 507, p8). But Borealis declined the offer on 11th March following Russia’s invasion of Ukraine.
Borealis owns and operates five European fertilizer production plants. Three of these plants are located in France with another each in Germany and Austria. Sales volumes from these sites totalled 3.9 million tonnes in 2020, generating revenues of e908 million.
This sales volume includes approximately 0.8 million tonnes of technical nitrogen solutions and around 150,000 tonnes of melamine. The five nitrogen production sites supply the market through an established distribution network across Europe.
Agrofert owns a diverse range of chemicals, agriculture and food production businesses in central Europe. These had a combined turnover of e7.5 billion in 2021. The Czech company is already one of Europe’s leading nitrogen fertilizer producers, with manufacturing sites in Germany, the Czech Republic, and Slovakia.
Completion of the sale is expected in the second-half of 2022, subject to customary closing conditions and regulatory approvals.
SENEGAL
Coromandel acquires stake in BMCC
Coromandel International is buying a 45 percent equity stake in Baobab Mining and Chemicals Corporation (BMCC), a Senegalese rock phosphate mining company.
The leading Indian fertilizer producer is investing $19.6 million in the part-acquisition of BMCC and is also providing the company with a $9.7 million loan.
These investments are designed to strengthen Coromandel’s production integration and secure a long-term supply of phosphate rock. BMCC’s mine has been regularly producing phosphate rock since last year and, at full capacity, could meet up to one-third of Coromandel’s requirements.
Coromandel has been looking for investment opportunities to secure its phosphate rock needs. Phosphate rock is a key feedstock for manufacturing phosphoric acid, an intermediate in the production of phosphate fertilizers. Coromandel currently produces around three million tonnes of phosphate fertilizers annually from three production plants in India.
Coromandel already has strategic agreements with Tifert (Tunisia) and Foskor (South Africa) to meet its phosphoric acid requirements. Currently, it also sources phosphate rock from various countries for phosphoric acid production at its Vizag plant.
Arun Alagappan, Coromandel International’s executive vice chairman, said: “India is working towards achieving self-sufficiency in phosphatic fertiliser production. Given the high dependence on rock phosphate imports, which is a key raw material for manufacturing phosphoric acid, the proposed investment will be a step towards achieving long term sustainability and supply security goals for meeting the country’s fertilizer needs.”
He added: “The investment in Senegal is in line with the company’s long term strategic objective of strengthening its sourcing capabilities to deliver superior value to all its stakeholders.”
The transaction is expected to be completed in the third-quarter of 2022, subject to the completion of agreed conditions.
BRAZIL
New OCP feed phosphates plant
Morocco’s OCP Group plans to build a feed phosphates plant in Maranhao state in north east Brazil.
The company’s CEO Mostafa Terrab announced the project in mid-May following a meeting with Marcos Mentes, Brazil’s agriculture minister, during an official visit to Morocco.
During a meeting at OCP’s headquarters in Rabat, the pair discussed OCP’s international investment priorities, particularly in the Brazilian market. “Having a plant in Brazil would be very valuable,” Terrab said.
Mentes said his country wished “to encourage foreign investors to produce fertilizers while encouraging local production at the same time.”
The proposed phosphate plant will be built at Sao Luis, the capital of Maranhao state, and consume phosphate rock imported from Morocco. Sao Luis is located on the Ilha de Sao Luis, an island in the Baia de Sao Marcos on Brazil’s Atlantic coast.
Olivio Takenaka, the president of Brazilian subsidiary OCP Fertilizantes, said: “The project is in progress. We already have the land, six kilometres away from the Port of Itaqui.”
Takenaka said that, under current plans, the plant would produce dicalcium phosphate (DCP) for animal feed. The project was close to obtaining Brazilian government approval, he added.
Brazil has a large domestic animal feed market. The country is world’s largest beef exporter and home to the second-largest cattle herd globally.
Yara to make green ammonia
Yara Fertilizantes expects to deliver the first batch of green ammonia from its Cubatao plant in Sao Paulo state by the end of 2023.
Under a purchase agreement, Raizen’s under-construction biomethane plant in nearby Paracicaba will supply the Cubatao complex with 20,000 m3 /d of biomethane for green ammonia production. Raizen is a joint venture between Shell and Brazilian biofuel company Cosan. The biogas will be distributed to Yara’s plant via a pipeline network operated by Comgas, a subsidiary of Cosan.
Although the currently agreed volume only represents three percent of the gas consumed at Cubatao, Yara’s aim is to run the entire plant on biomethane by 2030. It calculates that the production of nitrates from biomethane should reduce greenhouse gas (GHG) emissions from their manufacture by 80 percent.
Yara Fertilizantes, the Brazilian subsidiary of Yara International, is also working on a companion project to install an electrolysis unit near the Cubatao plant. This will generate green hydrogen using solar, wind and hydro power.
“We strongly believe in the role of hydrogen in the energy transition, especially in the production of ammonia to produce low-carbon fertilizers, since agriculture has a significant share in GHG emissions,” said Yara Fertilizantes vice president Daniel Hubner.
