Fertilizer International 512 Jan-Feb 2023
31 January 2023
Fertilizer Industry News
Fertilizer Industry News
ARGENTINA
Yara to supply green fertilizers for potato growing
Yara International is to supply fossil-free fertilizers to El Parque Papas, Argentina’s largest potato grower, in 2023.
Former racing driver Walter Hernández, the CEO of El Parque Papas, and Yara’s CEO Svein Tore Holsether met in Oslo in early December to cement the deal and sign a memorandum of understanding. The new agreement marks the first step towards the decarbonisation of potato production in Argentina.
Yara is on track to start producing fossil-free fertilizers later this year. These will use green ammonia as their starting material. This will be manufactured from green hydrogen generated via water electrolysis using renewable electricity. By eliminating the use of natural gas feedstocks and the steam methane reforming (SMR) process, these fossil-free fertilizers have the potential to significantly reduce the carbon footprint of food and farming.
Yara calculates that the use of its green fertilizers for potato crop nutrition will cut greenhouse gas (GHG) emissions at farm level by around 29 percent, versus standard fertilization practice. Green fertilizers will also reduce the overall carbon footprint of consumer snacks like potato chips (crisps) by around 5-10 percent.
“Most people probably don’t think about emissions when eating their chips. But there are huge opportunities to decarbonize snacks, if we find business models that enable each step of the value chain to contribute and to benefit. This is why the agreement between Yara and El Parque papas is important – we show that this can be done,” said Svein Tore Holsether, Yara’s CEO.
El Parque Papas is Argentina’s single biggest potato farmer. The company supplies 14,000 tonnes of potatoes to Argentinian food processors every year. These are used to produce some of the country’s most popular potato chips.
“Mass production of potato chips is actually a very complex operation involving many elements. My mission is to introduce a completely green, emission free potato in 2024. To do that, every company in the supply chain must take climate action. Collaboration is the only way to ensure that the end-product is climate neutral. A farmer can only do so much. Yara helps us make the last piece of the puzzle emissions free – the fertilizer itself,” said Walter Hernández, the CEO of El Parque Papas.
Yara has been pioneering the introduction of green fertilizers to the market. The Norwegian production giant plans to start manufacturing these this summer.
The company signed the world’s first commercial contract to sell fossil-free fertilizers to Lantmännen, a leading European agricultural cooperative, in January 2022 (Fertilizer International 506, p8). These will be produced by Yara and marketed by Lantmännen in Sweden later this year.
The manufacture of green fertilizers will be completely powered by renewable electricity. The result will be nitrate-based fertilizers with an 80-90 percent lower carbon footprint. These carbon savings will be validated by DNV, an independent assessor, using an established and reliable product carbon footprint (PCF) method.
Yara’s first fossil-free fertilizer deliveries will use green ammonia sourced from a large-scale pilot project at the company’s Porsgrunn plant in Norway. This is on track to begin commercial production in 2023. Porsgrunn will initially produce around 20,000 tonnes of green ammonia annually. This volume will then be converted into 60,000-80,000 tonnes of fossil-free green mineral fertilizer.
Yara should be well-positioned to scale-up green ammonia manufacture in future from its portfolio of under-development projects in Norway, the Netherlands and Australia. The company is planning to convert its entire Norwegian Porsgrunn plant to green ammonia within the next 5-7 years and is also actively expanding its clean ammonia business internationally.
WORLD
Fertilizer price falls expected in 2023
Fitch expects most fertilizer prices to fall in 2023. They will, however, stay above their mid-cycle levels, the US credit rating agency is predicting.
Fitch linked the continuation of historically high fertilizer prices to elevated natural gas costs and restricted – if improving – fertilizer supply. Crop prices are also expected to remain high this year.
The agency’s assumptions for both potash and diammonium phosphate (DAP) prices in 2023 were unchanged in its recent December assessment. These are forecast to be lower than in 2022 for DAP and sharply lower for potash.
Although Chinese DAP exports are likely to recover over the next two years, Fitch still expects these to be two million tonnes below their 2016-2021 annual average when they stabilise in 2024.
“Phosphate demand will partially recover in 2023, returning to its 2021 level by 2024 as application rates rise next year. European demand is affected by a regional price premium,” Fitch said.
“Our assumptions for phosphate rock continue to reflect limited export volumes from Morocco. But other producers, such as Jordan, Syria, Tunisia and South Africa, are gradually increasing their market shares,” the agency added.
Fitch is forecasting that seven million tonnes of extra phosphate production capacity will arrive in 2023 – mostly located in Russia, Egypt, China, and the US.
In contrast to potash and DAP, Fitch’s December assessment revised urea price expectations downwards due to new capacity expansion estimates. The agency is now forecasting the arrival of 3.8 million t/a of new global urea production capacity (excluding China) in 2022 with the addition of a further 3.2 million t/a in 2023 and 2.2 million t/a in 2024.
Fitch expects urea prices to have averaged $630/t in 2022.
“Our reduced 2022 assumption for urea reflects lower year-to-date prices, which we do not expect to recover for the rest of the year 2022,” Fitch said. “We have kept all other assumptions unchanged as we maintain our view that new capacity additions will offset lost exports from China and supply disruptions due to the Russia-Ukraine war.”
Ammonia prices should fall this year, forecasts Fitch, as supply constraints ease with the arrival of new Middle East capacity, and because of falling gas feedstock prices, and the restart of some previously idled European plants. Ammonia demand in 2023 should be supported by better affordability and strong crop prices, Fitch suggested.
UKRAINE
Resumption of Russian ammonia exports discussed
A deal to resume Russian ammonia exports via Ukraine looked imminent at the end of November, according to the UN’s aid chief.
Martin Griffiths, Under-Secretary-General for humanitarian affairs and emergency relief at the UN’s Office for the Coordination of Humanitarian Affairs (OCHA), told Reuters on 30th November that a deal was “quite close” and could happen within weeks.
“[If] we do not do fertilizers [exports out of Russia] now, we will have a food availability problem in a year. So, it is hugely important, almost more important than grain,” said Griffiths. “Everybody understands that the operation of the ammonia pipeline from Russia through Ukraine to the port of Odessa … it can be started within a week or two.”
The closure of the Russian pipeline and Black Sea ports on the 24th February last year resulted in the loss of around 200,000 tonnes/month of Russian ammonia exports to the global market (Fertilizer International 507, p8). Buyers in Morocco, Turkey, Bulgaria, and India, who previously relied heavily on Russian ammonia, have been forced to find alternative suppliers.
Speaking to the Financial Times in mid-December, Russian fertiliser billionaire Dmitry Mazepin called on global commodity traders to back a deal to resume Black Sea ammonia shipments.
A UN- and Turkish-brokered deal between Russia and Ukraine in July last year – subsequently renewed in November – opened the way for exports of previously blockaded Ukrainian grain. This agreement also included a pledge to restart exports of ammonia, according to Mazepin.
He told Financial Times that he had personally discussed the plan with Russian president Vladimir Putin at a meeting in November: “I asked for help, through diplomatic channels, to once again revisit those agreements that were signed in Istanbul regarding the grain deal to open ammonia.”
The proposal from Mazepin, the founder and former owner of Russian nitrogen producer Uralchem, involves restarting the pipeline connecting the company’s massive TogliattiAzot (TOAZ) ammonia production complex in Russia to the Ukrainian port of Yuzhny (Fertilizer International 507, p8).
Mazepin said ammonia exports via Ukraine could resume immediately with about 80 percent of output going to African countries. “We are ready to resume pumping,” he said.
UNITED STATES
Strong demand for organic NPK pellets
Australian-listed phosphate producer Fertoz Limited has secured orders for 18,000 tonnes of its new ‘Fertify’ fertilizer pellets for delivery by April 2023. These blend and pelletise rock phosphate with organic chicken litter and other constituents to create an organic NPK product.
Fertoz plans to commence production of Fertify pellets in January at a plant constructed in Montana under a joint venture agreement with local company Excel Industries. Fertoz has invested $1.28 million developing the 80,000 t/a capacity pelletising plant. According to the company, the Montana production site is well situated for the cost-effective sourcing of key ingredients, including rock phosphate from Fertoz’s nearby mines.
The NPK pellets contain 40 percent phosphate rock with Fertoz targeting customers in the North American organic and regenerative agriculture market. The company says it will accept more orders for Fertify as soon as extra production capacity becomes available.
“We are extremely pleased with the response by the market to Fertify which has quickly exceeded production capacity in the first four months of planned operations,” said Daniel Gleeson, Fertoz CEO. “This early demand reflects need for the high-quality, value-added product we had envisioned for the market and look forward to making this available more broadly as the demand continues to grow.”
Fertoz has also signed a 10-year offtake agreement with an unnamed North American fertilizer manufacturer for 120,000 tonnes of rock phosphate. The company says it on track to deliver around 40,000 tonnes of Fertify to customers in 2023.
Midwest sulphur fertilizer use increasing
The use of sulphur fertilizers is increasing in the Midwestern US, according to research published in Communications Earth & Environment in December.
The scientific paper compared sulphur fertilizer application rates across 12 Midwestern states with the declining rates of atmospheric sulphur deposition. The researchers from the University of Colorado and Syracuse University found that almost all the decline in atmospheric sulphur deposition was being replenished by the field application of sulphur fertilizers
Data from the US National Atmospheric Deposition Program showed that the rate of sulphur deposition on Midwestern croplands fell from 4.7 kg/ha in 1987 to 1.1 kg/ha by 2017. This was due to the progressive removal of sulphur from vehicle fuels and the scrubbing of sulphur dioxide from power plant emissions.
In contrast, fertilizer sales data from the Association of American Plant Food Control Officials showed that the use of sulphur containing fertilizers increased from 0.1 kgS/ha in 1985 to 4.9 kgS/ha in 2015. This increase almost completely replaced the loss of ‘free’ sulphur from declining atmospheric deposition.
The researchers conclude that the need to add sulphur fertilizers to soils will continue to rise – given the competing priorities of air quality regulation and high agricultural productivity – both in the US and many other parts of the world.
CHINA
Stamicarbon secures largest ever Chinese urea project
Stamicarbon has won a contract for a large-scale urea project in China.
The urea plant, with a production capacity of 3,791 tonne/day, will be the largest ever licensed by Stamicarbon in the country. The customer, the plant’s location and the value of the contract have not been disclosed.
The contract covers technology licensing, the plant’s process design package (PDP), and the supply of proprietary equipment in Safurex® . The urea plant will be integrated with a dual-line melamine plant, making Stamicarbon’s know-how on coupling urea and melamine plants of vital importance to the project.
The urea plant will have the capacity to provide 1,133 t/d of feed to the coupled melamine plant and manufacture 1,560 t/d of urea prills and 1,098 t/d of urea granules. This will allow the plant to serve three critical industries in China – being configured to produce urea prills, potentially urea granules, and even diesel exhaust fluid (DEF).
“We are proud to be part of this remarkable project that will bring forward best-in-class urea and melamine production in China,” said Pejman Djavdan, Stamicarbon’s managing director. “It is a genuinely solid project with an innovative concept that is bound to add value to the community and the region at large.”
This contract was one of a tranche of new contracts announced by Maire Tecnimont Group at the end of December. The new contracts, worth $280 million in total, were secured by its wholly-owned subsidiaries Tecnimont, KT-Kinetics Technology and Stamicarbon from clients in North America and Latin America, Africa and the Far East. They include awards for process licensing and a range of services for engineering, procurement and construction.
“These new value-added, higher margins contracts further consolidate our Group’s positioning in the global natural resource transformation market and provide strong evidence of the resilience of our technology-driven business model, leveraging on our companies’ distinctive competencies,” said Alessandro Bernini, Maire Tecnimont’s CEO.
BRAZIL
EuroChem exports Salitre phosphate rock
In a first-of-its-kind delivery, EuroChem exported 22,000 tonnes of phosphate rock from its Serra do Salitre mine to Europe in January, via the port of Açu in Rio de Janeiro state.
The shipment is being delivered to Antwerp in a deal between EuroChem Brazil and EuroChem Belgium, according to Argus Media. On arrival, the beneficiated phosphate rock concentrate is likely to be consumed as a raw material by EuroChem’s European fertilizer production units.
The port of Açu is pursuing a strategic expansion of its fertilizer operations. January’s shipment is part of new export agreement between the port and EuroChem that is due to last until mid-2024. Açu expects to export a total of 100,000-130,000 tonnes of phosphate rock to Antwerp in 2023.
To help boost fertilizer exports, Açu port is tripling storage capacity at its multi-cargo terminal by opening two new warehouses in the first half of 2023. This will expand covered storage at the port from one warehouse with a capacity of 25,000 tonnes to three warehouses with a combined capacity of 75,000 tonnes. The new warehouses will provide an additional 550,000 t/a of operational capacity for fertilizers.
EuroChem is beneficiating phosphate rock at its Serra do Salitre project in Brazil’s Minas Gerais state. Salitre was bought from Yara by the Swiss-headquartered but largely Russian based producer in February 2022 (Fertilizer International 507, p58).
The project’s mine and beneficiation plant are fully operational with fertilizer production scheduled to begin in 2024. EuroChem expects Serra do Salitre to eventually reach an annual production capacity of one million tonnes for finished phosphate products such as MAP/NP and TSP/SSP.
Brazil’s phosphate rock imports rose six percent year-on-year to reach 1.9 million tonnes in 2022, according to Argus Media. Imports were mainly sourced from Peru, Egypt and Morocco, with these three countries accounting for 50 percent, 18 percent and 14 percent of import volumes, respectively. Brazil itself exported 722,200 tonnes of phosphate rock in 2022 – mostly to Paraguay – a huge hike on the 100,600 tonnes exported in 2021.
CANADA
Mosaic temporarily curtails Colonsay
The Mosaic Company announced a temporary production curtailment at its Colonsay potash mine in Saskatchewan in early December.
The Florida-headquartered producer said its potash inventory levels were enough to cover near-term demand, as this had been slower than expected in the second half of 2022.
Colonsay had been operating at an annual production output of 1.3 million tonnes prior to the curtailment, with plans to expand this to 1.8-2 million tonnes by late 2023 following the restart of the mine’s second mill. Mosaic says it will continue with underground development work to allow the restart of both of Colonsay’s mills in early 2023.
“Our decision to temporarily curtail Colonsay reflects near-term dynamics and not long-term agricultural market fundamentals. Crop prices remain strong and continue to support healthy grower economics,” said Joc O’Rourke, Mosaic’s president and CEO. “After a year of reduced applications, we believe farmers are incentivised to maximise yields, which should drive significant recovery in fertilizer demand in 2023.”
Post-harvest applications of potash have fallen behind in the US, according to reports, with late harvesting in some areas in 2022 lessening demand. Slow barge transportation due to low river levels has also left significant carryover inventory in places. Nola potash barge movement are reported to have been increasingly thin during the 2022 fall application season.
