Fertilizer International 516 Sept-Oct 2023
30 September 2023
Europe’s NPK industry
EUROPEAN INDUSTRY REPORT
Europe’s NPK industry
We profile leading European NPK fertilizer producers. Major ownership changes have taken place within the EU during the last three years. Europe’s NPK producers have also needed to adjust their raw material sourcing in response to the Russia-Ukraine conflict.
The term ‘NPK’ is a catch-all phrase given to any fertilizer containing the primary crop nutrients nitrogen, phosphorus and potassium.
For growers, one of the main advantages of NPK fertilizers is that they can be specifically formulated, according to crop and/or soil type, to address nutrient needs and deficiencies. NPKs are typically applied to crops such as sugar beet, sunflower, and buckwheat during the autumn and to corn, wheat, barley, and vegetable crops during the spring.
NPKs are supplied to the market as either physical blends – of granular urea, diammonium phosphate (DAP) and muriate of potash (MOP), for example – or as compound NPKs produced using steam or chemical granulation (Fertilizer International 513, p46).
The manufacturing of compound NPK fertilizers via chemical granulation is often favoured due to quality considerations, as it produces hard, spherical, evenly sized granules of uniform composition. In this NPK production route, phosphoric acid and sulphuric acid are reacted with ammonia to produce a slurry. This is introduced as a spray into a granulator alongside solid raw materials such as potash (Fertilizer International 513, p46).
NPK products make up a sizable share of the overall fertilizer market. In 2020, for example, NPKs on a product basis accounted for a:
- 36 percent share of the 40 million tonne global potash market
- 26 percent of the 49 million tonne global phosphates market
- 16 percent of the 112 million tonne global nitrogen market.
Global compound NPK production totalled 100.8 million tonnes in 2021, according to the International Fertilizer Association (IFA). World production has been relatively stable since 2015, keeping within the range 96.8-101.3 million tonnes annually.
Regionally, Western Europe is the world’s second largest compound NPK producer after China (Figure 1), manufacturing around 11.9 million tonnes in 2021. The region is also responsible for 40-45 percent of world compound NPK exports, with international trade ranging from 6.2-6.6 million tonnes between 2018 and 2021, according to IFA.
Although China is a massive producer of compound NPKs – manufacturing more than 69 million tonnes in 2021 – this is overwhelming for domestic consumption with only a couple of percent of the country’s output entering international markets (1.5 million tonnes in 2021).
Adapt to survive and thrive
Europe’s fertilizer producers are increasingly focussed on premium products such as compound NPKs, water-soluble fertilizers, micronutrient products and nitrates. The shift to NPK production has been a particular popular and successful strategy.
Incorporating compound fertilizers within their product mix has provided European companies with a strong position in the higher-margin NPK market. Indeed, the top ten global NPK exporters includes six of the region’s countries – Belgium, Norway, Finland, the Netherlands, Spain and Poland.
Merger and acquisition activity continues to be a characteristic of the European NPK market. Spain’s Fertiberia was notably acquired by private equity firm Triton in 2020. More recently, Borealis accepted a binding e810 million offer from Agrofert for its European nitrogen business in June 2022. This was quickly followed by a e35 million binding agreement from Yilfert for Borealis’ 98 percent stake in NPK producer Rosier in September 2022.
Russia’s invasion of Ukraine hit European nitrogen producers hard last year due its impact on natural gas availability and pricing. Natural gas, the industry’s key feedstock, typically accounts for 90 percent of ammonia production costs.
Consequently, record rise in gas prices at the end of August 2022 triggered a spate of ammonia production curtailments across the continent (Fertilizer International 510, p8). This eventually affected around two-thirds of European ammonia production (Fertilizer International 513, p13).
Although lower European gas prices in November 2022 heralded a return to profitability, last autumn’s ammonia production curtailments did have implications for downstream fertilizer production. This affected four million tonnes of Yara’s fertilizer production capacity, for example, across its European production sites, this total including 300,000 tonnes of NPK production capacity. Actual production impacts were unlikely to be major, however, due to Yara’s ability to import ammonia to replace curtailed production.
Nonetheless, question marks over the competitiveness of Europe’s nitrogen producers remain, as domestically produced ammonia has periodically struggled to compete on cost with ammonia imports into the region during 2022 and 2023 (Fertilizer International 515, p7).
This is an important issue as the costs and availability of ammonia, a key ingredient in the chemical granulation of NPKs (Fertilizer International 513, p46), will ultimately influence the economics of compound NPK production.
CF Fertilisers UK, for example, closed its Ince, Cheshire, site in the UK last year due to mounting cost pressures. The production complex at Ince featured a 380,000 t/a capacity ammonia plant together with downstream production capacity for ammonium nitrate fertilizer (Nitram) and three compound fertilizer (NPK+S) plants with a combined capacity of 415,000 t/a. The site had not produced ammonia since September 2021 due to high natural gas prices (Fertilizer International 509, p8).
Yara – a regional and global NPK giant
Yara International is Europe’s leading phosphate rock and NPK producer. The company’s Siilinjärvi mine in Finland – Europe’s only phosphate mine – produces around one million tonnes of phosphate rock concentrate and 300,000 tonnes of phosphoric acid annually.
Yara’s combined European operations provide 5.3 million tonnes of compound NPK production capacity (Table 1), more than 80 percent of the company’s total global capacity of 6.5 million tonnes for compound NPKs. This is divided between six sites in four European countries: Siilinjärvi and Uusikaupunki in Finland, Glomfjord and Porsgrunn in Norway, Montoir in France and Ravenna in Italy.
Yara is incorporating the latest digital technology into NPK production, as Marcus Furuholmen, the company’s senior vice president with responsibility for this, recently explained:
“The production process for NPK fertilizer requires adjustments for each individual grade. It can be challenging for the production teams to keep track of the best set points for each grade to achieve optimum results. Golden Batch is a control room web application that monitors the process and assists operators in selecting ideal set points for critical parameters influencing throughput. The solution helps to reach higher stable production volumes, and we have already seen the first positive results.”
Yara is a market-leading producer of compound NPKs, manufacturing 6.0 million tonnes globally in 2022. The company’s NPK deliveries totalled 8.5 million tonnes last year, with Yara-pro-duced compound NPKs contributing 5.7 million tonnes to this total alongside 2.5 million tonnes of NPK blends. NPK deliveries within Europe reached 2.1 million tonnes in 2022, with Yara almost exclusively selling its own company-produced compound NPKs (2.0 million tonnes) into this market.
These production volumes and deliveries place Yara well ahead of competing NPK producers such as Coromandel, Gresik, IFFCO, PhosAgro and Acron. The NPK market is a lucrative one for Yara. NPK sales revenues rose by more than 35 percent year-on-year to $7.0 billion in 2022, representing its largest sales segment by product type. The company achieved an average realised NPK price of $874/t in the fourth quarter of 2022, a 37 percent rise year-on-year.
The company’s compound NPK products, marketed under the YaraMila brand name, typically sell at a price premium relative to commodity blends.
Premium products able to deliver high margins – including compound NPKs, calcium nitrate (CN), fertigation and micronutrient (YaraVita) products – feature strongly in Yara’s fertilizer portfolio. Increasing the capacity to produce and sell these premium products is therefore an integral part of Yara’s growth strategy.
This has been partly delivered by expanding European NPK output. An NPK expansion at the Uusikaupunki site in Finland came on-stream in the third quarter of 2016. Further NPK capacity additions in Norway – by 70,000 tonnes at Porsgrunn and 50,000 tonnes at Glomfjord – were also completed during 2018.
The start of the Russia-Ukraine conflict in 2022 had major impacts on European fertilizer production – including NPK manufacturing. Although Yara’s direct investments in Russia and Ukraine are limited, the company did partly rely on Russian phosphate, potash and ammonia as raw materials. It also purchased significant volumes of natural gas from Russia for its European operations.
Yara announced it was ending raw material sourcing from Russian entities in March 2022. It subsequently eliminated the use of Russian-sourced phosphate rock, for example, by increasing sourcing from its own Siilinjärvi mine, as well as from suppliers in South Africa, Morocco, and Jordan.
“Because [we] had performed extensive testing of other sources of phosphate rock, Yara could make the switch in its full-scale NPK plants overnight. This would not have been possible without years of research and strong internal collaboration,” said Mohan Menon, the department director for NPKs at Yara Porsgrunn.
Sanctions on Belarus also saw Yara quickly wind-down its sourcing of Belarusian potash with a pledge to eliminate this completely by the start of April 2022.
Major player ICL
ICL Group operates two European NPK production plants located in Amsterdam in the Netherlands and Ludwigshafen in Germany. Combined, both sites provide the company with 850,000 t/a of NPK production capacity within the EU market.
ICL’s Amsterdam site has a total nameplate capacity of 550,000 tonnes for NPK production, divided between 450,000 tonnes of granular and 100,000 tonnes of powder products. The Ludwigshafen plant, meanwhile, has a nameplate production capacity of 300,000 tonnes.
ICL is able to produce over 80 different grades of NPK fertilizers from its Amsterdam and Ludwigshafen production sites. The company also has two mines in Europe: potash is mined at Súria in Spain, while the Boulby mine in the UK is the world’s first and only polyhalite mine.
ICL also markets PKpluS® , a polyhalitecontaining range of granular PK fertilizers. These balanced formulations offer phosphorus and potassium supplemented by secondary nutrients, including sulphur, magnesium and calcium.
Grupa Azoty targets domestic and export markets
Grupa Azoty Police, a subsidiary of Grupa Azoty, is Poland’s largest manufacturer of phosphoric acid, phosphates and NPK fertilizers. The company is based in Police in the country’s southern Lesser Poland province. Its main commercial products include:
- MAP, DAP and NPK fertilizers, incorporating secondary nutrients (sulphur, magnesium) and micronutrients
- A granulated NS fertilizer comprised of ammonium sulphate, urea and magnesite
- Urea
- Liquid ammonia
- White titanium dioxide-based dyes.
A major $15 million (PLN 67 million) phosphoric acid plant upgrade was completed at the Police site in 2019.
Grupa Azoty Police’s fertilizer unit is the largest within the company, in terms of production volumes and revenues. Its NPK and DAP products – POLIFOSKA® and POLIDAP® – are market-leading brands in Poland.
Grupa Azoty Police produced 690,768 tonnes of compound fertilizers in 2022, these accounting for 47 percent (PLN 2.5 billion) of total company revenues of PLN 5.3 billion ($1.3 billion). Last year, the domestic and export market accounted for 65 percent and 35 percent, respectively, of total fertilizer and ammonia sales. Key export markets include United Kingdom, Germany, Italy, Sweden, Spain, the Czech Republic, Brazil, Lithuania, Hungary, Greece, Denmark and Romania. Combined sales to those countries accounted for 82 percent of total export sales.
Financial performance in 2022 was largely driven by raw material and final product price trends. Commenting in this, the company said:
“[Annual] results were strongly influenced by the turbulence caused by Russia’s aggression against Ukraine, which has a negative effect on the availability and prices of raw materials, eventually also translating into rising prices of final products. In the first six months of 2022, markets continued to be affected by strong upward trends in prices of many feedstocks and raw materials used in production relative to the same period last year, in particular natural gas, phosphate rock, potassium chloride and sulphur, pushing up the prices of fertilizer products.
“The third quarter was a period of high prices and continued increases in the prices of key raw materials used in production. Natural gas prices reached their all-time highs in late August 2022.”
Fertiberia adapts
Grupo Fertiberia operates 16 production centres located in four countries – ten in Spain, three in Portugal, two in Algeria and one in France. These are capable of producing around eight million tonnes of fertilizers and intermediate products.
Fertiberia is a major European producer of compound NPKs. The company manufactures 15 types of compound NPKs under its Classic product range. These balanced products incorporate additional secondary nutrients and micronutrients such as sulphur, iron boron and zinc. Fertiberia also offer specific blends formulated for crop types including potato, grape vines, as well as fruit and citrus trees.
Although it has not publicly disclosed production figures in recent years, Fertiberia manufactured more than half a million tonnes of NPK fertilizers in 2020.
The company manufactures compound NPKs at the 250,000 t/a capacity Huelva plant in Spain. Portuguese subsidiary ADP Fertilizantes also has the capacity to produce 400,000 t/a of NPKs and 170,000 t/a of superphosphates at its Setúbal plant. NPK blending plants at Ile-et-Vilaine in France and Utrera in Spain provide a further 120,000 t/a and 25,000 t/a of blended NPK fertilizer capacity, respectively.
Spanish subsidiary Agralia, meanwhile, has the capacity to produce 75,000 t/a of complex liquid fertilizers at its Altorricón site supplemented by an additional 25,000 t/a of capacity at its Villalar De Los Comunero site. The Mengibar site of Spanish subsidiary Fercampo also provides Fertiberia with a further 35,000 t/a of complex liquid fertilizer production capacity.
Fertiberia ceased manufacturing DAP and MAP at Huelva in 2013, citing high production costs, having previously ended phosphoric acid production at the site. The company now sources the phosphoric acid needed for NPK production from international markets.
Fertiberia has been diversifying and expanding its product portfolio. The company launched a new line of NPK fertilizers in 2016 as part of the Fertiberia Advance product line. The company also introduced a new NPK product SulfActive in 2018, part of its Classic product range.
The company is relatively well insulated from the Russia-Ukraine conflict. Spain has a low dependency on Russian natural gas, compared to other parts of Europe, mainly relying on LNG imports and the Medgaz pipeline from Algeria. Fertiberia also sources its ammonia from North Africa, potash from Spain and Jordan, and phosphoric acid from Morocco.
Agrofert buys Borealis NITRO
Austrian-headquartered Borealis Group completed the e810 million sale of Borealis NITRO, its European fertilizer, melamine and technical nitrogen business unit, to Agrofert in July.
The business unit manufactures ammonium nitrate (AN) in France and calcium ammonium nitrate (CAN) in Germany. It also operates around 60 fertilizer warehouses across the continent with a holding capacity of 70,000 tonnes and an accompanying sales and distribution network.
Borealis, which is jointly owned by Austrian petrochemicals company OMV (75%) and Abu Dhabi based Mubadala (25%), had been seeking a buyer for its European nitrogen business since February 2021. The company had previously declined a e455 million offer for the business from Russian-owned fertilizer producer EuroChem Group (Fertilizer International 507, p8) following Russia’s invasion of Ukraine.
The acquisition of Borealis’ assets – which include five fertilizer production plants – makes Agrofert a key European producer and supplier of compound NPK fertilizers. Three of these plants are located in France – having originally been purchased from Total-owned GPN in 2013 – with another each in Germany and Austria. The largest fertilizer production site is in Linz, Austria. This produces ammonia, nitric acid, urea, NPKs and CAN. Its sales volumes totalled 3.9 million tonnes in 2021, generating revenues of e1.5 billion, some e1.3 billion coming from within the European market.
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.
“Fertilizer production is one of the key segments of the Agrofert Group – and we trust in its future in Europe,” said Petr Cingr, vice chairman of Agrofert’s board of directors. “Our priority, now, will be to integrate Borealis’ nitrogen business into Agrofert to enable us to approximately double our production capacity and, at the same time, to enter new markets, namely France, the Benelux countries, Bulgaria and Serbia.”
Yilfert nears complete buyout of Rosier
In a further divestment, Borealis Group completed the e35 million sale of its share stake in Rosier (98.09%) to Yilfert Holdings in January.
Rosier is a major manufacturer of speciality NPKs and liquid and water-soluble fertilizers. The company operates two NPK plants at Moustier in Belgium and Sas Van Gent in the Netherlands. These manufacture the Rosafert range of granular compound fertilizers for basal or top dressing. These NPKs offer high levels of available nitrogen – in nitrate and ammonium form – in combination with phosphorus, potassium, sulphur and micronutrients.
Yilfert, part of Yildirim Group, is now seeking complete ownership of Rosier via a quick purchase of the remaining stake (1.91%) through a mandatory takeover bid at a price of e30 per share.
Borealis increased its controlling interest in Rosier – from 77.4 percent to 98.09 percent – as part of a rescue package at the end of July 2022. Borealis originally acquired a 56.86 percent interest in Rosier from French oil and gas giant Total in 2013.
Rosier does not disclose NPK production figures in its annual reports. However, the company generated sales revenues of e248 million in 2022, up by six percent year-on-year from e234 million in 2021. The company also recorded a profit of e1.4 million in 2022 versus a e37 million operating loss million in 2021.
Commenting on its 2022 operating performance, Rosier said:
“The war in Ukraine led to a steep increase in the price of natural gas and its derivatives (ammonia, ammonium nitrate, ammonium sulphate). Supply of raw materials from Russia and Belarus was subject to an embargo and alternative supply sources needed to be developed.
“The European fertiliser market was heavily under supplied due to the ban on imports from Russian producers. All this has led to increased raw material costs which were offset by a sharp increase in fertiliser product prices.”
Rosier’s new owner, Yildirim Group, is a private Dutch-Turkish industrial conglomerate headquartered in Istanbul. The company is wholly owned by brothers Ali Riza Yildirim and Robert Yuksel Yildirim. It operates in 54 countries and employs more than 20,000 people.
Yildirim’s main business interests are in port management, metals and mining, fertilizers and chemicals, and the energy and power sectors. The company also owns a 24 percent share of CMA CGM Group, the world’s third biggest shipping and logistics company.
