Brazil aims to cut fertilizer imports by quarter
Farming powerhouse Brazil is launching a national fertilizer plan to reduce its dependency on imports by more than a quarter to nearly 60pc of national consumption by 2050.
The plan, which would reduce imports from their current 85pc of consumption, will be officially released after the signing of a presidential decree. In March 2021, Brazil, a leading producer of soybeans, corn, cotton and coffee, undertook the crafting of a national fertilizer strategy to consider ways of boosting fertilizer output to make the country less dependent on imports.
Discussions led to a 195-page technical document that was made available to Argus and will be the basis for the governmental decree.
Among the plan's goals, Brazil intends to increase nitrogen installed capacity gradually up to 2.8mn metric tonnes (t) by 2050. To reach that volume, the plan includes attracting at least two more nitrogen producers in Brazil through 2030 and another four through 2050. As for private investments, the government seeks to attract at least $10bn to increase nitrogen production — and output of raw materials — by 2030 and the same amount each decade by 2050.
In 2020, Brazil produced 224,000t of nitrogen fertilizers, according to the document, an amount that could meet 4.3pc of the country´s demand in the same year. Operating at full installed capacity, local production could meet 17.6pc of consumption. The document highlights that demand for nitrogen fertilizer may double by 2050.
Brazil currently has three operational nitrogen units. Leased from Petrobras, Unigel's Camacari unit, in Bahia state, has an installed capacity of 475,000t/yr of ammonia and another 475,000t/yr of urea. Unigel's Laranjeiras unit, in Sergipe state, has an installed capacity of 650,000t/yr of urea, 450,000t/yr of ammonia and 320,000t/yr of ammonium sulphate. Yara has an installed capacity of 211,000t/yr of ammonia and another 416,000t/yr of ammonium nitrate.
Investment costs in producing plants as well as operating and raw material costs are determinants for competitiveness of Brazilian fertilizer. Natural gas is the main source of energy for producing nitrogen fertilizer in Brazil and prices for the raw material are a major factor in enabling local production of ammonia and urea.
Brazil is still in the early stages of a natural gas market opening, and the development of this market is essential for the local fertilizer industry. New players in the natural gas segment are expected to add competitiveness and liquidity to new contracts. Brazil also intends to enable bilateral agreements with its neighbors, Bolivia and Argentina, by 2025 to access natural gas from these countries.
While with nitrogen the goal is based on ways to boost Brazilian access to the raw material, regarding phosphates and potash, Brazil is focused on mapping out mining possibilities. One of the goals is to increase phosphate rock exploration by 3pc each year through 2030 and by 2pc each year until 2050. Gradually, Brazil intends to enhance its phosphate rock production to reach 27mn t/yr. The plan also envisions the addition of other two phosphate fertilizer and raw materials producers in new mining areas by 2030, totaling seven producers and increasing that number to 10 by 2040.
On potash, Brazil aims to raise national production gradually through 2050 to 6mn t of installed capacity. To reach that volume, the goal is to double to 10 the amount of potash and raw materials producers by 2030, adding another 10 producers by 2040. Brazil has only one potash producing unit, in Sergipe state, owned by Mosaic Fertilizantes and whose production reached around 9.5mn t in 2020. The main potash deposits with exploration potential mapped so far are located in Sergipe and Amazonas states and account for around 3pc of global deposits.
Steps to reach goals
To increase production and installed capacity, Brazil's government aims to encourage international investments by enabling financial incentives and reducing redtape.
Supported by the ministry of foreign affairs, Brazil intends to discuss at the Organization for Economic Co-operation and Development (OECD) ways of attracting international and national investors to the fertilizer market. The discussions will be valuable in encouraging bilateral agreements with leading global producing markets, such as Belarus, Canada, China, Morocco and Russia, among others.
A Brazilian government source told Argus the government has already taken a series of moves envisaged by the plan. Last week, agriculture minister TerezaCristina Correa da Costa paid a visit to Iran, where delegates of Brazilian and Iranian companies signed an agreement to barter 400,000t of Iranian urea for the same volume of Brazilian soybeans and corn.
All projects to develop and increase fertilizer production require long-term planning and investments in infrastructure. To encourage that, the plan includes a proposal to craft a law by 2025 to add special incentive norms for the development of fertilizer industry infrastructure.
By 2030, the government wants to enable at least five auctions of mining areas for phosphate fertilizers and another five auctions for areas of potassium fertilizers.
Related news posts
BayWa suspends 2024 profit forecast over restructuring
BayWa suspends 2024 profit forecast over restructuring
London, 25 July (Argus) — German agricultural group BayWa on Wednesday suspended its full-year profit forecast due on 8 August, citing ongoing restructuring. It posted a preliminary revenue of €10.7bn ($11.6bn) for the first half of the year, down by 15pc from €12.6bn a year ago. BayWa's first-half 2024 preliminary earnings before interest, tax, depreciation and amortisation stood at €149.5mn, less than half of the €322.1mn earned in the same period last year. BayWa said it continues to be in constructive talks with its financing partners, adding that it also has postponed publication of the final half-yearly results to 27 September, citing impairment reviews. The company commissioned a restructuring report on 12 July in response to a "strained financing situation". The Munich-headquartered BayWa Group operates in the fields of energy, agriculture — including fertilizers — and building materials. By Suzie Skipper Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Singapore shortlists consortia for NH3 power, bunkering
Singapore shortlists consortia for NH3 power, bunkering
Singapore, 25 July (Argus) — The Maritime and Port Authority of Singapore (MPA) and the Energy Market Authority (EMA) selected two consortia, with one of them likely to lead the project to develop ammonia as a low or zero-carbon solution for power generation and bunkering in the island nation. MPA and EMA selected the two consortia from a total of [six firms that were shortlisted in 2023]https://direct.argusmedia.com/newsandanalysis/article/2501511), after a request for proposal (RFP) was launched. The final selection from the chosen two will be made in the first quarter of 2025. This project, which is part of Singapore's national hydrogen strategy , is looking at developing end-to-end ammonia solution that can generate 55-65MW of electricity via direct combustion in combined cycle gas turbines. Low- to zero-carbon ammonia would be imported and used for this purpose. The project is aiming for 100,000 t/yr of ammonia bunkering, starting with shore-to-ship bunkering followed by ship-to-ship bunkering. The two consortium leads are Singaporean conglomerate Keppel's arm Keppel Infrastructure, as well as Singaporean-based Sembcorp-SLNG. The consortia also include the following bunkering participants - Japan's shipping firm NYK Line, as well as Japanese trading firms Sumitomo and Itochu. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Feedstock imports shake up US biofuel production
Feedstock imports shake up US biofuel production
New York, 24 July (Argus) — Waste from around the world is increasingly being diverted to the US for biofuel production, helping decarbonize hard-to-electrify sectors like trucking and aviation. But as refiners turn away from conventional crop-based feedstocks, farm groups fear missing out on the biofuels boom. Driven by low-carbon fuel standards (LCFS) in states like California, US renewable diesel production capacity has more than doubled over the last two years to hit a record high of 4.1bn USG/yr in April according to the Energy Information Administration. Soybean and canola processors have invested in expanding crush capacity, expecting future biofuels growth to lift vegetable oil demand. But policymakers' growing focus on carbon intensity, a departure from the long-running federal renewable fuel standard (RFS) that sets volume mandates for broad types of fuel, primarily benefits waste feedstocks, which generate larger LCFS credits because they are assessed as producing fewer emissions. Argonne National Laboratory's GREET emissions model, which has been modified by federal and California regulators for clean fuels programs, factors in emissions sources like fertilizers and diesel use on farms for virgin vegetable oils but not for used oils sourced from cooking operations. Refiners trying to maximize government subsidies are thus sourcing waste-based feedstocks from wherever they can find them. Through May this year, imports to the US under the tariff code that includes used cooking oil (UCO) and yellow grease rose 90pc from year-prior levels to more than 1.8bn lb (844,000t). While China represents most of that, sources are diverse, with significant sums coming from Canada, the UK, and Indonesia. Imports of inedible and technical tallow, waste beef fat that can be turned into biofuels, have also risen 50pc so far this year to 800,000lb on ample supply from Brazil. While soybean oil was responsible for nearly half of biomass-based diesel production in 2021, that share has declined to around a third over the first four months this year as imports surge (see graph). "Every pound of imported feedstock that comes in displaces one pound of domestically sourced soybean oil or five pounds of soybeans," said Kailee Tkacz Buller, chief executive of the National Oilseed Processors Association. Even as LCFS and RFS credit prices have fallen over the last year, hurting biofuel production margins and threatening capacity additions , imports have not slowed. Feedstock suppliers, many from countries with less mature biofuel incentives and limited biorefining capacity, might have few options domestically. And exporting to the US means they can avoid the EU's more prescriptive feedstock limits and mounting scrutiny of biofuel imports. More ambitious targets in future years, particularly for sustainable aviation fuel, "will create a lot of competition for UCO in the global market," said Jane O'Malley, a researcher at the International Council on Clean Transportation. But for now, "the US has created the most lucrative market for waste-based biofuel pathways." Incentives for US refiners to use waste-based feedstocks will only become stronger next year when expiring tax credits are replaced by the Inflation Reduction Act's 45Z credit, structured as a sliding scale so that fuels generate more of a subsidy as they produce fewer greenhouse gas emissions. While essentially all fuel will receive less of a benefit than in past years since the maximum credit is reserved for carbon-neutral fuels, the drop in benefits will be most pronounced for fuels from vegetable oils. Granted, President Joe Biden's administration wants the 45Z credit to account for the benefits of "climate-smart" agriculture, potentially helping close some of the assessed emissions gap between crop and waste feedstocks. But the administration's timeline for issuing guidance is unclear, leaving the market with little clarity about which practices farmers should start deploying and documenting. "While a tax credit can be retroactive, you can't retroactively farm," said Alexa Combelic, director of government affairs at the American Soybean Association. Squeaky wheel gets the soybean oil The concerns of agricultural groups have not gone unnoticed in Washington, DC, where lawmakers from both parties have recently called for higher biofuel blending obligations, prompt 45Z guidance, and more transparency around how federal agencies scrutinize UCO imports. There are also lobbying opportunities in California, where regulators are weighing LCFS updates ahead of a planned hearing in November. At minimum, agricultural groups are likely to continue pushing for more visibility into the UCO supply chain, which could take the form of upping already-burdensome recordkeeping requirements for clean fuels incentives and setting a larger role for auditors. Fraud would be hard to prove, but two external groups told Argus that the Biden administration has indicated that it is looking into UCO collection rates in some countries, which could at least point to potential discrepancies with expected supply. More muscular interventions, including trade disincentives, are also possible. Multiple farm associations, including corn interests frustrated that the country's first alcohol-to-jet facility is using Brazilian sugarcane ethanol , have asked the Biden administration to prevent fuels derived from foreign feedstocks from qualifying for 45Z. The possible return of former president Donald Trump to the White House next year would likely mean sharply higher tariffs on China too, potentially stemming the flow of feedstocks from that country — if not from the many others shipping waste-based feedstocks to the US. Protectionism has obvious risks, since leaving refiners with fewer feedstock options could jeopardize planned biofuel capacity additions that ultimately benefit farmers. But at least some US agriculture companies, insistent that they can sustainably increase feedstock production if incentives allow, see major changes to current policy as necessary. By Cole Martin Waste imports crowd out soybean oil Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's S04 makes first batch of SOP at Lake Way
Australia's S04 makes first batch of SOP at Lake Way
London, 24 July (Argus) — Australia's S04 — a subsidiary of Sev.en Global Investments, an energy investment firm based in the Czech Republic — has produced its first SOP product at its Lake Way project near Wiluna in Western Australia. The 200,000 t/yr SOP project remains in the commissioning phase, and there is no date yet for full commercial operations. But Sev.en said the project is "tracking well" towards full operations. Commissioning work included the installation of a new floatation unit in the process plant. The project will use solar evaporation ponds to extract potassium-rich salts from the lake mines. The Lake Way SOP project has been in development for over seven years. It was originally commissioned in April 2021 and began commercial production in June that year under its previous owners Australia-based Salt Lake Potash. Sev.en acquired the project when it bought out Salt Lake Potash in 2022 and then made significant investments in all aspects of the production process. By Nykole King Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more