Plans for $2bn Peruvian fertilizer plant await green light

22 January 2013 19:52  [Source: ICIS news]

Plans for $2bn Peruvian fertilizer plant await green lightSAO PAULO (ICIS)--The future of a potential $2bn (€1.5bn) nitrogen fertilizer plant in Peru that would export ammonia and urea to countries throughout Latin and Central America should be decided by the end of June, the senior executive from the Spanish company behind the ambitious project said on Tuesday.

Scheduled to start production in 2017, the massive facility would produce up to 3,500 tonnes of urea per day and 3,300 tonnes of ammonia per day, equivalent to 1.2m tonnes/year and 1.1m tonnes/year, respectively, revealed Fertiberia's Enrique Palomino on the sidelines of the Fertilizer Latino 2013 conference in Brazil.

According to the Madrid-based executive, Peruvian President Ollanta Humala will decide in the second quarter whether to back the project, with two potential coastal sites identified for its construction: Melchorita in Pisco province 150 miles (241km) south of the capital, Lima, and Piura in the far north near the border with Ecuador.

The final location for the plant would depend on where the complex would source its natural gas for feedstock, with Fertiberia in "very advanced talks" with several gas producers, Palomino said. The Melchorita site would take natural gas pumped 300 miles along an existing pipeline network from the Peruvian jungle, while the Piura site would use natural gas from the local area.

"My preferred choice is Piura, because it would allow us to sell ammonia for local monoammonium phosphate (MAP) and diammonium phosphate (DAP) production and mean there is slightly less distance to important ammonia and urea export markets such as Ecuador, Colombia, Mexico and the US," said Palomino, the project's director general.

"Wherever we site the plant on the Pacific Coast, the urea lines will consume 700,000 tonnes a year of the ammonia, so that would leave around 400,000 tonnes a year of ammonia for export. However, we anticipate those 400,000 tonnes could be used for the production of up to 800,000 tonnes of porous ammonium nitrate (PAN) for explosives for the huge Peruvian and Chilean mining industries."

The executive expects about two-thirds of the plant's urea output to be sold abroad, meaning about 800,000 tonnes/year of urea would enter the market from the second half of 2017. Peru currently imports its urea and ammonia from countries such as Mexico and Venezuela.

"We have worked very hard on this project and are confident it will be a great success," Palomino said. "Construction of the nitrogen complex and support infrastructure such as roads and ports would create up to 7,000 jobs and take around 40 months to complete. For now, we are waiting on the government's decision and the signing of a natural gas contract, which we expect to conclude shortly."

Part of the huge Grupo Villar Mir, Fertiberia holds a stake in three ammonia plants in Algeria that export up to 900,000 tonnes/year of ammonia to Europe, including to its own processing facilities in Spain and Portugal.

($1 = €0.75)

By: Richard Ewing
+44 208 652 3214

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