LONDON (ICIS)--Algeria's government is considering a blanket ban on fertilizer imports from as soon as April and may also prohibit ammonia and urea exports as the country looks to become self-sufficient in crop nutrients, a market source revealed on Friday.
Just months after throwing the export-oriented industry into chaos with a controversial new shipping permit process, ministers are discussing halting the flow of nitrogen phosphorus potassium (NPK) cargoes and other fertilizers to the North African nation, a person with knowledge of the matter told ICIS.
According to the locally-based source, the potential ban on the arrival of NPKs and other foreign fertilizers would not necessarily mean ammonia and urea exports come to a halt, but he cautioned: "The government tends to place all fertilizers in the same basket so a major diversion of products to the domestic market could impact all fertilizer trade."
Algeria has the capacity to produce around 200,000-250,000 tonnes of NPKs per year at units run by Fertial, with a further 100,000 tonnes a year brought from abroad.
However, the distribution infrastructure for NPKs is said to be limited, with state-owned Asmidal understood to possess only a combined 20,000 tonnes of storage capacity spread across three warehouses.
In addition, due to the risk of fertilizer lorries being hijacked by criminals and terrorists, trucks only leave factories in convoy and with an armed police or military escort.
"The situation here is now very tense and tough; a complete nightmare," the source continued. "We don't know what new rabbit the government will pull out of the hat next. It's a like a circus.
"It would be impossible to comply with these proposals because of the bottleneck that would be created; the Algerian fertilizer industry simply doesn't have the technical capacity to handle all the volumes that would be required.
"The local market only needs a very small amount of the ammonia produced in the country so this proposal makes no sense whatsoever. Not only that, but there would not be enough police to escort all the different trucks."
In November, just weeks after a long-awaited commissioning of the massive $2bn (€1.48bn) Sorfert plant at Arzew, traders and buyers wishing to load cargoes were told they must first gain approval from the Ministry of Energy and the Ministry of Defence.
Market participants must now file details of the buyer, vessel, destination, end-user and purpose in person at government offices in the capital, Algiers, before an export application is considered.
The process has caused ammonia producers Fertial and Sorfert severe headaches as it takes weeks to complete and traders are often unsure where exactly they will deliver cargoes as they are sold to customers on a spot basis.
While a trickle of ammonia and urea cargoes have loaded in Arzew and Annaba recently, the government has yet to grant permission for any loadings in the March-June period.
"Permission for the next batch of export cargoes should have been granted three weeks ago, but we are still awaiting the green light," the source said.
To compound the situation for producers, natural gas curtailments mean Fertial's ammonia units are only running at around two-thirds of capacity. Sorfert is understood to be producing ammonia at a similar rate but has stopped urea production due to insufficient storage capacity.
Netherlands-based OCI Nitrogen holds a 51% stake in Sorfert and state-run energy giant Sonatrach holds a 49% share. The plant will produce 800,000 tonnes/year of merchant ammonia and 1.3m tonnes/year of granular urea for export once fully operational.
A joint venture between Spain's Fertiberia and state-owned Asmidal, Fertial was on target to produce 840,000 tonnes of ammonia in 2013 until natural gas curtailments were imposed in October in a move that forced the manufacturer to declare force majeure. Fertial exports around 80% of its ammonia output, with a record 750,000 tonnes exported in 2012.
($1 = €0.74)