Tuesday, June 25, 2024

Forbes: Fermachem to invest US $1.5B in Colima fertilizer plant

The Indian company Fermachem will reportedly invest US $1.5 billion in an ammonia and urea plant in Armería, Colima, that should help meet Mexico’s fertilizer demand, the digital media outlet Forbes México has reported.

Urea and ammonia are both ingredients used in fertilizer production.

Some of the product will also be exported to the United States, supplying farmers in Texas, California, Iowa, Nebraska, Illinois and Minnesota, Forbes México said.

In 2022, Mexico’s government announced a plan to triple national fertilizer production to reduce its dependency on imported fertilizer. It has not commented on Fermachem’s announced investment in Colima. (Pemex)

“The estimated investment for the development of the ammonia and urea plant is US $1.5 million dollars, which represents around [29.1 billion] pesos, considering the exchange rate of Nov. 14, 2022,” a document obtained by the digital publication. 

The plant will produce 3,500 metric tons of ammonia per day, as well as 2,860 metric tons of urea. It will also have a fertilizer granulation plant with a capacity of 2,860 metric tons per day, the document notes. 

Mexico has suffered from fertilizer shortages due to adverse weather conditions, supply chain problems and energy and transportation costs driving up the cost of ammonia and urea. In 2021, Mexico imported approximately 62% of the fertilizer it used.

In May 2022, the federal government announced plans to triple fertilizer production to support local farmers and curb consumer price inflation, with the goal of fertilizer production self-sufficiency by 2024. 

In 2023, the government officially rolled out Fertilizers for Well-being, a nationwide program aimed at reducing fertilizer costs for small farmers. (Government of Mexico)

As part of this strategy, the government-owned oil company Pemex, in coordination with the Agricultural and Rural Development Ministry (Sader), announced in January an investment of 15 billion pesos (US $750 million at the time of the announcement) into the rehabilitation of existing fertilizer plants. The government’s plans also include providing up to 600 kilograms of free fertilizer annually to produce farmers who meet specific criteria.

Neither Fermachem nor Colima’s state government have commented on the reported investment. 

Fermachem is not the only foreign company to see an opportunity in Mexico’s demand. In February, the Dutch company Tarafert announced it would be building a US $1.5 billion plant in Lerdo, Durango, which would begin operations in 2026.

With reports from Forbes México

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