Nigeria has seen a boost in exports of its fertiliser products on account of increased demand from major importers of Nigeria’s urea and increased capacity from Notore Chemicals Industries and Dangote Fertiliser plants.
As fertiliser prices are nearing a decade high, soaring food prices allow farmers to expand crop production, boosting demand for nutrients essential to producing food.
Ezra Yakusak, executive director/CEO at Nigerian Export Promotion Council, while giving a breakdown of the top 15 exported products in the first half year of 2022 this week, said urea/fertiliser was the biggest export as it accounted for 32.49 percent of the total export, while cocoa beans, sesame seed, and aluminum ingots contributed 12.65 percent, 7 percent, and 5.07 percent respectively.
The top three destinations for Nigeria’s exports, based on the value, were Brazil, the United States, and India, out of the 112 countries across the Americas, Asia, Europe and Oceania regions, and Africa.
Notore Chemicals and Dangote Fertilisers benefit from higher prices as the fertiliser industry is experiencing supply-side constraints while demand is rising.
According to Bloomberg, Europe’s ammonia production shrank even further with more reductions expected as two polish companies joined a growing list of fertiliser makers cutting output because of rocketing energy costs.
“Grupa Azoy, Poland’s largest chemical company, trimmed ammonia output on record gas prices, while Anwil, a unit of oil company PKN Orlen SA halted production of the nutrient,” Bloomberg said in a report.
According to Chris Lawson, an analyst at researcher CRU Group, that means about 38 percent of Europe’s production capacity of key fertiliser ingredients is now reduced or completely curtailed.
In the first half of 2022, Notore’s revenue from urea was up by 636.6 percent to N24.97 billion from N3.39 billion in the first half of 2021, with 55.99 percent of the total revenue generated outside Nigeria, leading the chemical company to report its first half-year profit in five years.
Its revenue from export sales during the period amounted to N14.72 billion in the first half of this year, an improvement from the first half of 2021 when revenue was only generated locally. However, its export sales grew by 3,684 percent from the N388.8 million reported in the nine months to June 2021.
In a statement, Ohis Ohiwerei, group managing director and CEO of Notore Chemical Industries, attributed the growth in revenue to improvements in plant reliability and increased production output, a positive outcome of the turnaround maintenance programme implemented in most part of the year 2021.
“The period witnessed an increase in plant reliability and relatively stable operations, resulting in a significant increase in production output and sales,” he said.
The CEO and board of directors expressed confidence in the turnaround maintenance in the first quarter of 2021, anticipating that it will deliver 500,000 tonnes of fertiliser, increase operational effectiveness, and support profitability.
“Achieving this level of production output will not only lead to significant increases in the company’s cash flows from operations, but also substantial increases in revenues annually,” said Ohiwerei.
In the first quarter of 2022, data from the National Bureau of Statistics show that urea replaced sesamum seeds as Nigeria’s biggest non-oil export product, accounting for a 2.93 percent share of total exports for the first quarter of 2022, compared to the corresponding period last year when sesame seeds accounted for the highest chunk of Nigeria’s non-oil export.
The value of Nigeria’s urea exports stood at N208.39 billion in the first three months of 2022, compared to N16.77 billion in the same period last year.
Nigeria exported urea worth N63 billion to Brazil, N55 billion to the US, N51 billion to India, N15 billion to Indonesia and N9.9 billion to Uruguay, NBS data show.
FBNQuest, an investment banking and asset management business of FBN Holdings plc, linked the increase in urea exports to the start-up of operations at the Dangote Fertiliser facility, following the commencement of export operations by the company to the US, India, and Brazil, among others.
Dangote Fertiliser is expected to harvest about N2.1 trillion (about $5 billion) yearly in export revenue, according to Forbes Africa.
Initial shipment from the Dangote Fertiliser Plant, which has the capacity to produce 3 million tonnes of urea and ammonia per year, began in June 2021.
Dangote Fertiliser comprises two 4,000-tonnes-per-day urea production lines, positioning the Dangote Group as a leading manufacturer of urea fertiliser globally.
The second line commenced production of ammonia in February 2022, with stable production of urea expected to be achieved by end of May 2022. Ammonia production will be used in its entirety as feedstock for the urea plant.
The plant benefits from 200mscf/day assured gas supply of 20 years from Chevron and the Nigerian Petroleum Development Company. Dangote Fertiliser Plant is a natural gas-based granulated urea fertiliser manufacturing facility with a capacity of 2.8 million tonnes per annum.
The plant’s production capacity (8,000 tonnes per day) is larger than the combined existing urea production capacity in Nigeria from Indorama (4,000 tonnes per day), and Notore (1.500 tonnes per day).