Monday, May 29, 2023
BusinessLocal fertilizer production plan takes shape

Local fertilizer production plan takes shape

Ethiopian Investment Holding vies to partner with foreign fertilizer manufacturers

The Ministry of Mines will soon hire international companies that are able to conduct a feasibility study that would re-assess the Ministry’s renewed plans to substitute import of fertilizers. It is currently drafting Term of Reference (ToR) to float a tender.

The ideal company will study the international fertilizer market, and asses Ethiopia’s raw material inputs required for fertilizer production locally. The company will also determine the technology required to produce fertilizer locally and the amount of capital needed.

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Once the feasibility study proves viable, the Ministry will proceed to hiring a fertilizer manufacturer.

“The company that undertakes the feasibility study can also become the manufacturer if it can mobilize the investment capital and has the required skill to manufacture agricultural fertilizer,” Takele Uma (Eng.), Minister of Mining, told The Reporter.

Fertilizer production, which is an investment in a heavy industry, can require up to USD three billion in capital.

The Ethiopian Investment Holding (EIH), a newly formed state conglomerate with a 100 billion birr in capital, will buy shares under a joint venture arrangement with the expected foreign fertilizer manufacturer.

According to Takele, Ethiopia spent USD 1.2 billion to import fertilizers over the past nine months. The price doubled from last year, following supply turbulences subsequent to the war in Ukraine, resulting in farmers’ diminished appetite for fertilizer use. Prices almost doubled to 4,800 birr per quintal.

“We have all the natural resources to produce fertilizer locally in Ethiopia,” said the Takele.

Ethiopia has potassium deposits in west Wellega, apart from phosphate.  Natural gas, which is a source of ammonia, is also a key ingredient to produce fertilizers.

A separate exploration to determine Ethiopia’s stock of natural gas was also recently awarded for US-based, Swell & Associates Inc. (NSAI). The company agreed to conduct consulting and feasibility studies in the Ogaden basin in the southeastern part of Ethiopia to assist in the exploitation of oil and natural gas resources.

NSAI embarked on drilling 51 wells.

75 percent of local fertilizer factory’s success is determined by the amount of the natural gas deposit found. The natural gas feasibility study will be finalized in the next four months.

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