Indorama strengthens presence in Nigerian fertiliser industry

Singapore-based chemicals and fertiliser major Indorama recently acquired a 51% stake in Nigerian fertiliser company TAK Agro & Chemicals. TAK is a major player in Nigeria's NPK fertiliser industry, operating six blending plants across the country. With this deal, Indorama gains direct access to the NPK fertiliser market in Nigeria.

In 2006, Indorama made its initial entry into Nigeria by acquiring a former state-owned plastics resins business. Expanding its operations, the company later established Indorama Eleme Fertilizer & Chemicals which focuses on urea production. With a capacity to produce approximately 2.8m tonnes of granular urea, the facility primarily caters to domestic fertiliser demand in Nigeria while also engaging in exports. Urea, produced through a chemical reaction involving ammonia and carbon dioxide, boasts a high nitrogen content that promotes plant growth and enhances crop yields.

Nigeria's domestic fertiliser industry has seen significant growth since the introduction of the Presidential Fertiliser Initiative (PFI) in 2016. The aim of the PFI was to boost domestic production of NPK fertiliser, a vital multi-nutrient mix containing nitrogen (N), phosphorus (P), and potassium (K). Prior to the PFI, Nigeria heavily relied on imported fertilisers, which inflated costs for farmers and burdened the national economy. Under the PFI, the required raw materials for NPK fertiliser – including locally sourced urea and limestone granules, as well as imported phosphate from Morocco and potash from Europe – are procured at reduced rates and made available to private blending firms responsible for manufacturing the final products. As a result of the PFI, the number of active NPK blending plants has grown from four at the programme's inception to over 40.

Indorama has been supplying urea to support the PFI and private blenders since 2017. With the acquisition of TAK, Indorama will now be able to sell NPK fertilisers directly to Nigerian farmers.

While fertiliser usage in Nigeria has increased from 12.2kg per hectare in 2010 to 19.6kg in 2020, it still lags significantly behind the global average of 146.4kg. This highlights substantial growth opportunities for producers in the country.

In March this year, Nigerian industrialist Aliko Dangote inaugurated a new urea and ammonia fertiliser factory in Lagos. With an annual production capacity of 3m tonnes, this plant ranks among the largest globally. The facility is set to serve both local and international markets; it has already exported to countries such as the United States, Brazil, Mexico, and India.

In 2022, urea surpassed sesame seeds as Nigeria's top non-oil export, bringing in N810bn (US$1.071bn) for the country's economy. The increased demand for urea exports partially stemmed from supply limitations caused by the Russia-Ukraine conflict. Leading buyers of Nigeria's urea were Brazil, the United States, and Argentina. Market analysis by ChemAnalyst predicts that in 2023, local companies such as Indorama and Dangote could capture a $2.5bn share from the $32.4bn urea market.

 

References

‘Everything you need to know about the Presidential Fertiliser Initiative (PFI)’, Government of Nigeria, 20 March 2017

‘NSIA implements restructuring of the Presidential Fertilizer Initiative (PFI)’, The Nigeria Sovereign Investment Authority, 27 April 2021

‘Nigerian billionaire Dangote launches $2.5 billion fertilizer plant as prices soar’, Reuters, 22 March 2022

‘‘People are begging us to sell.’ Africa’s richest man opens huge fertilizer plant as food crisis looms’, CNN, 24 March 2022

‘Africa needs more, not less, fertilizer’, Foreign Policy, 08 October 2022

‘Fertiliser imports decline as private investments exceed $8b’, The Nation Newspaper, 13 February 2023

‘Urea’s N810bn haul shows Nigeria’s export potential’, Business Day, 20 March 2023

‘Petchem Investment Holdings Pte. Limited, acquires 51% shares in TAK Agro & Chemicals Limited (“TAK”) Nigeria, one of the largest NPK producers in Nigeria on 1st April 2023’, Indorama Corporation, 1 April 2023

‘Company background’, Indorama Corporation, Accessed 26 June 2023

‘Fertilizer consumption (kilograms per hectare of arable land) - Nigeria, World’, The World Bank, Accessed 26 June 2023