Brazil’s Unigel halts fertilizers production on high natural gas prices

SAO PAULO (ICIS)–Unigel is to “temporarily stop” nitrogen fertilizers production because of high costs and low prices, effective on Wednesday, the Brazilian chemicals and fertilizers producer said.

Unigel said natural gas prices in Brazil are one of the highest in the world, and six times higher than in the US or the Middle East, “despite efforts” by multiple stakeholders, including the government, to lower them.

“Unigel suffered losses throughout 2023 and also in 2024, but it retained the majority of its staff in expectations that negotiations and work fronts seeking to reduce the price of natural gas would be successful,” said the company.

“The company will continue to have a minimum infrastructure for maintenance and preservation of assets, in addition to ensuring compliance with legal and socio-environmental commitments.”

Unigel’s move comes after it signed a tolling agreement with Petrobras in December for the functioning of two nitrogen fertilizers plants in the states of Sergipe and Bahia.

The two plants were leased to Unigel by Petrobras in 2019.

It also comes just weeks after Unigel’s creditors agreed to a debt restructuring of the company’s beleaguered financial metrics.

The plant in Camacari, Bahia, can produce 475,000 tonnes/year of ammonia and 475,000 tonnes/year of urea.

The plant in Laranjeirs Sergipe, can produce 650,000 tonnes/year of urea, 450,000 tonnes/year of ammonia and 320,000 tonnes/year of ammonium sulphate (AS).

“[After leasing the plants in 2019] Unigel contributed to reducing the country’s extreme dependence on the import of nitrogen fertilizers by approximately 15%, which is essential for agribusiness, today the most important sector of our economy, and directly impacts Brazilians’ food security,” said Unigel.

“Furthermore, Unigel is the only national producer of ARLA, an additive added to diesel engines to reduce the emission of polluting gases.”

The company added that once the precedent conditions in the tolling contract have been met, it would be able to “reevaluate the resumption” of production.

Unigel’s chemicals divivions produces styrene and polystyrene (PS), among other materials.

Front page picture source: Unigel