The latest attempts to sell two Petroleo Brasileiro SA (Petrobras) fertilizer units in Brazil are attracting the interest of firms including European crop nutrient giant Yara International ASA, Russian fertilizer maker EuroChem Group AG, and Brazil steel and iron ore producer Cia Siderugica Nacional SA (CSN), according to Bloomberg, citing people familiar with the matter.
Yara said it does not comment on market speculation, while Petrobras declined to comment. CSN and EuroChem did not immediately reply to emailed requests for comment.
Once a significant fertilizer player, Petrobras, Brazil’s state-owned oil company, opted to exit the market in 2018, but the divestment process has proved challenging. Now there is renewed interest after the war in Ukraine disrupted global supplies and propelled prices to multi-year highs.
Petrobras held talks with Yara for more than a year over the sale of Araucaria Nitrogenados, a plant known as ANSA in the southern state of Parana, some of the sources said. But last week the Petrobras Board unanimously rejected a bid from the Oslo-based firm, according to sources.
With daily production capacity of 1,975 mt of urea and 1,303 mt of ammonia, ANSA was mothballed in early 2020 after a series of losses since being acquired in 2013. Yara is still interested in the plant, with an Aug. 19 vote for new Petrobras Board of Directors reopening the door to approval, one of the sources said.
The sale of the other unit, nitrogen fertilizer maker UFN-III in Mato Grosso do Sul state, has resumed after a prospective deal with Russia’s Acron PJSC was aborted in April (GM April 29, p. 30). One hard-and-fast requirement for the buyer is a commitment to complete UFN-III construction works. UFN-III has been under construction since 2011, and at last report was 81% complete. A deal by Acron to buy both of the plants fell through in 2019 (GM Nov. 27, 2019).
Now UFN-III is attracting interest from CSN, EuroChem, and Yara, among others, although the process is still in early stages and no proposals have been made, said one source. In April, Unigel CEO Roberto Noronha Santos told Reuters that the Brazilian company is also interested in UFN-III. Unigel, a chemical and fertilizer maker, already has two long-term leases for two other Petrobras nitrogen fertilizer plants (GM Nov. 22, 2019).
Located in the city of Três Lagoas in Mato Grosso do Sul state, UFN-III has a projected urea capacity of 3,600 mt/d of urea, or nearly 20% of Brazil’s apparent consumption in 2020, plus 2,200 mt/d of ammonia, with a consumption of 2.2 million cubic meters of natural gas a day.
Petrobras wants to divest non-core assets to focus on the so-called pre-salt offshore region, which holds its largest and most profitable hydrocarbon discoveries.