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High on the industry agenda

Summary

Free Trade, Profitable Future is the theme of this years TFI World Fertilizer Conference, and worldwide trade initiatives and their impact on the fertilizer business will be evaluated. Are further reductions in fertilizer tariffs feasible? And what obstacles continue to impede the free - and fair - flows of fertilizer raw materials and finished products? FI investigates...

Abstract

Free trade in fertilizers is high on the agenda at this year's TFI World Fertilizer Conference. The issue has been given added significance as China applies to join the World Trade Organisation (WTO), and as moves gain momentum to extend the North American Free Trade Association (NAFTA) to the rest of Latin America. However, some fertilizer marketers have for long argued that trade should not only be free, it should also be fair. This is the background to the current lobbying by representatives of the US ammonium nitrate producers, who are pressing for sanctions to be taken against imports of low-cost AN from Russia.

China's desire to join the WTO has major implications for the international trade in fertilizers, especially for the leading North American exporters. Indeed, fertilizers lie at the heart of some of the talks that have already taken place, as the Chinese government has sought US backing in its bid to join the organisation. In an official visit to Washington between 7-9 April, Chinese Premier Zhu Rongji pledged to phase out trade restrictions in fertilizers by 2004. Although the Chinese and US negotiators failed to reach a final agreement on this occasion, the United States expressed its approval of this and other major concessions made by the Chinese government on trade in agricultural and industrial goods. The North American fertilizer industry is a major supplier of phosphates and potash to the Chinese market, and its representatives had expressed their concern that the liberalisation of fertilizer trade would be left out of any potential agreement between the US government and China. Until the April announcement, the prognosis had been pessimistic, as industry observers doubted whether China would concede any negotiating ground on fertilizer trade - despite such liberalisation being a condition of accession observed by other WTO members.

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When will the pain yield any gain?

Summary

Once again, Western E.uropean fertilizer producers are obliged to seek strategies to restore their profitability. The task is an urgent one, as consumption throughout the region has contracted during the past decade, and is set to fall further in the face of drastic revisions to the E.uropean Union agricultural policy. Will the producers find a winning formula?

Abstract

AspeedYreturn to profitability is on the top of the agenda for all leading Western European fertilizer producers, as they face difficult market conditions yet again. Indeed, some of them are asking fundamental questions about their continuing involvement in an agricultural sector that has yielded far too Iittle during the past decade in terms of satisfactory financial returns.

"We have to be hard-nosed and not delay our return to profitability," said ThorleifEnger, Executive Vice President for the Agriculture division of Norsk Hydro - Europe's largest fertilizer producer. Likewise, Kemira Oy is scrutinising its investments in agriculture, basing its forecasts for the year ahead on the assumption that fertilizer consumption in Western Europe will fall by 4-5% in the current fertilizer year. These two organisations will most certainly remain committed to agriculture as a core activity, but each company is actively pursuing strategies that will cut costs still further and enhance rates of return on their agribusiness investments.

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On top of the world

Summary

With the recent inauguration of the 250,000 tla potassium sulphate plant at Salar de Atacama, the Chilean company, SQM, has become the world's leading supplier of speciality fertilizers. It is also unique in its ability to supply substantial tonnages of all sources of potassium and nitrate fertilizers. Following a year in which profits rose by 8% globally, SQM has taken the opportunity to reorganise its commercial operations, streamlining its structure from nine divisions to three. The new SQM organisation is described in this profile.

Abstract

For SQM, 1998 was a year of high achievement, representing the culmination of a four-year strategic plan to double the total assets from $700 million to approximately $1.4 billion. During this period, SQM has invested substantially in new capacity both of its existing high-value speciality products, as well as venturing into new activities. These investments are already yielding a return, as SQM reported sales of $505.7 million and profits of $67.2 million in 1998 - an increase of 8% on rhe previous year.

Other notable developments last year included the inauguration ofthe 250,000 tla potassium sulphate plant and 16,000 tla boric acid facility, completing the third stage of the Salar de Atacama project. Additionally, the exploitation of a new mining sector of caliche started in Maria Elena, using an innovative portable grinding process and belt transportation system. The new facility produces higher quality ores and enjoys lower production costs. As part ofSQM's diversification into other activities, the company acquired a 14% stake in the leading Chilean cement producer, Empresas Melon S.A.

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Keen and ready for business

Summary

Aktsiaselts OBT is a new entrant in the highly competitive market to distribute fertilizers from the former Soviet Union (FSU) via the Baltic. From its base at the Estonian port of Muuga, OBT is set to become an increasingly significant player, and its confidence that it can offer unique competitive advantages is reflected in OBT's investment in modern facilities.

Abstract

A s reported in the review ofBaltic ports in the J uly/August issue of Fertilizer International, competition between the Baltic ports is intensifYing, as each invests in modern facilities. Amajor focus ofthis competition for trade is the commerce in fertilizers and other associated raw materials to and from Russia, as well as Kazakstan, Uzbekistan and Ukraine. Estonia has four major ports, centred around the capital of Tallinn, of which the largest is the port ofMuuga. As the deepest port in the Gulf of Finland, Muuga offers a draught of 18.5 m. It has the important advantage ofbeing ice-free, enabling it to handle over half of the total throughput of the Port of Tallinn. The bulk cargoes handled at Muuga include fertilizers from Estonia's two indigenous fertilizer producers, based at Maardu and Kohtla-Jarve.

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