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EuroChem elects Louisiana for $1.5 billion greenfield fertilizer project

Russian EuroChem to profit from US shale gas supply

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe Moscow-based company EuroChem signed an agreement with the State of Louisiana to invest $1.5 billion capital expenditure to build a greenfield fertilizer plant along the Mississippi River in USA.

Established only in 2001, EuroChem has grown up very fast over its 12 years of life in beginning with the phosphate fertilizer and then in developing nitrogen fertilizer activities.

Home-based in Russia, EuroChem has driven its agrochemical expansion from emerging to developed countries with the ambition to join the top five potash producer in the world.

EuroChem_Iberville_Fertilizer_Louisiana_Project_MapIn the Russian context, EuroChem competitive advantage was built on a vertical integrated business model starting from the raw materials (phosphate rocks and natural gas) and covering all the transformation and distribution phases up to the farmers.

In that respect EuroChem has grown up with a unique business model where its owns the mines and wells, fertilizer plants, storage and exports terminals, ports accesses and ships, trucks and rail rolling stocks.

To reach 2% of the global market, EuroChem has expanded its network over the world including the Americas representing one fourth of its 2012 revenues.

At that level USA represents a strategic export market for EuroChem in a context where the development of the shale gas is impacting the fertilizer business model.

As the world largest producer of corn, USA is also the largest consumer of fertilizer.

54% of these fertilizers are imported according to the US Department of Agriculture from multiple sources such as Trinidad and Tobago or Russia.

In a context of shale gas glut in the US market, the local production of nitrogen fertilizers becomes very attractive compared with the current import.

With more than half of the fertilizer being imported, the US market has space enough for several fertilizer projects such as EuroChem Louisiana Fertilizer Project.

EuroChem Louisiana Project to produce urea-ammonia

For this greenfield Louisiana Fertilizer, EuroChem is planning to invest $1.5 billion capital expenditure to produce urea and ammonia.

In this perspective, Louisiana offers significant advantages in addition to the tax incentives:

 – It concentrates all the pipelines infrastructures to provide the natural gas for the feedstock of the nitrogen fertilizer.

 – The Mississippi River gives direct access to the famous US corn belt, the main domestic market for fertilizer.

 – It can also provide over the long term the perfect platform to export fertilizer to other Americas countries in competitive conditions.

EuroChem_Fertilizer_Louisiana_ProjectTherefore EuroChem is designing its Louisiana Fertilizer project as a manufacturer facility and distribution center for nitrogen fertilizer to support its existing trading offices in Tampa in Florida and San Paulo, in Brazil.

In discussion since mid 2012 with the State of Louisiana, EuroChem is narrowing its selection of potential site location to only two options secured with financial deposits:

 – Iberville Parish

 – St John the Baptiste Parish

The both locations are currently under evaluation including the environmental impact for approval by the Natural Resources Committees of the Louisiana Legislature.

Considering this site evaluation to take about one year, EuroChem is targeting to run its Louisiana Fertilizer Project into commercial operations in 2017.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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