Acerias Paz del Rio plans to multiply fertilizer production by more than 10 times

We spoke with the director of Fertilizers of Acerias Paz del Rio, Dr. César Palacio Martínez, about the expansion of production and marketing of fertilizers, one of the company’s main focuses.

The steel company’s expansion program is supported by the recent events the world has faced, when, due to the Covid-19 pandemic and especially to the geopolitical confrontation between Russia and Ukraine, agricultural inputs, vital for the food security of the countries, became scarce.

In view of this situation, the decision taken by the steel company is of great relevance for food producers in Colombia, who have faced a sharp rise in the prices of imported inputs, including fertilizers.

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Below, we include some sections of the interview with the Fertilizer Director of Acerias Paz del Rio, which can be fully seen in the video located at the top of the page.

Acerias Paz del Rio has been strengthening its production and marketing strategy for fertilizers and soil improvers. What is the difference between one and the other?

There is a quite noticeable difference. Soil improvers are part of the amendment segment, and as the name implies, include products that improve the soil in certain physical, chemical, or biological conditions.

The main improvements that our farmers are looking for are to increase the pH when they have this issue, lower the aluminum saturation when this is the case and achieve a balance of bases such as calcium, magnesium, and sulfur, mainly.

Fertilizer, on the other hand, is anything that nourishes the plant. It is food for plants.

Why did you decide to make this choice and what are the main characteristics of the products you offer?

Acerias Paz del Rio, in the area of fertilizers and amendments, has been in operation during 65 years. The pursuit of growth that we have been handling is due to the interest of its new shareholders, now 100% Colombian, in contributing more to the country’s food security and in continuing to increase the company’s participation in the circular economy.

Our products are characterized by being thermal products. All Acerias Paz del Rio products are thermal products associated with the production of steel, and this is an exclusive process in which the products are taken to 1,600 degrees with oxygen injection, to make the combustion more homogeneous.

In the end, this makes them very reactive products, of maximum reactivity, and very assimilable by plants. This is what brings benefits to our farmers.

Could you give us some figures on the participation of Acerias Paz del Rio in the national market of fertilizers and soil improvers?

In our country, we have a fertilizer market that moves between 1,800,000 and 2,000,000 tons per year. We also have an amendment market that moves between 450,000 and 600,000 tons per year.

Currently, Acerias Paz del Rio participates with 3,500 tons of fertilizers per year and 25,000 to 30,000 tons of amendments per year. Our current project is focused on reaching 45,000 tons of fertilizer and 35,000 tons of amendments per year.

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Tell us a little about the world market for fertilizers and soil improvers. Who are the main producers and consumers, and why has this market been in turmoil since last year?

Fertilizers are a very important input for agricultural production in the world. And not only in agriculture but also in livestock farming, because farmers and people who produce grains for animals or for concentrates are also fertilizing.

The world uses about 400 million tons per year. The main consumers, the four main ones, are India, Brazil, the United States, and China.

Some of them produce fertilizers, as is the case of China, which is practically self-sufficient. The United States also produces fertilizers. India produces, but not as much as it consumes, and Brazil does not produce as much as it consumes. So, these four countries are the main consumers and are part of the market balance.

When they start placing orders they are so large that volumes can become scarce all over the world, for the rest of the people or agribusinesses that also need fertilizers.

In terms of producers, the main one is in Canada, which is Nutrien. It is a company that has a turnover of 38 billion dollars a year in fertilizers. We have Wesfarmers, from Australia, which is in second place, and has a turnover of 34 billion dollars a year. Qatar Industries follows, with $26.6 billion. And we have SQM of Chile in fourth place, with 25.5 billion dollars.

In the Top 10, Top 15, there are also Yara, Mosaic, PhosAgro, ICL, Acron. They are Norwegian companies, from the United States, from Russia. These are the main producers.

Now, as for what you were referring to the “turmoil” in the market, we have already had a few. One of them was in 2008. The last one, which is now stabilizing, was mainly caused by the Russia-Ukraine war.

As the cost of gas increased, and gas is one of the most important inputs in fertilizer production – arguably the most important input – production costs rose and therefore product costs.

The same gas costs caused some companies to shut down, generating supply problems, or causing other producers to raise their prices due to unsatisfied demand. That is, because there were people asking for gas when there was not much product out there.

Other issues that affected and generated what you call “turmoil” were the logistical issues. After the pandemic, there was a logistical mess in the world. Containers were misplaced, ships were left where they were not supposed to be, routes were disorganized, some started to have restrictions. That is to say, the logistical issue also affected the fertilizer sector around the world.

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