Yara-backed proposed tariffs on Brazilian ammonium nitrate sparks controversy

Yara-backed proposed tariffs on Brazilian ammonium nitrate sparks controversy
Yara-backed proposed tariffs on Brazilian ammonium nitrate sparks controversy

A proposal to impose tariffs on ammonium nitrate imports has pitted the Abiquim chemical industry lobby against local fertilizer blenders and powerful food producers who favor foreign supplies.

Abiquim’s request, still under review by the Ministry of Development and Trade, highlights the broader implications of Western sanctions against Russia, which the lobby says have ended up favoring Asian exporters through cheap access to natural gas used as a feedstock and fuel to make crop nutrients.

Critics of the tax on ammonium nitrate, also used in explosives, say the tariffs would penalize around 90% of national consumption, with Brazil mainly dependent on imports for its supply.

Last year, the country imported 1.1 million metric tons, 84% of which came from Russia, according to trade data. This year, through May, imports amounted to 629,497 metric tons against a national production of 64,143 tons, according to the Siacesp fertilizer group, based in Sao Paulo.

Norwegian company Yara, Brazil’s only producer, defended Abiquim’s proposal while admitting that “it is not the long-term answer.”

“It is obvious that the structuring solution for the country is to have competitive natural gas, although the tariff is an important tool to guarantee market equality and safeguard the national industry,” he declared in a press release sent to Reuters.

Yara’s domestic production capacity is 416,000 tons. The company said it produced some 90,000 tonnes of ammonium nitrate for agricultural use last year.

Abiquim President Andre Cordeiro said in an interview that the temporary tariffs would provide a level playing field against imports at a time when the domestic chemical industry’s capacity utilization has reached its highest level. low for 30 years, with an average of 64%.

He noted that natural gas prices can be up to seven times higher in Brazil, adding that a deluge of cheap imports can drive companies out of business, including the Yara unit in Brazil. State of Sao Paulo.

Mr Abiquim called for the tax on ammonium nitrate to be increased from zero to 15%.

AMA, which represents Brazilian fertilizer blenders, denounced the proposal as protectionist, accusing a multinational of controlling national supplies in a document sent to the Ministry of Development and Trade. AMA specifically mentioned that Yara can produce more than 2 million tonnes per year in its European factories, while production in Brazil is much lower and is not entirely intended for fertilizer manufacturing.

Other groups strongly opposing the tariff include the Brazilian soy, corn, cotton, coffee, beef and sugarcane lobbies. They argued during a public consultation that customs duties could increase the costs of producing local food.

“With the price of natural gas in Brazil and other external factors, the production of nitrogen fertilizers in the country has become an economically unviable activity,” Yara said. (Reporting by Ana Mano; Writing by Josie Kao)



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