Peru's Fertilizers Industry Development Under Review

---

Researched by Industrial Info Resources (Cordoba, Argentina)--About four years ago, Peru explored the possibility of expanding its fertilizer industry by incentivizing international investors--particularly in Pisco, a city close to the capitol Lima, because it is near the coast and could have a necessary natural gas supply. But the projects that resulted from these incentives are now at risk of being cancelled due to the lack of a natural gas feed and the high price of the feedstock.

For more information, see October 16, 2009, article - Peru Lands Two Large Grassroot Fertilizer Plants.

The development of Peru's fertilizer industry started when the Camisea Consortium summoned bids to auction for 170 million cubic feet per day of natural gas for a minimum of 20 years. The winners of this auction were CF Industries (NYSE:CF) (Florida), Protexa (Lima, Perú) and Brescia Group (Lima, Perú) (currently Nitratos del Peru S.A.). Protexa's project was later cancelled, but CF Industries and Nitratos del Peru continued with their interest in developing two fertilizer complexes: CF Industries' Marcona complex, which was planned to include a 2,300-metric-ton-per-day ammonia unit and a 3,850-metric-ton-per-day urea unit, and Nitratos del Peru's Pisco fertilizer complex, with two production units, a 710,000-metric-ton-per-year ammonia unit, and an ammonium nitrate unit that will have a production capacity of 350,000 metric tons per year.

Finally, the Camisea Consortium only granted the necessary natural gas supply to CF Industries' venture, leaving Nitratos del Peru empty-handed and waiting for the approval of the 70 million cubic feet of natural gas the company needed to proceed. Furthermore, Nitratos del Peru has seen a delay in the environmental impact assessment approval, which also is of vital importance for the execution of the project.

Although CF Industries has secured the necessary natural gas supply, the company has decided to put its project on hold, claiming that it is no longer viable to invest in Peru due to the lower natural gas prices available in the U.S. market. If this tendency in low prices continues, CF Industries will need to cancel the Marcona project in Peru and relocate the undertaking. The upcoming months are decisive for the growth of Peru's fertilizer industry.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.