What a time to have launched a fertilizer plant in Nigeria by Africa’s richest man, Aliko Dangote. A time that has flogged down inflation early.
On 22 March 2022, Dangote’s $2.5bn fertilizer plant in Lagos, Nigeria started production. The 3m tonnes/year plant production will meet the local market of 1.5m tonnes/year and have a large excess for export purposes. The Production of both urea and ammonia fertilizers makes it the world’s third-biggest fertilizer plant and second-biggest producer of urea-based fertilizer.
The Global price for fertilizer has been on the rise since 2020, rising as much as 70% in the year behind. This then sporadically increase from Russia’s invasion of Ukraine, which changes the price of natural gas prices, ammonia, and urea-based fertilizers.
With both countries at war against each other, global food markets have been hit hard as it is seeing their biggest increases since 2008 because both countries are major grains producers and exporters.
According to the World Bank’s Commodities, Outlook Report was released on April 26. Fertilizer demand has jumped in other producer countries seeking to boost grains output to fill the gap in global supply.
“Commodity markets are under tremendous pressure, with some commodity prices reaching all-time highs in nominal terms,” John Baffes, a senior economist at the World Bank, said in the report. “The sharp rise in input prices, such as energy and fertilizers, could lead to a reduction in food production particularly in developing economies.”
Dangote fertilizers plant, exporting was targeted within Africa initially, but with the ongoing tussle between Russia and Ukraine, the demand for the market is now global as other countries are now imploring him for a sale
The construction of the fertilizer plant on about 500 hectares of land started in 2014. It was a twin project I.e Dangote Fertilizer and Dangote crude oil refinery.
Dangote crude oil refinery is set to start production in the third quarter of 2022 after so many delays.
The refinery is expected to be one of the biggest refineries in the world. According to IMF February’s report, the refinery is expected to produce 50,000 barrels/day in 2022 and hit 300,000/day by 2026 once operation start. This will reduce Nigeria’s $9.6bn annual expenditures on petrol subsidies.
The refinery and fertilizer are designed to be the most of Nigeria’s crude oil and natural gas reserves as well as to exceed the domestic markets. This will be beneficial to the government to solve their supply problems for decades.
The fertilizer facility is expected to expand with time according to its needs. Even in its current stage of 5m tonnes/year, it has already exceeded the capacity of all previously existing fertilizer producers in the country combined. These include Indorama’s Eleme Fertilizer and Chemicals Co.’s 1.4m tonnes/year facility, located in Port Harcourt, and the 800,000 tonnes/year Notore Chemical Industries plant in the Onne Free Trade Zone, Port Harcourt.
Dangote investing in fertilizer production is in his gene of dominating crucial sectors of the economy which provide basic needs. His Dangote Cement, is the biggest producer of the building material in Africa, while Dangote Sugar Refinery, is a leader in the food industry, supplying both industrial and domestic users.
Dangote Group is also active in automobile production, salt refining, food seasoning manufacturing, and the rice and wheat trades.
This latest investment by the Dangote group looks set to agree with the government’s export ambitions and give him a key role in another industry that will be crucial to Nigeria’s future.
