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Norway’s Yara International has become the latest fertilizer producer to cut ammonia production due to record natural gas prices, as the energy crisis threatens to affect food supplies.
The partly state-owned group said on Friday that 40 percent of its ammonia production capacity would be cut next week to protect its margins after rising gas prices eroded profitability.
Yara, one of the world’s largest fertilizer producers, follows rival CF Industries, which closed two large fertilizer plants in the UK a day earlier, prompting warnings from industry figures of an impending shortage of ammonium nitrate that could affect the availability of food.
Ammonia is used to create ammonium nitrate, one of the most widely used fertilizers. It is derived from natural gas and nitrogen. The sharp rise in gas prices has left producers struggling to pass costs on to customers quickly enough.
Of Yara’s 4.9 million tonnes of ammonia production in Europe, it plans to reduce approximately 2 million tonnes of production in the Netherlands, Italy, the United Kingdom and France. Its plants were scheduled to be serviced at Brunsbüttel in Germany and Porsgrunn in Norway, further reducing production capacity.
The company said it would partly source the ammonia it needs from outside Europe or third parties. “The impact on finished products is currently less,” he added.
The duration of the reductions will depend on the price of the two key inputs ammonia, natural gas and nitrogen, the company said.