CD4855 - Ammonia - Urea - Markets - in - Latin - America - January - 2009 - (UPDATED - 9th - Jan) - Final BRITISH 02 PDF

Ref No: CD4855 January 2009
Ammonia & Urea Markets in Latin America

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CD4855 Ammonia & Urea Markets in Latin America
Contents
Page Ammonia & Urea Markets in Latin America Ammonia & Urea Markets in Latin America 1. Latin American Agriculture & Nitrogen Demand 2. Latin American Nitrogen Consumption by Major Country 2.1 Argentina 2.2 Bolivia and Paraquay 2.3 Brazil 2.4 Chile 2.5 Colombia 2.6 Mexico 2.7 Peru 2.8 Uruguay 2.9 Venezuela 3. Latin American Ammonia Consumption by Country 3.1 Cuba 3.2 Mexico 3.3 Trinidad 3.4 Argentina 3.5 Brazil 3.6 Chile 3.7 Colombia 3.8 Peru 3.9 Venezuela 4. Latin American Urea Consumption by Country 5. Latin American Ammonia & Urea Supply 5.1 Nitrogen Production & Capacity 5.2 Company Profiles of Major Nitrogen Players in Latin America 5.3 Latin American Nitrogen Capacity by Plant 6. Ammonia and Urea Capacity to 2027 6.1 Short-Term Ammonia Capacity Changes between 2008 to 2012 6.2 Longer-Term Ammonia Capacity Changes to 2027 6.3 Short-Term Urea Capacity Changes between 2008 to 2012 6.4 Longer-Term Urea Capacity in 2027 7. Latin American Nitrogen Supply/Demand in Balance 7.1 Supply and Demand in Calendar Year 2007 7.2 Supply and Demand in Calendar Year 2012 7.3 Supply and Demand in Calendar Year 2017 7.4 Supply and Demand in Calendar Year 2027 1 1 2 5 6 8 8 10 11 12 12 13 14 15 16 17 17 17 17 18 18 18 18 19 20 21 22 24 26 26 27 28 29 32 32 34 35 36
CD4848 Phosphate Fertilizer Producers
Contents continued
Page 8. Target Markets for Ammonia & Urea into Latin America 8.1 Major Buyers/Suppliers in 2007 8.2 Target Markets 8.3 Price Forecast for the major ammonia and urea suppliers into Latin America 9. Conclusions & Recommendations 9.1 Target Markets 9.2 Latin American Competitiveness 9.3 Conclusions 37 37 44 44 48 48 51 55
List of Tables
Page Table 1: Estimate Harvested Acreage & Production in Latin America Table 2: Latin Americas Domestic Nitrogen Apparent Consumption Table 3: Argentinas Domestic Nitrogen Consumption Table 4: Bolivia & Paraguays Domestic Nitrogen Consumption Table 5: Brazils Domestic Nitrogen Consumption Table 6: Chiles Domestic Nitrogen Consumption Table 7: Colombias Domestic Nitrogen Consumption Table 8: Mexicos Domestic Nitrogen Consumption Table 9: Perus Domestic Nitrogen Consumption Table 10: Uruguays Domestic Nitrogen Consumption Table 11: Venezuelas Domestic Nitrogen Consumption Table 13: Latin Americas Apparent Consumption of Urea Table 14: Latin American Nitrogen Production in Calendar Year 2007 Table 15: Latin American Nitrogen Capacity Summary in 2007 Table 16: Nitrogen Capacity in Latin America in 2007: Plant List Table 17: Latin Americas Ammonia Capacity to 2027 Table 18: Latin Americas Urea Capacity to 2027 Table 19: Nitrogen Capacity in Trinidad in 2027 Table 20: Nitrogen Capacity in Argentina in 2027 Table 21: Nitrogen Capacity in Brazil in 2027 Table 22: Nitrogen Capacity in Peru in 2027 Table 23: Nitrogen Capacity in Venezuela in 2027 Table 24: Latin American Nitrogen Supply/Demand Balance 2007 Table 25: Latin American Nitrogen Supply/Demand Balance 2012 Table 26: Latin American Nitrogen Supply/Demand Balance 2017 Table 27: Latin American Nitrogen Supply/Demand Balance 2027 Table 28: Latin American Nitrogen Supply/Demand Balance 2007 Table 29: Latin America Nitrogen Imports by Country 2007 Table 30: Latin America Nitrogen Imports by Country 2012 Table 31: Latin America Nitrogen Imports by Country 2017 Table 32: Latin America Nitrogen Imports by Country 2027 Table 33: Latin America Nitrogen Imports by Country 2007 Table 34: Latin America Nitrogen Imports by Country 2027 Table 35: Ammonia & Urea Prices, 1999 to 2027 Table 36: Argentinas Domestic Urea Supply/Demand Balance Table 37: Brazils Domestic Urea Supply/Demand Balance Table 38: Chiles Domestic Urea Supply/Demand Balance Table 39: Perus Domestic Urea Supply/Demand Balance Table 40: Uruguays Domestic Urea Supply/Demand Balance 2 5 7 8 9 10 11 12 13 14 15 19 22 22 24 27 29 29 30 30 31 31 32 35 36 37 38 38 39 40 41 43 43 45 48 49 50 50 51
List of Diagrams
Page Diagram 1: Nitrogen Fertilizer Use by Crop at the Global Level Diagram 2: Latin American Nitrogen Consumption - 2007 Diagram 3: Latin American Nitrogen Imports - 2007 Diagram 4: Published Ammonia Prices 1999 to 2027 Diagram 5: Published Urea Prices 1999 to 2027 Diagram 6: Breakdown of Ammonia Site Costs for South and Central America Producers, 2008 Diagram 7: Ammonia Business Costs for Trinidad vs. Major Diagram 8: Breakdown of Urea Site Costs for South and Central American Producers, 2008 Diagram 9: Average Business Costs of Competitors in the Latin American Urea Market Diagram 10: Average Production Costs (US$ per metric tonne) 5 33 33 46 47 52 53 53 54 54
Ammonia & Urea Markets in Latin America

Latin Americas apparent consumption of nitrogen is an estimated at 8.1 million tonnes in 2007 accounting for an estimated 7% of the worlds total. The BSC forecast for nitrogen consumption in 2017 is 10.9 million tonnes and in 2027 is 13.6 million tonnes. This forecast represents a growth rate of 2.6% per year for the Region during this twenty-year forecast period beginning in 2007. Urea is the most popular nitrogen containing product both in Latin America and globally and is expected to continue growing, retaining a 50% or greater market share of total nitrogen consumption.
Latin America is both an importer and an exporter of nitrogen products. Imported nitrogen currently represents about 70% of the regions consumption. Some inter-regional trade exists but most of the nitrogen imports originate from outside the region. Latin America is also an exporter of nitrogen with Trinidad accounting for 80% of the ammonia and urea trade from the region.
With a strong and growing regional market, Latin Americas close proximity to the worlds largest nitrogen import market in the United States and access to relatively low cost natural gas, there should be considerable interest in investment in new nitrogen capacity in Latin America. However, investment has been hampered by concerns over political risk in countries where the Government controls the natural gas and can change the rules at any time after an investment is made.
Feedstock costs determine the competitiveness of the nitrogen plant. Low feedstock costs are necessary to remain competitive and are also required to repay the huge capital costs associated with an ammonia/urea investment. The manufacturer with the lowest cost will survive during the cyclical decline and prosper during the cyclical upturn. After feedstock costs, location is the second most important factor. International nitrogen trade is continuing to grow as most of the new capacity is being built in countries with low cost feedstock that will be targeting export markets. A location advantage could partially offset a disadvantage in production costs.
Bolivia is a land-locked country with a relatively low level of nitrogen consumption and therefore, the bulk of the production from a new world-scale nitrogen complex in Bolivia will need to be exported. Brazil, Argentina, Mexico and Chile are the Latin American countries that will show the most growth in urea consumption and imports. The major challenge for a new ammonia and urea manufacturing in Bolivia is to be competitive and this requires a relatively low feedstock costs. Information on feedstock costs in Bolivia were not provided but BSC believes that the worlds lowest cost ammonia producers have a current feedstock costs below $2 per thousand cubic feet (million BTUs). At $2 gas, a new, efficient ammonia/urea plant would have cash production costs of about $100 per tonne of urea. Debt service (principal plus interest) could add an additional $100 per tonnes during the first ten-years of the project. At the bottom of the price cycle in 2012, BSC is forecasting that fob Caribbean urea price will bottom out
British Sulphur Consultants confidential 1
at around $230 per tonne. With $2 gas, this project should be able to cover production cost and service its debt even at the bottom of the price cycle. Profit margins will increase substantially as the market recovers.
1. Latin American Agriculture & Nitrogen Demand

World crop production will need to increase to satisfy future demand for food, feed, natural fibers and fuels. With proper land use practices, Latin America (Central & South America) has the potential to become the major supplier into these growing world agricultural markets. This region currently plants more than 120 million hectares of eleven major crops. Tropical forests and grassy plains occupy a large portion of the surface in a number of these countries. The use of these forest lands for timber, for tropical products, for crop production or for cattle grazing can help alleviate poverty within the country as well as provide an opportunity for exports. But this land can also be degraded if used incorrectly. Improvements in land management and agricultural technology will be necessary to make this land sustainable for future generations while reducing ecological degradation. Issues of land ownership, international trade, national credit policies, the cost of capital and some Government reforms will also be needed.
Latin America produced about 14% of eleven major world crops on an estimated 120 million hectares of land in 2008. Soybeans and corn were the largest in terms of volume, each accounting for an estimated 116 million tonnes of production. In terms of world market share, soybeans production in Latin American accounted for 53% of global production while corns market share was 15%. Latin American is also dominant in terms of sugar production with a 32% world share. Brazil is the regions largest crop producer accounting for an estimated 62 million hectors harvested for these eleven crops and a 44% share of the Latin American market. Argentina is the second largest with an estimated 30 million hectors and a 31% share followed by Mexico at about 11 million hectares with 11% of Latin American production.
Table 1: Estimate Harvested Acreage & Production in Latin America in 2008

Harvested(millions of hectares) Soybeans Corn Wheat Rice Sorghum Sunflower Cotton Barley Oats Rye Sugarcane Total Eleven Major Crops 41.4 31.2 9.5 5.5 4.2 2.5 1.8 1.3 0.7 0.1 22.0 (e) 120.1 Production(millions of tonnes) 116.1 116.4 27.0 17.3 12.0 3.6 9.5 3.5 1.4 0.1 53.1 360.0 Share of Production(% of world) 53% 15% 4% 4% 19% 12% 8% 3% 6% 1% 32% 14%
The above list of crops excludes many smaller volume, yet important crops like fruits and vegetables, floral and ornamentals, tobacco, potatoes, coffee, cocoa, nuts and more. These crops represent additional opportunities for international trade and fertilizer consumption.
The following is a summary of the main crops and their growing regions: Soybeans, although only introduced into Argentina in the 1950s and Brazil on the 1960s are the most important cash crop grown in Latin America. o In 2007, an estimated 41.4 million hectares were harvested in all of Latin America. Their success is evident in Brazil and Argentina who have become the worlds second and third largest producer and exporter of the soybeans. By the turn of the 21st century, Paraguay had also become one of Latin Americas top exporters of soybeans. o Since legumes require little or no nitrogen to grow (0 to 10 Kg Nitrogen/Ha), they are not an important consumer of nitrogen. In total, food and feed grain crops (corn, wheat, rice, barley, sorghum, rye and oats) are even larger than soybeans with an estimated 52.5 million hectares planted in 2007. o Corn or maize is native to tropical America and is the second largest crop grown in Latin America with an estimated 31 million hectares harvested in 2007. Brazil, Mexico and Argentina are the regions largest producers. Throughout the 20th century Argentina has emerged as the worlds second corn exporter. Nitrogen use on corn is intensive with application rates of 50 to as much as 150 Kg Nitrogen/Ha common. o Wheat is mostly grown in northern Argentina, south-western Uruguay, Brazil and Mexico accounting for an estimated 9.5 million hectares harvested in 2007. Argentina is one of the five major wheat exporters along with Australia, Canada, the EU and the United States. Nitrogen application rates on wheat depend on where it is grown but rates of 40 to as much as 150 Kg Nitrogen/Ha found in the region. o Rice - a dietary staple in several countries is most successfully grown in the Savannah and rain forest climatic areas of Brazil and Colombia as well as on the Peruvian coast. In 2007, an estimated 5.5 million hectares were harvested in 2007. Rice is also intensively fertilizer with application rates from a low of 40 to a high of 150 Kg Nitrogen/Hg. Sugarcane adapted well to the South American environment when introduced by the Europeans in colonial times. Currently, an estimated 22 million hectares of sugarcane was harvested in Latin America during 2007. In northern Brazil it is an important part of their economy. Sugar cane and beets are also grown in Mexico, Guatemala, Argentina, Colombia and a number of other Latin countries. Nitrogen application rates on cane can range from 40 to 140 Kg Nitrogen/Ha. Cacao, the source of cocoa, is native to the Amazon region and is an important crop particularly in Brazil. Nitrogen consumption on cocoa is generally less than 50 Kg/Ha. Other crops of coffee, potato, sweet potato, cassava, fruits and vegetables are also important local crops in many countries within the region. All consume nitrogen.
According to Global Insite, Latin Americas harvested crop acreage will continue to increase during the next 10-years, expanding by about 10 million hectares with most of this growth in Brazil (Cerrado) and Argentina (Pampas).Brazil has about 4% of the worlds arable land and according to one source at least 40% of it is unused. Brazil covers nearly half of the South American continent. Because of its abundant rainfall, tropical to sub-tropical climate and available forest and woodlands, Brazil should become the worlds new breadbasket. Others believe that the rain-forest of Brazil should be left alone because of the potential for significant damage to the environment of the region and the world.
Argentinas most densely populated region, the Pampas, is also the most productive in terms of agriculture with a focus on cereals, oil crops and ranching. Argentina has an estimated 30 million hectares of arable and permanent cropland.
Brazil, Argentina and Mexico are the largest consumers of fertilizers. Application rates on maize, rice and wheat are relatively low when compared to the farmers in West Europe and the U.S.The expansion of planted acreage and growth of conversion from pasture to crop production is expected to continue over the forecast. This land will be planted mostly to grains. Demand for ethanol will also increase acreage devoted to sugarcane. Argentina and Brazil are two of the worlds largest soybean producers. Reduced soybean planting in North America will provide an opportunity to increase planting in Latin America. Soybeans are a nitrogen-fixing crop, requiring only a minimum nitrogen application.
The consensus among agronomists is that fertilizers are responsible for roughly one third of the increase in world grain production. The balance is provided by irrigation, improved crop varieties, cultivation practices, weed and insect control and planting density. According to the International Plant Nutrient Institute (IPNI), fertilizers boost crop yield, improve and enhance the physical quality of the soil and provide disease resistance to the crops they feed.
According to a recent International Fertilizer Industry Association (IFA) report entitled, Assessment of Fertilizer Use by Crop at the Global Level published by Patrick Heffer of the IFA, cereals account for 56% of the total nitrogen fertilizer consumption worldwide. Wheat contributes 19% of the worlds fertilizer nitrogen followed by rice and maize (corn) at 16% each and other coarse grains with about 5% (Diagram below).Oil crops (soybeans, oil palm and other oil crops) represent about 7%, while cotton and sugar crops are estimated at 4% and 3% and fruits & vegetables are at 15%.
Diagram 1: Nitrogen Fertilizer Use by Crop at the Global Level
IFA
2. Latin American Nitrogen Consumption by Major Country

Latin Americas apparent consumed of nitrogen is an estimated at 8.1 million tonnes in 2007 accounting for an estimated 7% of the worlds total.
Table 2: Latin Americas Domestic Nitrogen Apparent Consumption (thousand of tonnes nitrogen)
1997 Central America Belize Costa Rica Cuba Dominica Dominican Republic El Salvador Guatemala Haiti Honduras Jamaica Martinique Mexico Nicaragua Puerto Rico * Panama Trinidad Total Central America 1 84 121 8 49 58 109 6 66 8 4 1,594 26 12 14 2 2,162 3 61 95 7 34 37 132 0 90 8 3 1,540 45 1 14 18 2,089 6 79 61 8 56 53 153 1 79 14 1 1,704 40 2 16 36 2,308 7 94 81 8 70 68 177 1 96 17 1 2,030 48 2 19 71 2,791 2007 2017 2027 Change 2007 to 2027 3 33 -14 1 36 31 45 0 5 9 -1 490 4 1 5 53 702
Table 2: Latin Americas Domestic Nitrogen Apparent Consumption (thousand of tonnes nitrogen) Concluded.
1997 South America Argentina Bolivia Brazil Chile Colombia Ecuador Fr Guiana Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America Total Latin America 392 7 1,957 246 330 134 1 11 2 154 7 38 230 3,509 5,671 973 4 3,323 395 471 121 2 13 2 312 3 101 268 5,987 8,075 1,386 11 4,876 446 592 124 1 19 18 586 5 145 425 8,633 10,941 1,780 15 6,130 546 727 155 1 24 22 731 6 181 507 10,824 13,615 807 12 2,807 151 256 34 -1 12 20 419 3 80 240 4,837 5,540 2007 2017 2027 Change
Nitrogen in fertilizers was estimated 6.4 million tonnes while nitrogen in non-fertilizers was estimated at 1.7 million tonnes. The BSC forecast for nitrogen consumption in 2017 is 10.9 million tonnes and in 2027 is 13.6 million tonnes. This forecast represents a growth rate of 2.6% per year for the Latin American region during this twenty-year forecast period beginning in 2007 to 2027. The share of nitrogen for fertilizers and non-fertilizers is expected to remain about the same at an 80%/20% split.
The following is a brief review of crop production and nitrogen use for the major nitrogen consuming countries in Latin America. Ammonia consumption consumed in converted products that were exported is excluded when calculating nitrogen consumption even though the ammonia was consumed domestically.
2.1 Argentina
Nitrogen consumption in Argentina was estimated at 1.0 million tonnes in 2007. Approximately 90% was consumed in fertilizers and 10% in non-fertilizer. Urea was the largest form of nitrogen with about 60% of this total nitrogen consumption contributing about 0.6 million tonnes of N (1.2 million tonnes of urea), supplied from both domestic production and imports. DAP and MAP supplied about 16% of total nitrogen consumption estimated at about 160,000 tonnes of N (1.1 million tonnes of DAP & MAP). All of Argentinas the DAP and MAP was imported. A small amount of ammonium sulphate estimated at less than 25,000 tonnes of N (120,000 tonnes of ammonium sulphate) was used in fertilizers, all of this was produced domestically. About 11% of the total nitrogen consumption was supplied as ammonium nitrate estimated at 112,000 tonnes of N (328,000 tonnes of ammonium nitrate) used primarily for nonfertilizer uses mainly in explosives.
Argentina is best known as a cattle-raising country on the grassy plains of Pampas. However, the pampas is also the most productive crop producing region in Argentina. The total land area of Argentina is 274 million ha, of which 142 million ha is under permanent pasture, 34 million ha under arable crops and one million ha under permanent crops. About 1.6 million ha are irrigated (FAO). About half of the farmers cultivate rented land. Argentina can be divided into three large agricultural regions:
The humid region covering about 68 million ha (25 percent). The semi-arid region, 48 million ha (15 percent), where irrigation is often necessary. The arid region, 170 million ha (60 percent), consists of practically all of Patagonia to the south of Rio Colorado. There is little agricultural activity in this region.
In terms of crops, nitrogen is used mainly on grain crops (corn, wheat, rice, barley, sorghum, rye and oats) for domestic use in food and animal feeds and for export into the international market. Wheat and corn receive about 60% of the nitrogen fertilizer consumption. Argentina is the worlds fourth largest exporter of wheat (United States, Canada and Russia are larger) where about two-thirds of the countries production is exported. In addition to wheat, Argentina is the worlds second largest exporter of corn next to the United States where about three-fourths of their corn production is exported. Argentina is also third largest soybean producer next to the United States and Brazil, but soybeans are legumes and require little or no nitrogen to grow. Nitrogen use on sunflowers has also been increasing following planted acreage upward. Fruit (citrus, grapes, apples & pears), industrial (cotton, sugar cane & tobacco) and horticultural crops (potato, garlic, onion & tomato) are also important nitrogen consumers.
Nitrogen consumption in Argentina is forecast to grow from a current level of 1.0 million tonnes of nitrogen to 1.4 million tonnes by 2017 and 1.8 million tonnes by 2027. This represents a growth of about 3.1% per year. This growth will come mainly from increased grain production, where application rates are relatively low. Much of this grain production will be destined for the international market. Urea will remain the principal nitrogen source where domestic consumption is forecast to double by 2027 from a current 0.6 million tonnes of nitrogen (1.2 million tonnes of urea) to 1.2 million tonnes of nitrogen (2.5 million tonnes of urea).
Table 3: Argentinas Domestic Nitrogen Consumption (millions of product tonnes)

1997 Ammonia Urea UAN AN AS DAP MAP Other (1) Total Nitrogen 0.1 0.5 ** 0.1 ** 0.5 0.1 0.4 2007 ** 1.2 0.3 0.3 0.1 0.5 0.6 1.0 2017 ** 1.9 0.4 0.4 0.1 0.6 0.8 1.4 2027 ** 2.5 0.5 0.5 0.2 0.7 1.1 1.8 Change 2007 to 2027 ** 1.3 0.2 0.2 0.1 0.2 0.5 0.8
(1) Total nitrogen represents the value of the nitrogen in each product excluding nitrogen in exports. Source: British Sulphur Consultants
2.2 Bolivia and Paraquay

These two interior (landlocked) countries consumed an estimated 5,000 tonnes of nitrogen in 2007 with an 60%/40% split between fertilizer and non-fertilizer uses. All of the fertilizer is imported. Urea is an important nitrogen source for agriculture accounting for an estimated 1,100 tonnes of N (2,300 tonnes of urea). Some DAP was also imported for agricultural use. Most of the ammonium nitrate is believed to be used by the non-fertilizer explosives industry.
Soybeans are the largest crop in terms of acreage with Paraguay harvesting an estimated 2.6 million hectares and Bolivia harvesting 0.7 million hectares. However, as we said a number of times above, soybeans consume little or no nitrogen. The nitrogen consuming crops are mainly grains (corn, wheat, and rice), sunflowers, potatoes, cotton and sugarcane. In Bolivia, an area of untapped arable land in the eastern lowlands and higher fertilizer application rates could greatly increase crop production and fertilizer consumption. Bolivia has one of the lowest rates of fertilizer application in the world.
Application rate in Paraguay are also relatively low with a major problem for nitrogen growth being the high level of soybean production when compared to grain crops.
Table 4: Bolivia & Paraguays Domestic Nitrogen Consumption (millions of product tonnes)
1997 Ammonia Urea UAN AN AS DAP MAP Other (1) Total Nitrogen ** 0.005 ** 0.5 ** 0.009 0.006 0.175 2007 * 0.002 * 0.010 ** 0.011 ** 0.005 2017 ** 0.031 ** 0.012 0.002 0.053 ** 0.028 2027 ** 0.039 ** 0.015 0.003 0.063 ** 0.035 Change 2007 to 2027 ** 0.037 ** 0.004 0.003 0.052 ** 0.030
Nitrogen consumption is forecast to increase at about six fold, but from a very low base. Urea will become the nitrogen source of choice with a 50% share of total nitrogen in 2027.
2.3 Brazil
Brazil is the largest fertilizer consumer in Latin America with an estimated 3.3 million tonnes of nitrogen used in 2007. An estimated 85% of Brazils nitrogen is used in fertilizers (2.9 million tonnes of N) with and remaining 15% is for non-fertilizer uses (0.4 million tonnes of N). Currently, about 62% of Brazils nitrogen is imported. About half of the nitrogen is consumed as urea accounting for 1.6 million tonnes of N (3.5 million tonnes as urea) with two-thirds of this urea imported. DAP and MAP are the next larger supplier of nitrogen with an estimated 13% share of total N and accounting for 0.4 million tonnes of N (3.8 million tonnes as DAP & MAP). All of Brazils DAP is imported while 60% of the MAP is imported.
Ammonium sulphate accounts for about 14% of the total or about 0.5 million tonnes of N (2.4 million tonnes as ammonium sulphate). About 90% of this ammonium sulphate is imported. Ammonium nitrate consumption was estimated at about 13% of total N or about 0.4 million tonnes of N (1.4 million tonnes as ammonium nitrate). Brazil uses ammonium nitrate for both fertilizers and non-fertilizers (explosives). About 67% of the ammonium nitrate is imported. Brazil also uses an estimated 1.5 million tonnes of ammonia that is converted into downstream nitrogen products like urea, ammonium nitrate, MAP, ammonium sulphate and industrial products.
Table 5: Brazils Domestic Nitrogen Consumption (millions of product tonnes)

1997 Ammonia Urea UAN AN AS DAP MAP Other Total Nitrogen(1) 1.9 3.3 4.9 6.1 2.8 0.4 2.1 ** 0.1 1.4 0.1 1.5 2007 0.4 3.5 ** 1.4 2.4 0.7 2.9 2017 0.4 6.1 ** 1.6 2.4 1.2 3.9 2027 0.4 8.0 ** 2.0 2.5 2.1 4.9 Change 2007 to 2027 ** 4.5 ** 0.6 0.1 1.4 1.9
In terms of crops, nitrogen is used mainly on grain crops (corn, wheat, rice) and also for potatoes and sugarcane. Brazil is the worlds third largest producer (United States & China are larger) and exporter (United States & Argentina are larger) of corn where about 12% of their corn production is exported. Brazil is second largest soybean producer and exporter next to the United States but once again, soybeans are legumes and require little or no nitrogen to grow.
Brazil has the worlds second largest ethanol program and with plentiful soybean supplies it is expanding into biodiesel. More than half of the nations sugarcane crop is processed into ethanol, which now accounts for about 20 percent of the countrys fuel supply. In Brazil, producers are getting 650 gallons of ethanol per acre from sugarcane. In the U.S., between 560 and 580 gallons of ethanol is made from an acre of corn. The outlook for global biofuels will depend on a number of interrelated factors including the future price of oil, availability of low-cost feedstocks, and sustained commitment to supportive policies by governments, technological breakthroughs that could reduce the cost of second generation biofuels and competition from unconventional fossil fuel alternatives.
Brazil is prepared to take advantage of the growth with a commitment to both ethanol and biodiesel. We have 80 million hectares of land in the Amazon that is going to turn us into the Saudi Arabia of biodiesel, said Expedito Parente, a Brazilian chemical engineer who took out the first patent for the manufacture of biodiesel on an industrial scale. Brazils President Lula is similarly enthusiastic. In the
next 1015 years, we will see Brazil become the leading producer of biodiesel, he said recently. Few countries can compete with Brazil, because God gave us sun, land and hard-working people.
As indicated above, Brazil is one of the few countries that can provide new cropland in the future and the agricultural forecasting service, Global Insite is projecting that Brazil will clear and plant up to 10 million more hectares in the Cerrado during the forecast period. Sugarcane production is also expected to grow sharply along with increased use of ethanol. Brazil is also the worlds largest exporter of coffee, sugar, orange juice, beef and poultry.
Nitrogen consumption in Brazil is forecast to grow from a current level of 3.3 million tonnes of nitrogen to 4.9 million tonnes by 2017 and 6.1 million tonnes by 2027 (Table above). The average growth rate during the next twenty years is forecast at about 3.1% per year. This growth in nitrogen consumption will come mainly from increased grain production, once again with much of this grain destined for the international market. Urea will remain the principal nitrogen source with domestic consumption forecast to more than double by 2027 from a current 1.6 million tonnes of nitrogen (3.5 million tonnes of urea) to 3.7 million tonnes of nitrogen (8.0 million tonnes of urea).
2.4 Chile
Chile consumed an estimated 0.4 million tones of N in 2007 with about 60% for fertilizers and the remaining 40% for non-fertilizers. About half of Chiles nitrogen consumption is in the form of urea accounting for 0.2 million tonnes of N (0.4 million tonnes of urea). All of this urea is imported. About 0.1 million tonnes each of DAP and MAP are also used accounting for about 30,000 tonnes of N. All of the DAP and MAP is imported. All of the ammonium nitrate consumption in Chile is for explosives. Chile exports about 25% of its ammonium nitrate production mainly into Peru and surrounding Latin American countries.
Table 6: Chiles Domestic Nitrogen Consumption (millions of product tonnes)

1997 Ammonia Urea UAN AN AS DAP MAP Other Total Nitrogen(1) ** 0.3 ** 0.2 ** 0.1 0.1 0.2 2007 ** 0.5 ** 0.4 ** 0.1 0.1 0.4 2017 ** 0.5 ** 0.5 ** 0.1 0.1 0.4 2027 ** 0.6 ** 0.6 ** 0.2 0.1 0.5 Change 2007 to 2027 ** 0.2 ** 0.2 ** 0.1 ** 0.1
The major nitrogen consuming crops in Chile are corn, wheat and sugar beets. Chile is a net importer of food. Given its limited arable land, production on existing land will need to be farmed more intensely to
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maximize crop production. There is interest in biofuels using sugar cane or rapeseed, but limited arable land will temper this growth.
BSC is forecasting that nitrogen fertilizer consumption will grow from the current 0.4 million tonne level to 0.5 million tonnes by 2027. This represents a growth rate of 1.6% per year. Urea will remain the dominate nitrogen source for fertilizer use growing from the current 0.5 million tonnes of urea to 0.6 million tonnes of urea by 2027 maintaining a 50% plus share of total nitrogen consumption. Ammonium nitrate growth will be mainly for explosives.
2.5 Colombia
Nitrogen consumption in Colombia was estimated at 0.5 million tonnes of N in 2007. An estimated 75% of the N is for fertilizers and 25% is ammonium nitrate for explosives. Urea is the dominate nitrogen product for fertilizers with about half of total N supplied as urea estimated at 0.2 million tonnes of N (0.5 million tonnes of urea). All of Colombias urea is imported. The remaining N is supplied with DAP, MAP and ammonium sulphate. The non-fertilizer consumption of ammonium nitrate is currently around 0.1 million tonnes of N or 0.3 million tonnes of ammonium nitrate.
Colombias major crops include coffee, corn, rice, sugar cane and cocoa. All are nitrogen consumers with coffee being the largest. Most of Colombias sugar cane is grown in the Cauca Valley, a rich, mostly flat agricultural valley with annual rainfall similar to the eastern Corn Belt of the United States, but summerlike temperatures year-round. There are about a half million hectares of sugarcane in the valley, planting and harvesting occurs year around, and yields exceeding 50 tons/ha are common, some of the highest yields in the world. Colombia is gearing up for increased sugarcane output for ethanol.
Nitrogen consumption in Colombia is forecast to increase from the current 0.5 million tone level to 0.7 million tonnes by 2027. This represents a growth rate of about 2.2% per year. Urea will remain the dominate source for N on crops growing from 0.5 million tonnes of product to 0.8 million tonnes by 2027.
Table 7: Colombias Domestic Nitrogen Consumption (millions of product tonnes)

1997 Ammonia Urea UAN AN AS DAP MAP Other Total Nitrogen(1) 0.3 0.5 0.6 0.7 0.2 0.1 0.3 ** ** 0.1 0.1 0.1 2007 0.1 0.5 ** 0.3 0.1 0.1 0.1 2017 0.1 0.7 ** 0.3 0.1 0.2 0.1 2027 0.1 0.8 ** 0.4 0.1 0.2 0.2 Change 2007 to 2027 ** 0.4 ** 0.1 ** 0.1 0.1
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2.6 Mexico
Nitrogen consumption in Mexico was estimated at 1.5 million tonnes of N in 2007. About 80% was for fertilizer and 20% for non-fertilizers. Urea is also the dominate source of N with an estimated 47% share of the total representing an estimated 0.7 million tonnes of N (1.5 million tonnes of urea). Nearly all of this urea was imported. Ammonium sulphate is the next largest source of N with a 14% market share or 0.2 million tonnes of N (1.0 million tonnes of ammonium sulphate). Nearly all of the ammonium sulphate is produced domestically. DAP and MAP provide about 0.1 million tonnes of N to Mexicos crops (0.5 million tonnes of DAP & MAP). About half of Mexicos straight ammonia and ammonium nitrate are used for a variety of non-fertilizer products including fibers and explosives.
Mexican crops include grains (corn, barley and sorghum are the largest), coffee, citrus and sugar cane. Sugar is Mexicos largest agricultural industry. The North American Free Trade Agreement (NAFTA) will have important ramifications to the Mexican sugar industry and trade with the United States where Mexican sugar exports have an advantage over exports from other regions. Mexico high production costs will limit exports but the industry will continue to grow as it is very important to the country.
Nitrogen consumption in Mexico is forecast to increase from a current 1.5 million tonnes to 2.0 million tonnes 2027. This represents a growth rate of 1.4% per year. Urea will remain the largest source for N representing about 50% of the total growing to 1.0 million tonnes of N (2.1 million tonnes of urea). A big jump in ammonium sulphate consumption is also forecast increasing its share of total N to 18% by 2027 (0.4 million tonnes of N or 1.9 million tonnes of product).
Table 8: Mexicos Domestic Nitrogen Consumption (millions of product tonnes)

1997 2007 2017 2027 Change 2007 to 2027 Ammonia Urea UAN AN AS DAP MAP Other Total Nitrogen
(1)
0.6 0.9 ** 0.5 1.5 0.2 0.1
0.4 1.6 ** 0.6 1.0 0.3 0.2
0.4 1.7 ** 0.6 1.4 0.5 0.2
0.4 2.1 ** 0.7 1.9 0.5 0.3
** 0.5 ** 0.1 0.9 0.2 0.1
1.6
1.5
1.7
2.0
0.5
2.7 Peru
Peru consumed an estimated 0.3 million tonnes of nitrogen in 2007. About 70% was for fertilizers and 30% for non-fertilizers (explosives). Urea was the dominant nitrogen supplier accounting for about half of the total nitrogen consumption at an estimated 0.2 million tonnes of N (0.4 million tonnes of urea). All of
this urea was imported. Most of the ammonium nitrate consumption of 0.1 million tonnes of N was for non-fertilizer use in explosives (0.3 million tonnes of product). All of the DAP, MAP and ammonium sulphate were also imported.
Table 9: Perus Domestic Nitrogen Consumption (millions of product tonnes)

(1)
** 0.2 ** 0.1 0.1 0.1 **
** 0.3 ** 0.3 0.1 0.1 **
** 0.9 ** 0.4 0.1 0.2 **
** 1.1 ** 0.5 0.1 0.2 **
** 0.8 ** 0.2 ** 0.1 **
0.2
0.3
0.6
0.7
0.4
The main commercial crops in Peru are coffee, sugar cane, cotton, potatoes, coca and rice. The production for local consumption, much of which is grown by peasants who still practice subsistence agriculture, includes potatoes, corn, barley, wheat, manioc, sweet potatoes and vegetables and fruits. Agriculture is concentrated mainly in the valleys of the coastal region, in the basins and valleys of the high level surface of the Andes, and in the western margins of the eastern region. Irrigation in Peru has been and will remain a major contributor to increasing the country's food security, agricultural growth and productivity, and human development in rural areas.
Nitrogen consumption in Peru is forecast to increase from a current 0.3 million tonnes of N in 2007 to 0.7 million tonnes in 2027. Ureas share of total nitrogen consumption is forecast to increase from about 50% to 67% during the forecast period. In 2027, Peru is expected to consume 1.2 million tonnes of urea, up from 0.4 million tonnes in 2007.
2.8 Uruguay
Nitrogen consumption in Uruguay was estimated at 0.1 million tonnes in 2007, all of this is believed for fertilizer use. Urea accounts for about 60% of the total nitrogen consumption or 66,000 tonnes of N (343,000 tonnes of urea). DAP and MAP supply most of the other nitrogen to the agriculture industry.
Uruguay's economy is characterized by an export-oriented agricultural sector and very dependant on its larger neighbours, Brazil and Argentina. Agriculture makes up 10.5% of the countries GDP and consumes 9% of its labour force. Uruguay has an old fashioned, relaxed approach to farming and most farms combine grass and pasture fed cattle with row crops. The main row crops in Uruguay are wheat, rice, soybeans and barley. Application rates are low as is crop yield.
Uruguay had a bumper year in 2008 with growth in wheat production and exports. Soybeans are also increasing. Uruguay is set to export a record 1 million metric tons of wheat from the 2008-09 crop due to greatly expanded area and good growing conditions. The total area of wheat planted almost doubled this season from 245,000 Ha last season to 460, 000 hectares. Fortunately for Uruguay they did not suffer the same drought conditions as Argentina and consequently, total wheat output this season is expected to reach 1.3 million - 1.4 million tons.
Table 10: Uruguays Domestic Nitrogen Consumption (millions of product tonnes)

(1)
** ** ** ** ** 0.1 0.1
** 0.1 ** ** ** 0.1 0.1
** 0.2 ** ** ** 0.2 0.1
** 0.2 ** ** ** 0.2 0.2
** 0.1 ** ** ** 0.1 0.1
**
0.1
0.1
0.2
0.1
Nitrogen fertilizer consumption is forecast to increase to 0.2 million tonnes by 2027 with growth in urea, DAP and MAP as nitrogen sources.
2.9 Venezuela
Venezuela consumed an estimated 0.3 million tonnes of nitrogen in 2007. About 90% was for fertilizers and 10% for explosives. About 65% was as urea or 223,000 tonnes of N (484,000 tonnes of urea). Nearly all of this urea was from domestic production. A small volume of ammonium nitrate, ammonium sulphate and DAP also provided nitrogen to Venezuela farmers. All of the ammonium nitrate was believed used for explosives.
Corn, rice, sorghum, fruits, vegetables and sugar cane are the main crops. Based on application rate data, we believe that corn consumes the most nitrogen followed by pasture, coffee then rice. The country imports much of its food. Venezuela has a tropical climate. Many believe that Venezuelas agriculture potential far exceeds current output levels given the vast untapped land and water resources that exist in the central Orinoco plain and in the lowlands of the southern state of Amazonas.
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Table 11: Venezuelas Domestic Nitrogen Consumption (millions of product tonnes)

(1)
0.1 0.3 ** ** 0.1 ** **
0.1 0.4 ** 0.1 0.1 ** **
0.1 0.6 ** 0.1 0.1 0.1 0.1
0.1 0.8 ** 0.1 0.1 0.2 0.1
** 0.4 ** ** ** 0.1 0.1
0.2
0.3
0.4
0.5
0.2
BSC is forecasting that nitrogen fertilizer consumption will nearly double over the twenty-year forecast period to about 0.5 million tonnes of nitrogen in 2027. Urea is to remain the primary source of N growing from a current 380,000 tonnes of urea to 768,000 tonnes by 2027.
3. Latin American Ammonia Consumption by Country

As shown in the Section 2 above, nitrogen can be supplied in many different nitrogen containing products. The most popular products are; Anhydrous Ammonia (AA) a gas with a nitrogen content of 82%, Urea a solid product with a nitrogen content of 45% (coated urea) to 46% (uncoated urea), Ammonium Nitrate (AN) a solid product with a nitrogen content of 33% to 34.5%, Ammonium Sulphate (AS) a solid product with a nitrogen content of 20.5% to 21%, Diammonium Phosphate (DAP) a solid product with a nitrogen content of 18%, Monoammonium Phosphate (MAP) a solid product with a nitrogen content of 10% to 11%, Urea Ammonium Nitrate (UAN) a solution product with a nitrogen content of 28% to 32%,
Each of these products has a different nitrogen content, different physical forms (solid, liquid or gas), different chemical compositions and different pricing structures. The focus for the buyer (consumer) is on the nitrogen and how it performs in the fertilizer or for the specific industrial application. For some countries, availability may be the most important determining factor as many products are not produced locally and is not available for local consumption.
In terms of markets, ammonia is different than urea the other converted nitrogen products. Ammonia is mainly an intermediate product that is converted into another product. About 80% of worlds ammonia is converted at the same manufacturing site (on-site) into converted nitrogen products. The remaining 20% of ammonia production is referred to as merchant ammonia and is sold to another fertilizer or industrial clients for further processing at their own factories. The bulk of this merchant
ammonia is traded in the international market while some additional sales are made within the country it was produced to local ammonia converters.
Since virtually all of the worlds nitrogen consumption is based on ammonia, then world ammonia consumption is essentially equal to the world nitrogen consumption. However, total ammonia consumption in a particular country or region can be different than domestic ammonia consumption as shown in Section 2 above to avoid double counting the nitrogen in converted products and because nitrogen exports are eliminated to calculate domestic nitrogen consumption. The countrys total ammonia consumption will exceed the countrys domestic ammonia consumption when the country uses ammonia to manufacture converted nitrogen products and when it exports converted nitrogen products. In Latin America; Argentina, Mexico, Trinidad and Venezuela are examples where the ammonia consumption total exceeds domestic ammonia consumption. This gets a bit tricky but goes back to the statement that ammonia is mainly an intermediate product. For reference, the Table 12 shows total ammonia
consumption for Latin America in 2007 at 4.6 million tonnes while domestic ammonia consumption from Section 2 will show domestic ammonia consumption at a lower 1.1 million tonnes level. Once again, this difference is in conversion and exports. Total ammonia consumption in Latin America is forecast to grow to 8.8 million tonnes in 2017 and to 11.3 million tonnes in 2027.
Table 12: Latin Americas Total Ammonia Consumption (thousands of tonnes Ammonia)
1997 Central America Cuba Mexico Trinidad Total Central America South America Argentina Brazil Chile Colombia Peru Venezuela Total South America Total Latin America 60 1,859 259 2,255 130 1,331 63 139 18 612 2,294 4,549 2007 34 741 396 1,177 667 1,501 191 178 22 894 3,455 4,632 2017 47 1,024 944 2,021 1,300 2,635 323 208 609 1,784 6,861 8,882 2027 64 1,169 2,247 3,486 1,589 3,050 407 260 635 1,852 7,798 11,284 Change 2007 to 2027 30 428 1,851 2,309 922 1,550 216 82 613 958 4,342 6,652
Totals do not add because of consumption from small countries not shown.
3.1 Cuba
In 2007, Cuba imported an estimated 34,000 tonnes of ammonia to make ammonium nitrate for fertilizer use at their plant at Nuevitas. Ammonium nitrate production is forecast to increased, pulling total ammonia consumption and ammonia imports upward to 47,000 tonnes by 2017 and to 64,000 tonnes by 2027.
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3.2 Mexico
The BSC forecast is that total ammonia consumption will increase from the current 741,000 tonne level in 2007 to 1.1 million tonnes in 2017 and 1.2 million tonnes in 2027 (once again, these numbers are different than the Table 8 above because of conversion & exports).Ammonia is being consumed for both fertilizer and non-fertilizer uses. On the fertilizer side, ammonia is consumed in a urea plant that was reopened at Minatitlan, three ammonium nitrate plants, six ammonium sulphate plants along with the restart of the Fertinal DAP/MAP at Lazaro Cardenas. Ammonia consumption for non-fertilizers is at a number of different locations throughout the country. Some of this ammonia will be supplied from captive production and some from imported ammonia.
3.3 Trinidad
Nearly all of Trinidad nitrogen production is exported either as ammonia or as urea. In 2007, Trinidad produced 5.2 million tonnes of ammonia and exported 4.8 million tonnes. One plant manufactured urea (and consumed ammonia) with a reported production of 686,000 tonnes of urea requiring an estimated 397,000 tonnes of ammonia (allowing for 2% conversion losses).For this reason, domestic ammonia consumption is estimated at 396,000 tonnes in 2007, all from a captive ammonia/urea plant.
At the end of 2009, a new ammonia/melamine/UAN plant will be commissioned at Point Lisas that will consume up to 740,000 tonnes of ammonia at capacity. This plant is expected to be followed by at least five new ammonia/melamine/urea/UAN plants with a conversion capacity of an additional 1.6 million tonnes of ammonia by 2027.Trinidads domestic ammonia consumption is forecast to increase to 0.9 million tonnes in 2017 and 2.2 million tonnes in 2027. All will be supplied from captive ammonia production.
3.4 Argentina
In 2007, Argentina consumed an estimated 667,000 tonnes of ammonia, nearly all of this ammonia consumed in the production of urea with the small volume consumed in the production of UAN, ammonium nitrate and ammonium sulphate. Urea will remain the primary ammonia consumer with a new ammonia/urea plant expected before 2017.With this expansion, domestic ammonia consumption is forecast to grow from the 2007 level of 667,000 tonnes to 1.3 million in 2017 and 1.6 million in 2027. Nearly all of this ammonia will be supplied from captive production.
3.5 Brazil
Brazil consumed an estimated 1.5 million tonnes of ammonia in 2007.An estimated 0.7 million tonnes of ammonia was consumed in the production of urea at three plants, an estimated 0.2 million tonnes for ammonium nitrate production at two plants, an estimated 0.1 million consumed for ammonium sulphate production at three plants, an estimated 0.2 million tonnes ammonium phosphate at five MAP plants and the remaining 0.3 million tonnes consumed for non-fertilizer uses.
17
BSC is expecting that new capacity will be built for urea, ammonium nitrate and MAP resulting in domestic ammonia consumption growing from a current 1.5 million tonnes to 2.6 million tonnes by 2017 and 3.1 million tonnes by 2027. Some of this ammonia will be supplied from captive production and some from imported ammonia.
3.6 Chile
In 2007, Chile imported an estimated 191,000 tonnes of ammonia to make ammonium nitrate for fertilizer use at two plant located at Mejillones. Ammonium nitrate capacity and production is forecast to increased, pulling ammonia consumption and imports upward to 323,000 tonnes by 2017 and to 407,000 tonnes by 2027. Most of this ammonia will be supplied from imports.
3.7 Colombia
Colombia consumed an estimated 178,000 tonnes of ammonia in 2007 in the production of ammonium nitrate and ammonium sulphate. Both are forecast to increase sending domestic ammonia consumption up to 208,000 tonnes in 2017 and 260,000 in 2027. Most of this ammonia will be supplied from imports.
3.8 Peru
Peru consumed an estimated 22,000 tonnes of ammonia in 2007, all of this for ammonium nitrate production at their plant in Callao. Most of this was ammonia was imported. A new ammonia/urea plant has been announced for Peru that is currently expected in 2012/13. Most of this plants ammonia is expected to be converted into urea mainly for export. Most of this urea will be exported. As a result, total ammonia consumption is forecast to increase to 609,000 tonnes in 2017 and to 635,000 by 2027.All of this ammonia will be supplied from captive production.
3.9 Venezuela
Total ammonia consumption in Venezuela was estimated at 0.9 million tonnes in 2007. Venezuela is the largest nitrogen exporter in Latin America and converts or sells most of its ammonia production for the export market. This ammonia is manufactured in four plants that also produce captive urea. Ammonia consumption is forecast to increase along with new ammonia/urea capacity. By 2017, ammonia consumption is forecast to reach 1.8 million tonnes and grow to 1.9 million tonnes by 2027. All of this ammonia will be supplied from captive production.
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4. Latin American Urea Consumption by Country

Urea is the most popular nitrogen containing product both in Latin America and globally and is expected to continue growing, retaining a 50% or greater market share. In addition to being readily available, urea offers many preferred physical and chemical properties and an international market where competitive and comparative pricing is available and mostly transparent.
Table 13: Latin Americas Apparent Consumption of Urea (thousands of tonnes urea)
1997 Central America Belize Costa Rica Cuba Dominican Republic El Salvador Guatemula Honduras Jamaica Mexico Nicaragua Puerto Rico * Panama Trinidad Total Central America South America Argentina Bolivia Brazil Chile Colombia Ecuador Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America 498 5 2,140 291 368 248 21 ** 212 14 35 324 4,157 1,247 2 3,490 494 498 195 27 0 339 6 140 380 6,818 1,922 11 6,122 516 671 184 36 20 879 10 194 638 11,200 2,533 14 8,015 646 850 235 46 25 1,125 13 249 768 14,516 1,286 12 4,526 152 351 40 19 25 786 7 108 387 7,698 ** 106 128 63 52 113 131 6 909 50 19 21 12 1,635 6 51 27 56 13 159 148 10 1,599 83 2 22 6 2,151 10 73 35 62 17 173 121 16 1,711 74 ** 25 6 2,326 12 88 43 75 21 211 148 19 2,083 90 ** 31 7 2,831 2007 2017 2027 Change 2007 to 2027 6 37 16 19 8 52 ** 9 484 7 ** 9 1 680
Total Latin America
5,792
8,969
13,526
17,346
8,378
Totals will not add because of a small tonnage that are unaccounted for or sold into small Caribbean countries.
Urea and the other converted nitrogen products are essentially an end-market product moving to millions of individual farmer customers or for the manufacturers of technical products based on urea. These products are sold into both domestic (about 75%) and international markets (about 25%).
19
Urea is sold mainly as a fertilizer for use as such (direct application) or to a lesser extent for blending with other phosphate and potash fertilizers to produce NP/NPK compound fertilizers. Non-fertilizer uses of urea include: Urea formaldehyde, used in resins and adhesives. Melamine, used in laminates and plastics. Animal feed supplement. Fermentation agents, particularly for mono-sodium glutamate. DeNox agent (used in removing nitrogen and nitrous oxides from combustion gases). De-icer used on roads and runways.
Three countries account for about 70% of Latin Americas urea consumption. The largest urea consumer was Brazil at 3.5 million tonnes about 39% of this urea is imported. Currently, about half of Brazils nitrogen is supplied in the form of urea and urea will remain the principal nitrogen source for domestic consumption. BSC is forecasting that urea consumption will increase to 6.1 million tonnes by 2017 and to 8.0 million tonnes by 2027.
The next largest urea consumption is in Mexico where 1.5 million tonnes were used in 2007. Urea will remain the largest source for N representing over half of the total growing to 1.7 million tonnes in 2017 and 2.1 million tonnes in 2027. Nearly all of Mexicos urea was imported in 2007.
The third largest is Argentina at 1.2 million tonnes of urea. Argentina is a net importer of urea. Urea will remain the principal nitrogen source where domestic consumption is forecast to double by 2027 from a current 1.2 million tonnes 2.5 million tonnes.
In Bolivia, BSC believes that a small amount of urea is transhipped into the country out of Argentina with consumption currently representing an estimated 2,300 tonnes of urea. BSC is forecasting that urea consumption in Bolivia will increase to 14,000 tonnes by 2027.
Other important consumers of urea are Venezuela, Chile, Colombia and Peru who used a combined total of 1.7 million tonnes in 2007. Urea consumption in these four countries is forecast by BSC to increase to 3.4 million tonnes by 2027.
5. Latin American Ammonia & Urea Supply

Ammonia production in Latin America is currently in six countries with Trinidad accounting for about half of the regions total production. Latin America is both an importer and an exporter of nitrogen products. Imported nitrogen represents about 70% of the regions consumption. Nitrogen imports enter the Latin America market mainly by vessel with Brazil being the largest import destination. Some interregional trade exists but most of the nitrogen imports originate from outside the region. Latin America is
20
also an exporter of nitrogen with Trinidad accounting for 80% of the ammonia and urea trade from the region.
With a strong and growing regional market, Latin Americas close proximity to the worlds largest nitrogen import market in the United States and access to relatively low cost natural gas, there should be considerable interest in investment in new nitrogen capacity in Latin America. However, investment has been hampered by concerns over political risk in countries where the Government controls the natural gas and can change the rules at any time after an investment is made.
5.1 Nitrogen Production & Capacity

The follow is a summary of the major nitrogen products produced and consumed in Latin America.
Ammonia (82-0-0) production in Latin America in calendar-year 2007 was estimated at 9.3 million tonnes of product. About 40% of this ammonia production is converted on-site to other nitrogen products with the remaining 60% sold as ammonia. Latin America has excess ammonia production and Trinidad is the worlds largest ammonia exporter with 4.8 million tonnes shipped from Trinidad and another 0.5 million tonnes from other Latin American sources (mainly Venezuela) in CY 2007.In addition, this region imported 0.7 million tonnes of ammonia with most (0.6 million tonnes) as inter-regional product out of Trinidad.
Urea (46-0-0) is the most widely used nitrogen fertilizer in Latin America. About half is manufactured as a granular product and half as a prill. Urea production was estimated at 4.5 million in CY 2007. Latin America is short urea and imported 5.6 million tonnes and an additional 0.9 million tonnes of inter-regional product. Latin America also exported 2.0 million tonnes of urea in CY 2007; about half of this urea was exports into the Latin American market.
Latin America has only one producer of Nitrogen Solutions (28/32-0-0). Urea-ammoniumnitrate solution (UAN) production was estimated at 0.3 million tonnes in CY 2007. Ammonium Nitrate (34-0-0) production was about 40% of high-density material for fertilizer use and 60% of low-density material for non-fertilizer uses. In CY 2007, an estimated at 1.2 million tonnes were produced. Exports were minimal. Latin America is short ammonium nitrate importing an estimated 2.5 million tonnes into the region of in CY 2007.
Ammonium Sulphate (21-0-0) production was estimated at 1.4 million tonnes in CY 2007. Most of the production is in Mexico and Brazil where it is consumed locally. Exports were minimal. Latin America is short ammonium sulphate and imported a total of 2.6 million tonnes in CY 2007 from the United States, Europe and the FSU with the largest import market in Brazil.
Latin America is an important consumer of Ammonium Phosphates including MonoAmmonium Phosphates (11-52-0) and Di-Ammonium Phosphates (18-46-0). Latin America currently produces MAP only in Brazil with an estimated 1.1 million tonnes of production in CY 2007 with only a trace volume of DAP also in Brazil. The region imported an estimated 2.5 million tonnes of DAP and 3.0 million tonnes of MAP in CY 2007.
Other North American nitrogen production includes Ammonium Thiosulphate (12-0-0), Sodium Nitrates (16.7-0-0), Potassium Nitrates (13.8-0-44.3) and NPKs.
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Table 14: Latin American Nitrogen Production in Calendar Year 2007 (millions of product tonnes)
Central America Ammonia (82% N) Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen1 6.0 0.8 0.0 0.1 1.0 0.0 0.0 4.9 South America 3.3 3.7 0.3 1.1 0.4 ** 1.1 2.7 Total 9.3 4.5 0.3 1.2 1.4 ** 1.1 7.6
Overall, Latin America ammonia capacity was 10.9 million tonnes of 82% ammonia in seven countries (Table 16). All of the 11 Latin American solid urea plants converted ammonia from adjacent ammonia plants to take advantage of the bi-product CO2 from ammonia production. Solid urea capacity was 6.5 million tonnes in six countries. Only one UAN plants was operating at the beginning of 2008 with a capacity of 0.5 million tonnes. Nine of the twelve ammonium nitrate plants operated on purchased ammonia with total ammonium nitrate capacity of 2.3 million tonnes.
5.2 Company Profiles of Major Nitrogen Players in Latin America

The nitrogen industry in Latin America is vertically integrated with the highest concentration of ammonia capacity in Trinidad where about half of the regions capacity is operating. The largest nitrogen holding companies were PCS Nitrogen in Trinidad, Koch Nitrogen in Trinidad, Pequiven in Venezuela, Yara in Trinidad and PEMEX in Mexico as shown on the table below. Ammonium sulphate capacity was estimated at 2.6 million tonnes in thirteen plants. Table 15 shows ownership of Latin American nitrogen capacity followed by a profile of each of the major Latin American nitrogen manufacturers.
Table 15: Latin American Nitrogen Capacity Summary in 2007 (millions of product tonnes)
PCS Nitrogen Koch Nitrogen** Pequiven (PVDSA)** Yara Nitrogen PEMEX Petrobras Profertil (jv Agrium) Ultrafertil SA All Others Total Ammonia 2.1 1.9 1.6 1.3 1.0 0.9 0.7 0.6 0.8 10.9 Urea 0.7 0.5 2.0 1.1 1.1 0.7 0.4 6.5 UAN 0.6 0.6 AN 2.3 2.3 AS 2.6 2.6 Share* 19% 18% 15% 12% 9% 8% 6% 6% 6% 100%
Source: British Sulphur Consultants * Share is based on total ammonia capacity. ** Includes Kochs 35% interest in FertiNitro. For Pequiven, includes remaining capacity for FertiNitro & Venezuela.
Represents the nitrogen value in ammonia, the base product for all nitrogen production.
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5.2.1 PCS Nitrogen Trinidad

PCS Nitrogen Trinidad is a wholly-owned subsidiary of Potash Corporation of Saskatchewan (PCS).PCS is an integrated producer of fertilizers, industrial and animal products producing all three fertilizer nutrients. PCS is a public traded company and is the fifth largest supplier of nitrogen products to the North American market as well as the largest nitrogen producer in Latin America. PCS currently manufactures nitrogen products at four ammonia plants at Point Lisas in Trinidad with an ammonia capacity of 2.1 million tonnes and one granular urea plant with a capacity of 0.7 million tonnes. PCS produced at capacity and reported 2.1 million tonnes of ammonia and 0.7 million tonnes of granular urea in 2007. Most of this production was exported into the United States.
5.2.2 Koch Nitrogen Trinidad

Koch Industries is the largest private company in the Americas. Koch Nitrogen is a wholly-owned subsidiary of Koch Industries. Koch Nitrogen is the fourth largest nitrogen supplier into North America and the second largest nitrogen producer in Latin America. Koch currently manufactures ammonia at three plants at Point Lisas in Trinidad with an ammonia capacity of 1.5 million tonnes. One of these plants (Point-Lisas Nitrogen) is a 50/50 joint-venture with Terra Nitrogen in the United States. Koch also has a 35% interest in the FertiNitro plant in Venezuela ammonia capacity is 1.2 million tonnes. Koch total ammonia capacity in Latin America is 1.9 million tonnes and urea capacity is 0.5 million tonnes.
5.2.3 Pequiven (PVDSA)

Petroquimica de Venezuela, S.A. (PVDSA) and also know as Pequiven is owned by the Venezuela Government. This company either owns or has a majority interest in all nitrogen manufacturing within the country. The FertiNitro nitrogen facility is owned 35% by Pequiven, 35% by Koch Nitrogen and 30% by others. The Nitroven nitrogen facility is owned 90% by Pequiven and 10% by others. Total capacity controlled by Pequiven is essentially all of the capacity in Venezuela. However, Pequivens ammonia capacity (excluding the Koch share) is 1.6 million tonnes of ammonia and 2.0 million tonnes of urea.
5.2.4 Trinidad Nitrogen

Trinidad Nitrogen is a joint-venture between the Trinidad Government and Yara Trinidad. Yara manages the plants and markets all of the ammonia produced from the three plants. Yara International ASA is the parent company of Yara Trinidad. Yara International is a global fertilizer and chemical company with its headquarters in Norway. The company is traded on the Oslo Stock Exchange. These three plants have an annual capacity of 1.3 million tonnes and generally operate at around the 1.0 million tonne level.
5.2.5 PEMEX, Mexico

Petroleos Mexicanos (PEMEX) is the State-owned petroleum company that owns and operates the Mexican petrochemicals industry including the ammonia plants. PEMEX operates all three ammonia plants in Mexico with an annual capacity of 1.0 million tonnes. In 2007, ammonia production in Mexico was reported at 753,000 indicating a utilization rate of 75%.
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5.2.6 Petrobras, Brazil

Petrobras is the largest integrated energy company in Brazil. They operate two ammonia and urea plants with a capacity of 0.9 million tonnes of ammonia and 1.1 million tonnes of urea.
5.2.7 Ultrafertil, Brazil

Ultrafertil is the operating company for the nitrogen plants owned by Fosfertil, a privately owned Brazilian fertilizer company. Fosfertil is also Brazils largest producer of phosphate fertilizers. Ownership in Fosfertil is complex with Fertibras (Yara) at 15%, Fertifos (includes Mosaic) at 56%. Ammonia capacity is 0.6 million tonnes and urea capacity is 0.7 million tonnes.
5.2.8 Profertil, Argentina

Profertil is a 50/50 joint-venture between Agrium and Repsol YPF. Agrium is one of the largest fertilizer companies in North America while Repsol is an integrated oil and gas company in Argentina. Argium markets all of the production from this plant. Ammonia capacity is 0.7 million tonnes while urea capacity is 1.1 million tonnes.
5.3 Latin American Nitrogen Capacity by Plant

As indicated on Table 16 below, Latin America produced ammonia in 27 ammonia plants with an ammonia capacity of 10.9 million tonnes (Table 16). The highest concentration of ammonia plants is in Trinidad with a capacity of 5.2 million tonnes of capacity. This is followed by Venezuela with 2.0 million tonnes and Brazil with 1.5 million tonnes of ammonia capacity.
Table 16: Nitrogen Capacity in Latin America in 2007: Plant List (thousand tonnes of product)
Country Central America Cuba Total Cuba Revolution Plant Nuevitas 197 197 Company Location Ammonia Urea UAN AN
Mexico
PEMEX PEMEX PEMEX Grupo Real del Monte Agronitrogenados Fertimina Fertinal Nitroammonia (Orica)
Camargo, Chih. Cosoleacaque, Ver. Cosoleacaque, Ver. Minatitlan Coatzacoalcos Minatitlan Lazaro Cardenas Monclova
132 450 450 1,032
248 248
360 180 270 68 858
Total Mexico
Trinidad
Caribbean Nitrogen Point Lisas Nitrogen Ltd Nitrogen 2000 PCS Nitrogen PCS Nitrogen
Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas
610 610 610 520 520
709 -
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Table 16: Nitrogen Capacity in Latin America in 2007: Plant List (thousand tonnes of product) Concluded.
Country Company PCS Nitrogen PCS Nitrogen Trinidad Nitrogen Trinidad Nitrogen Yara International Total Trinidad Location Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Ammonia 402 610 465 550 310 5,207 Urea 709 UAN AN -
Total Central America South America Argentina Fabricaciones Militares Petrobras Energia Profertil Total Argentina Rio Tercero Campana Baha Blanca
6,239
957
1,055
21 119 677 807
190 1,073 1,263
550 550
23 23
Brazil
Petrobras Petrobras Ultrafertil SA Ultrafertil SA Ultrafertil SA
Camacari, BA Laranjeiras, SE Araucaria, PR Cubatao, SP Piacaguera, SP
495 413 436 200 1,544
495 594 660 1,749 -
100 407 507 100 350 450
Total Brazil Chile ENAEX ENAEX Total Chile Mellijones Mellijones
Colombia Abonos Colombianos Cartagena 131 50 181 Fertilizantes Peru Sinteticos Nitratos SA Total Peru Cuzco Callao 32 32 45 45 17 17 232 30 262
Fertilizantes Colombianos Barrancabermeja Total Colombia
Venezuela
Nitroven (PVDSA) Nitroven (PVDSA) Petroquimica (PVDSA) FertiNitro
El Tablazo El Tablazo Puerto Moron Jose
297 297 243 1,188 2,025 4,589 10,868
396 396 248 1,452 2,492 5,521 6,478
550 550
1,287 2,342
Total Venezuela Total South America Total Latin America
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6. Ammonia and Urea Capacity to 2027

The nitrogen market is cyclical. These cycles are the result of swings in the supply and demand balance most often caused by the overbuilding of new capacity during periods when supply and demand is tight. This tight market pushes prices and profit margins upward. The growth in new capacity will eventually exceed the growth in demand and the supply and demand balance swings from a tight market to a weak market. This weak market pulls prices and profit margins downward. During the downward portion of the cycle, little or no new capacity is built and some older, less efficient plants are closed until demand once again catches up with supply at which time prices and profit margins begin to recover. The cycle is repeated once again. The length of each cycle is different and typically last from 8 to 12 years.
Once financing is secured, the current lead time to build a new ammonia/urea plant can be up to 40 months and capital cost for a world scale (2,000 tpd ammonia and 3,500 tpd urea plant) is about $1.6 billion. This estimate of lead time has increased from about 32 months and the capital costs are nearly twice as high as they were just four years ago when the nitrogen building cycle was beginning to accelerate.BSC expects these estimates will retreat some from their current highs as raw material costs decline along with new orders. Nevertheless, the point is that all ammonia/urea plants that will be commissioned during the next three years and many of those over the next four years are already under construction. Some of these may be delayed because of the current economic downturn but BSC believes that most will eventually be completed. New capacity beyond the next four years is speculative and is based on the BSC forecast of supply, demand and prices. The timing, size and location of this new capacity is based mainly on competitive costs with a strong emphasis on the cost of feedstock along with the overall production and delivered costs into a targeted market.
6.1 Short-Term Ammonia Capacity Changes between 2008 to 2012

At this time, only one new ammonia plant is under construction, the Clico Energy plant at Point Lisas, Trinidad that is expected to be commissioned in late 2009 or early 2010. This 610 thousand tonne plant will convert all of its ammonia into melamine and about 1.2 million tonnes per year of UAN solutions.
Mexico is a high cost ammonia producer and BSC is forecasting that 0.9 million tonnes of ammonia capacity will be closed before 2012 as nitrogen market prices and margins deteriorate. The State owned PEMEX Petroleum Company has already closed more than 1.5 million tonnes of ammonia capacity since 2000.BSC does not believe that PEMAX will operate unprofitable ammonia plants and will opt to sell gas into more profitable markets.
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6.2 Longer-Term Ammonia Capacity Changes to 2027

As indicated above, capacity changes beyond 2012 are speculative based on BSCs forecast of supply, demand and prices. These changes are shown on Table 17 below. Latin American is one of the fastest growing nitrogen markets and with relatively low cost available for sale or conversion, BSC is forecasting that a number of new ammonia projects will be built over the twenty year period. Overall, the forecast shows twelve projects with an estimated 8.6 million tonnes of new ammonia capacity built during the next twenty years. The net increase in ammonia capacity is forecast to be 7.7 million tonnes of ammonia with the closure of 0.9 million tonnes of capacity in Mexico. Most of these new ammonia projects will be for conversion of ammonia into downstream urea or urea ammonium nitrate for the export market.
Table 17: Latin Americas Ammonia Capacity to 2027 (thousands of tonnes ammonia)
2007 Central America Mexico Trinidad Total Central America South America Argentina Brazil Colombia Peru Venezuela Total South America Total Latin America 1,032 5,257 6,289 2012 132 5,867 5,999 2017 132 7,187 7,319 2022 132 8,847 8,979 2027 132 9,847 9,979 Change - 900 4,640 3,980
807 1,544 181 32 2,025 4,589 10,828
847 1,584 181 32 2,025 4,669 10,668
1,347 2,184 181 732 2,685 7,129 14,448
1,347 2,284 181 732 3,685 8,229 17,208
1,347 2,384 181 732 3,685 8,329 18,310
540 840 --700 1,660 3,741 7,720
Includes debottlenecking of existing capacity
6.2.1 Trinidad
Trinidad should provide a number of nitrogen projects as new offshore natural gas reserves become available. At least three new nitrogen projects have been proposed and investigated during the last three years but none were awarded gas contracts and therefore were cancelled or put on hold. The Government is committed to developing local gas-based industries and is actively working with their two gas producing companies, British Petroleum (BP) and British Gas (BG), to increase domestic gas availability. BSC is forecasting that in addition to the Clico project currently under construction, five world scale ammonia plants will be built in Trinidad adding a total of 4.6 million tonnes of new capacity by 2027.Some of these projects will be with Trinidads existing ammonia manufactures and all will be jointventures with some Trinidad ownership. Four of these new ammonia plants will be located south of Point Lisas at La Brea where the Government is developing a new industrial complex.
6.2.2 Argentina
Argentinas last investment into ammonia was a joint-venture with the Canadian company Agrium commissioned in 2000 and 2001. Argentina will need more nitrogen to feed its growing population and will encourage development of at least one, new world scale ammonia project before 2017. With limited gas reserves and a number of local industries competing for a share of available gas, future project will be
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limited. Ammonia capacity is forecast to increase by 0.5 million tonnes by 2016. Other projects are possible if new gas reserves are found.
6.2.3 Brazil
No new capacity is currently planned for Brazil.BSC is forecasting that a new plant will be added around 2016 by one of the existing ammonia manufacturers (FAFEN or Ultrafertil) in either Camacari or the Piacaguera region. Some debottlenecking of existing capacity is also expected to improve efficiency and lower production costs. Ammonia capacity is forecast to increase by 0.8 million tonnes by 2016 and hold at that level.
6.2.4 Peru
A new ammonia/urea project, a joint-venture between the Argentina energy company Plus Petro and the U.S. fertilizer company CF Industries is being investigated for Peru. While plans for this project appear to have stalled since the downturn in the nitrogen market, BSC still believes a new 0.7 million tonne ammonia plant will be built in Peru and is currently forecasting a 2013 start-up. Plus Petro has the gas contract and appears eager to convert a portion of this gas into higher value downstream products like ammonia. While Plus Petro would like to develop additional projects in Peru, alternative, more profitable uses for this gas and the high capital costs to build a new ammonia plant will limit the number of projects.
6.2.5 Venezuela
A number of projects have been proposed for Venezuela with the last major ammonia plant commissioned at Jose in 2001 by FertiNitro, a joint-venture between Petroquimica de Venezuela SA (Pequiven) and the U.S. Company Koch Industries. BSC believes that two new ammonia plants will be built during this forecast period with a total increase in capacity of 1.7 million tonnes. Although gas reserves are plentiful and relatively low cost, investments in Venezuela will be limited because of the political risk.
6.3 Short-Term Urea Capacity Changes between 2008 to 2012

At this time, there are no new solid urea plants under construction in Trinidad. The Clico Energy project at Point Lisas, Trinidad will convert all of its ammonia into melamine and into about 1.2 million tonnes per year of UAN solutions. An intermediate step in UAN production is the production of urea solution, but since this product is not isolated as a saleable solid urea by granulation or prilling the urea, BSC does not include this as urea capacity.
Mexico re-opened the small Minatitlan prilled urea plants in 2007 operating on purchased ammonia. Production costs are high and BSC is forecasting that this plant will be closed before 2012. Mexico had 1.7 million tonnes of urea capacity in 2000, closing all of these by the end of 2004.
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Table 18: Latin Americas Urea Capacity to 2027 (thousands of tonnes ammonia)
2007 Central America Mexico Trinidad Total Central America South America Argentina Brazil Colombia Peru Venezuela Total South America Total Latin America* 1,263 1,749 17 0 2,492 5,521 6,478 1,263 1,809 17 0 2,492 5,581 6,290 2,113 2,759 17 1,089 3,492 9,470 10,680 2,113 2,759 17 1,089 4,992 10,970 13,449 2,113 2,999 17 1,089 4,992 11,210 14,269 850 1,190 --1,089 2,500 5,629 7,731 248 709 957 0 709 709 0 1,299 1,299 0 2,479 2,479 0 3,059 3,059 - 248 2,350 2,102 2012 2017 2022 2027 Change
* Includes debottlenecking of existing capacity
6.4 Longer-Term Urea Capacity in 2027

All but one of the Trinidad ammonia plants will have either urea or UAN plants associated with them. BSC is forecasting that five world scale ammonia plants will be built in Trinidad adding a total of 4.6 million tonnes of new capacity by 2027.The BSC forecast for Trinidad nitrogen plants is shown below:
Table 19: Nitrogen Capacity in Trinidad in 2027 (thousand tonnes of product)

Available Country Trinidad Company Caribbean Nitrogen Point Lisas Nitrogen Ltd Nitrogen 2000 PCS Nitrogen PCS Nitrogen PCS Nitrogen PCS Nitrogen Trinidad Nitrogen Trinidad Nitrogen Yara International Clico Energy (2010) TEIL (2014) Unknown (2017) Unknown (2020) Unknown (2021) Unknown (2023) Location Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas Point Lisas La Brea La Brea La Brea La Brea Ammonia 610 610 610 520 520 402 610 465 550 310 610 660 660 660 1,000 1,000 Urea 709 590 590 590 590 UAN Ammonia 1,200 800 800 610 610 610 90 520 402 610 465 550 310 660 550 550
Total Trinidad*
9,847
3,059
2,800
6,537
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Four of these new ammonia plants will have urea plants associated with them with an additional urea capacity of 2.4 million tonnes and a total urea capacity of 3.1 million tonnes. If all of Trinidads downstream nitrogen plants (urea, UAN & melamine) operate at capacity, Trinidad would have an estimated 6.5 million tonnes of ammonia available for sale.
6.4.1 Argentina
Argentinas is expected to build a new 0.5 million tonnes ammonia plant by 2016. This ammonia plant will have an 850 thousand tonne solid urea plant built at the same site. There will be no excess ammonia available for sale when all the downstream plants are operating at full capacity.
Table 20: Nitrogen Capacity in Argentina in 2027 (thousand tonnes of product)

Available Country Argentina Company Fabricaciones Militares Petrobras Energia Profertil Unknown (2016) Location Rio Tercero Campana Baha Blanca Ammonia 21 119 707 500 Urea 190 1,073 850 UAN Ammonia 550 -
Total Argentina*
1,347
2,113
550
6.4.2 Brazil
Ammonia capacity is forecast to increase by 0.8 million tonnes by 2016. In addition, a 1.0 million tonne urea plant is expected to be constructed at the same site. BSC believes that this plant will be sized to produce about 250 thousand tonnes of excess ammonia at capacity. This excess ammonia can be sold into the domestic market.
Table 21: Nitrogen Capacity in Brazil in 2027 (thousand tonnes of product)

Available Country Brazil Company Petrobras Petrobras Ultrafertil SA Ultrafertil SA Ultrafertil SA Unknown (2016) Location Camacari, BA Laranjeiras, SE Araucaria, PR Cubatao, SP Piacaguera, SP Ammonia 495 413 436 200 840 Urea 495 594 660 1,010 UAN 250 Ammonia -
Total Brazil*
2,384
2,759
250
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6.4.3 Peru
A new 0.7 million tonne ammonia plant and a 1.0 million tonne urea plant are forecast with a 2013 startup date. As indicated above, PlusPetro has the gas contract and will, at the moment, partner with CF Industries, but this could change. This project should have about 150 thousand tonnes of ammonia available for sale at capacity.
Table 22: Nitrogen Capacity in Peru in 2027 (thousand tonnes of product)

Available Country Peru Company Fertilizantes Sinteticos Nitratos SA PlusPetro (2013) Location Cuzco Callao Ammonia 32 700 1,000 Urea 150 UAN Ammonia *
Total Peru
732
1,000
150
6.4.4 Venezuela
BSC believes that two new ammonia plants will be built during this forecast period with a total increase in capacity of 1.7 million tonnes. BSC is also forecasting that two new urea plants will also be built adding 2.6 million tonnes in capacity by 2027. A small amount of ammonia should be available at capacity.
Table 23: Nitrogen Capacity in Venezuela in 2027 (thousand tonnes of product)

Available Country Venezuela Company Nitroven (PVDSA) Nitroven (PVDSA) Petroquimica (PVDSA) FertiNitro PVDSA (2013) PVDSA (2020) Location El Tablazo El Tablazo Puerto Moron Jose Ammonia 297 297 243 1,188 660 1,000 Urea 396 396 248 1,452 1,000 1,500 UAN 130 Ammonia -
Total Venezuela*
3,685
4,992
130
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7. Latin American Nitrogen Supply/Demand in Balance

7.1 Supply and Demand in Calendar Year 2007
Less than half of the nitrogen production in Latin American is for the domestic market with 58% of total nitrogen exported as ammonia or urea. Apparent nitrogen consumption in the region is estimated at 8.1 million tonnes of N (table below). Since ammonia is an intermediate product primarily used to manufacture other downstream nitrogen products, the 3.5 million tonnes of ammonia required for conversion into these downstream products is subtracted out of the total to avoid double-counting of the total nitrogen consumption. It is also interesting to note that overall, Latin America is a net exporter of nitrogen with the region exporting 5.3 million tonnes of nitrogen while it imports 0.7 million tonnes.
Table 24: Latin American Nitrogen Supply/Demand Balance 2007 (millions of product tonnes)
Production Ammonia (82% N) Conversion & Losses** Net Ammonia Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen** 9.3 - 3.6 5.7 4.5 0.2 1.2 1.4 -1.1 7.6 5.3 2.0 -0.1 ** ** -5.3 0.7 6.5 0.1 2.6 2.6 2.5 3.0 5.8 Exports* 5.3 Imports* 0.7 Apparent Consumption 4.7 - 3.6 1.1 9.0 0.3 3.7 4.0 2.5 4.1 8.1
* Includes inter-regional trade between Latin American countries. ** Conversion and losses are subtracted to avoid double counting nitrogen value in the converted products.
Three countries account for about 72% of the total nitrogen consumption. Brazil is the largest consumer of N with an estimated 3.3 million tonnes in 2007 followed by Mexico with 1.5 million tonnes and Argentina with 1.0 million tonnes (Diagram below).
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Diagram 2: Latin American Nitrogen Consumption - 2007
Latin American Nitrogen Consumption 2007

(8.1 millions of Tonnes of N) 1.5 0.5 0.3 0.4 0.1 0.5 *
*
0.1
3.3
0.4 1.0 0.1
An estimated 3.6 million tonnes of ammonia (N) was consumed in the production of downstream nitrogen products (mainly urea), most for export outside the Region. The Diagram below shows the location of nitrogen production (with a red star) and total nitrogen imports of 5.8 million tonnes of nitrogen (including 1.0 million tonnes of inter-regional shipments). Overall, this region produced an estimated 7.6 million tonnes of N in 2007 in seven countries.
Diagram 3: Latin American Nitrogen Imports - 2007
Latin American Nitrogen Imports 2007

(5.8 millions of Tonnes of N) 1.0 0.5 0.2 0.4 0.1 0.3 2.4
0.3
0.5 0.1
Overall, Latin America exported 4.3 million tonnes outside Latin America in 2007 with an additional 1.0 million tonnes shipped inside Latin America. Exports were mainly to the United States. For most Latin American countries, imports are the only source for nitrogen. For example, imports dominate the Mexican market. The major importers have established relationships with Mexican distributors like Yara/Olmeca. These distributors generally purchase fob vessel at the Mexican port. Distributors can offer credit to the farmer, something that is important to the customer. Mexico imports some ammonia from Trinidad while
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urea is mainly from Russia and the Ukraine. Product moves into both the east and west coast of Mexico with ocean freight costs into the west coast averaging about $70 per tonne for urea from Yuzhyy or the Baltic and about $30 less into the East coast.
The major market where domestic nitrogen production competes with imports is into Brazil and to a lesser extent in Argentina. Brazils fertilizer market is unique in that several large companies control most of the fertilizer distribution. These companies are fully integrated from fertilizer supply (local production or imports), blending plants, transportation (often by truck but with some limited rail), distribution, storage and even finance and credit to the grower, including purchase or barter of agricultural output (grains and soybeans). The largest fertilizer players are Bunge, Cargill and Fertibras. Russia and the Ukraine are the major exporters of urea into Brazil. Ocean freight costs during 2007 averaged about $47 per tonne out of Yuzhnyy and the Baltic depending on the port. Ammonia is imported mainly from Trinidad where ocean freight cost is believed to be in the $25 to $30 range.
Many of these same companies operate in Argentina (Bunge, Mosaic, Yara) where local urea production from Profertils Bahia Blanca plant is supplemented with imports from Russia, the Ukraine and Qatar. Once again, local distributors purchase fertilizers at the port, blend, transport and distribute fertilizers to the farmer.

Nitrogen demand in Latin America grows from 8.2 million tonnes in 2007 to an estimated 9.7 million tonnes in 2012. Apparent demand for most products are up with urea showing the strongest gain, up from 8.9 million tonnes in 2007 to 11.1 million tonnes in 2012.
Ammonia production increases from 9.3 million tonnes to 10.3 million in 2012 with much of this growth from Venezuela. This growth in ammonia production resulted despite the closure ammonia of capacity in Mexico. The increase in urea production of 0.8 million tonnes was the result of increased production in both Argentina and Venezuela. UAN production grew 1.2 million tonnes with the start-up of a new plant in Trinidad. With the re-opening of the Fertinal plant in Mexico, DAP, MAP, AN, AS production were all growing when compared in 2007.
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Production Ammonia (82% N) Conversion & Losses** Net Ammonia Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen** 10.3 - 5.2 5.1 5.3 1.5 1.8 1.6 0.9 2.4 8.5 5.5 2.5 1.2 --0.2 0.3 6.1 1.7 8.3 0.1 2.3 2.5 2.9 2.9 7.5 Exports* 5.5 Imports* 1.7 Apparent Consumption 6.5 - 5.2 1.3 11.1 0.4 4.1 4.1 3.6 5.0 9.7
As mentioned above, the start-up of a new UAN plant in Trinidad allowed exports to grow, UAN was up 1.2 million tonnes and overall nitrogen exports up 0.7 million tonnes in 2012.DAP and MAP exports also grew with the re-opening of the Fertinal plant in Mexico.
Ammonia imports are forecast to increase by 1.0 million tonnes in 2012. Most of this increase in imports was into Mexico where production at the re-opened Fertinal plant consumed an estimated 0.4 million tonnes of import of ammonia. With the closure of Mexicos high cost ammonia capacity, a total of 0.7 million tonnes of ammonia will be required to fill Mexicos domestic demand. Urea imports were up into Brazil, Mexico and Peru filling increased demand. Latin America is expected to remain a net importer of nitrogen products in 2012. Exports will also increase with virtually all of the ammonia, urea and UAN production in Trinidad as will as 70% of the urea and 33% of the ammonia production in Venezuela going into the international market.

Nitrogen consumption continues to grow during this next five-year period to 10.9 million tonnes and once again, most of this growth is for urea. MAP and DAP consumption are also strong growth, increasing from 6.6 million tonnes in 2007 to 10.5 million tonnes in 2017 during this ten-year period.
New ammonia capacity in Argentina, Brazil, Peru, Trinidad and Venezuela increased capacity by 3.5 million tonnes since 2007 and ammonia production rose by 3.6 million tonnes from the new plants and high operating rates from existing ammonia plants. Trinidad will remain the largest ammonia manufacturer in 2017 with a 7.4 million tonne forecast representing 53% of the Latin American production.
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Production Ammonia (82% N) Conversion & Losses** Net Ammonia Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen** 13.9 - 8.0 5.9 9.4 1.8 2.3 1.6 1.0 2.9 11.4 7.2 4.3 1.4 0.6 ** 0.4 0.3 8.5 2.1 8.3 0.1 2.7 3.0 3.0 2.9 8.0 Exports* 7.2 Imports* 2.1 Apparent Consumption 8.8 - 8.0 0.8 13.4 0.5 4.4 4.6 5.0 5.5 10.9
The start-up of downstream nitrogen capacity is forecast to boost production of all converted nitrogen products as well. Total nitrogen production is forecast to grow to 11.4 million tonnes in 2017, up from 7.6 million in 2007.For converted products, Brazil will be the largest nitrogen manufacture but a portion of this will be from converting imported ammonia. Excluding imported ammonia, Venezuela is the largest converted nitrogen manufacturer in 2017 with about one-third of the urea and 20% of total nitrogen.
Latin America continues to import more nitrogen than it exports, although if inter-regional nitrogen shipments are removed, this region is forecast to export more nitrogen outside the region than it imports. The reason is that most of the new capacity in Trinidad, Venezuela and most recently Peru will be export oriented. Overall, exports (including inter-regional shipments) are forecast to grow to 8.0 million tonnes of nitrogen in 2017 compared to 5.8 million tonnes in 2007. Total nitrogen imports are forecast to grow to 8.5 million tonnes compared to 5.3 million tonnes over this same ten-year period.

The forecast for Latin American nitrogen demand in 2027 is 13.6 million tonnes. This represents an annual growth rate of about 2.6% per year during the twenty-year forecast (see Table 2 for a country-bycountry forecast). Total demand is forecast to increase from 8.1 million tonnes in 2007 to 13.6 million tonnes by 2027. By 2027, ureas share of total Latin American nitrogen consumption is estimated at 17.3 million tonnes of urea containing 8.0 million tonnes of nitrogen (17.3 times 46%) and a market share of 59%. Ammonium nitrate is the second largest by nitrogen content with an estimated 5.2 million tonnes of product or 1.8 million tonnes of nitrogen (5.2 times 34%). Combined, ammonium phosphates (DAP & MAP) will account for an estimated 2.6 million tonnes of nitrogen.
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Production Ammonia (82% N) Conversion & Losses** Net Ammonia Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen** 16.9 - 10.4 6.5 12.0 2.6 3.4 2.0 1.1 3.8 13.9 8.2 5.4 2.2 0.9 ** 0.5 0.3 10.3 2.5 10.8 0.3 2.6 3.5 4.2 3.2 10.0 Exports* 8.2 Imports* 2.5 Apparent Consumption 11.2 - 10.4 0.8 17.4 0.7 5.2 5.5 4.9 6.8 13.6
During the last five-years of this forecast (2022 to 2027), imports were growing faster than exports. Once again, about half of the Latin Americas nitrogen trade is inter-regional. In 2027, BSC is forecasting that Latin America will export 8.2 million tonnes of ammonia, 5.7 million tonnes of these tonnes outside the region (destined for the U.S. market) and 2.5 million inside Latin America. For urea, BSC is forecasting that Latin America will export 5.4 million tonnes with about 1.2 million tonnes moving outside the region (also into the U.S.) and the remaining 4.2 million tonnes inside Latin America. For UAN, BSC is forecasting that 2.2 million tonnes will be exported to the U.S. and the remaining 0.3 million into Latin American markets. Excluding inter-regional sales, Latin American nitrogen exports are forecast at 5.7 million tonnes while imports are forecast at 5.5 million tonnes of nitrogen.
Nearly all of the ammonium nitrate and ammonium sulphate imports and nearly all of the DAP and MAP will be imported from outside the region in 2027. The largest nitrogen product imported from outside the region will be urea with an estimated 6.9 million tonnes in 2027.
8. Target Markets for Ammonia & Urea into Latin America

8.1 Major Buyers/Suppliers in 2007
As shown above and repeated on Table 28 below, Latin America consumed an estimated 8.1 million tonnes of nitrogen in 2007. Approximately 72% of this nitrogen consumption or 5.8 million tonnes were imported, 4.9 million of this from outside the region. Table 29 shows the breakdown of these 5.9 million tonnes of imported nitrogen products by country and by product. Trinidad is the only country in Latin America that is self-sufficient in nitrogen.
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Production Ammonia (82% N) Conversion & Losses** Net Ammonia Urea (46% N) UAN (32% N) Ammonium Nitrate (34% N) Ammonium Sulphate (21% N) DAP (18% N) MAP (11% N) Total Nitrogen** 9.3 - 3.6 5.7 4.5 0.2 1.2 1.4 -1.1 7.6 5.3 2.0 -0.1 ** ** -5.3 0.7 6.5 0.1 2.6 2.6 2.5 3.0 5.8 Exports* 5.3 Imports* 0.7 Apparent Consumption 4.7 - 3.6 1.1 9.0 0.3 3.7 4.0 2.5 4.1 8.1
Most of the reported 687 thousand tonnes of ammonia imported into Latin America during 2007 was inter-regional with Trinidad (506 thousand), Venezuela (85 thousand), Argentina (57 thousand), Mexico and Brazil (1 thousand) accounting for 650 thousand tonnes or 95% of the total imports and the Russia (27 thousand) and the Ukraine (7 thousand) and the United States (4 thousand) accounting for 37 thousand tonnes or 6%.
Only 15% or 953 thousand of the 6.5 million tonnes of urea imports were Latin American origin with Venezuela (473 thousand), Argentina (245 thousand) and Trinidad (232 thousand) shipping interregionally. The largest urea exporters outside the region were Russia (2.4 million), Ukraine (1.6 million), China (0.8 million), the Middle East countries Qatar and Saudi Arabia (0.4 million), the USA (0.2 million) followed by small exporters including the Netherlands, Belarus, Egypt, Libya and Indonesia (0.1 million). Virtually all of the UAN, AN, AS, DAP and MAP imports were from outside the region.
Table 29: Latin America Nitrogen Imports by Country 2007 (thousands of tonnes product)
Ammonia Central America Belize Costa Rica Cuba Dominica Dominican Rep. El Salvador Guatemula Haiti Honduras Jamaica Martinique Mexico Nicaragua Puerto Rico * 0 0 34 0 0 4 1 0 0 0 0 47 0 0 Urea 6 51 27 0 56 13 159 0 148 10 5 1,479 83 2 UAN 0 0 0 0 0 0 0 0 0 0 0 50 0 0 AN 0 83 14 0 0 0 97 0 35 1 0 486 0 0 AS 0 9 6 0 39 104 21 0 21 7 0 16 7 0 DAP/MAP 3 46 0 41 0 28 116 0 32 11 4 524 28 0 Total Nitrogen 3 61 46 6 34 35 130 0 90 8 3 988 44 1
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Table 29: Latin America Nitrogen Imports by Country 2007 (thousands of tonnes product) Concluded.
Panama Trinidad Total Central America South America Argentina Bolivia Brazil Chile Colombia Ecuador Fr Guiana Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America Total Latin America 0 0 87 0 0 314 191 67 0 0 0 0 10 0 1 0 583 669 22 0 2,060 499 2 2,209 494 495 195 0 26 0 339 6 140 9 4,413 6,473 0 0 50 50 0 0 0 0 0 0 0 0 0 0 0 0 50 100 1 0 717 319 10 909 48 172 39 0 0 0 291 0 0 78 1,866 2,583 6 0 237 96 0 2,148 9 1 16 10 3 0 52 0 3 0 2,338 2,575 13 0 845 1,132 0 2,540 195 270 80 0 0 10 148 0 240 52 4,666 5,511 14 0 1,463 556 4 2,440 434 384 119 2 13 2 297 3 104 39 4,395 5,858
Nitrogen imports are expected to grow along with consumption and by 2027 reaching an estimated 11.4 million tonnes of nitrogen products with 5.3 million tonnes from outside the region. Tables 30, 31 & 32 show the BSC forecast of imports by country and by product for 2012, 2017 and 2027.
In 2012, total nitrogen imports increase by 1.7 million tonnes with ammonia and urea showing the strongest growth. Much of the growth in ammonia was in Mexico, Brazil and Chile. For urea, the growth was in Brazil, Peru and Argentina.
Table 30: Latin America Nitrogen Imports by Country 2012 (thousands of tonnes of products)
Ammonia Central America Belize Costa Rica Cuba Dominica Dominican Rep. El Salvador Guatemula Haiti Honduras 0 0 82 0 0 4 1 0 0 9 66 32 0 56 16 157 0 110 0 0 0 0 0 0 0 0 0 0 83 14 0 0 0 97 0 36 0 14 14 0 114 147 52 0 10 4 56 2 0 44 31 1 0 39 Urea UAN AN AS DAP/MAP Total Nitrogen 5 70 90 0 57 46 117 0 71
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Table 30: Latin America Nitrogen Imports by Country 2012 (thousands of tonnes of products) Concluded.
Ammonia Jamaica Martinique Mexico Nicaragua Puerto Rico * Panama Trinidad Total Central America South America Argentina Bolivia Brazil Chile Colombia Ecuador Fr Guiana Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America Total Latin America 90 0 500 289 70 0 0 0 0 25 0 1 0 975 1,766 637 9 3,750 450 580 158 0 31 17 613 9 167 9 6,430 8,539 50 0 0 0 0 0 0 0 0 0 0 0 0 50 100 300 10 900 30 175 43 0 0 0 250 0 0 78 1,786 2,257 90 0 1,825 5 10 10 10 10 0 71 0 3 19 2,053 2,453 1,417 3 2,450 241 311 97 0 0 64 200 0 301 46 5,130 5,759 730 8 3,216 494 436 105 2 16 18 434 4 126 42 5,632 7,611 0 0 704 0 0 0 0 791 Urea 14 5 1,551 67 0 23 0 2,106 UAN 0 0 50 0 0 0 0 50 AN 0 0 240 0 0 1 0 471 AS 19 0 20 0 5 5 0 400 DAP/MAP 12 5 390 30 0 15 0 629 Total 12 3 1,455 36 1 14 0 1,978
In 2017, total nitrogen imports increase by 0.9 million tonnes with ammonia and urea again showing the strongest growth. For ammonia, the major growth was in Brazil and Chile. For urea, the growth was in Brazil, Argentina and Mexico.
Ammonia Central America Belize Costa Rica Cuba Dominica Dominican Rep. El Salvador Guatemula Haiti 0 0 86 0 0 4 1 0 10 73 35 0 62 17 173 0 0 0 0 0 0 0 0 0 0 91 14 0 0 0 107 0 0 14 14 0 119 148 52 0 5 67 2 0 46 32 139 0 Urea UAN AN AS DAP/MAP Total Nitrogen 5 78 95 0 61 47 150 0
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Table 31: Latin America Nitrogen Imports by Country 2017 (thousands of tonnes of products) Concluded.
Ammonia Honduras Jamaica Martinique Mexico Nicaragua Puerto Rico * Panama Trinidad Total Central America South America Argentina Bolivia Brazil Chile Colombia Ecuador Fr Guiana Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America Total Latin America 95 0 760 339 90 0 0 0 0 0 0 1 0 1,285 2,169 737 11 3,850 516 671 184 0 36 20 440 10 194 9 6,678 8,995 50 0 0 0 0 0 0 0 0 0 0 0 0 50 100 339 10 860 10 175 47 0 0 0 244 0 0 102 1,787 2,238 95 0 1,714 5 10 14 10 10 0 76 0 3 23 1,960 2,432 1,638 5 4,074 279 334 111 0 0 119 170 0 363 64 7,157 8,038 830 9 3,698 564 498 121 2 19 28 329 5 149 54 6,306 8,506 0 0 0 793 0 0 0 0 884 Urea 121 16 0 1,711 74 0 25 0 2,317 UAN 0 0 0 50 0 0 0 0 50 AN 38 0 0 200 0 0 1 0 451 AS 10 19 0 86 0 5 5 0 472 DAP/MAP 46 13 6 476 33 0 16 0 881 Total 78 13 1 1,616 39 1 15 0 2,200
And finally, in 2027, total nitrogen imports increase by 1.4 million tonnes over the ten-year period with ammonia and urea again showing the strongest growth. For ammonia, the major growth was in Brazil and Chile. For urea, once again, the growth was in Brazil, Argentina and Mexico.
Table 32: Latin America Nitrogen Imports by Country 2027 (thousands of tonnes of product)
Ammonia Central America Belize Costa Rica Cuba Dominica Dominican Rep. El Salvador Guatemula 0 0 64 0 0 4 1 12 88 43 0 75 21 211 0 0 0 0 0 0 0 0 101 14 0 0 0 118 0 15 3 0 170 227 53 6 94 4 48 0 35 158 Urea UAN AN AS DAP/MAP Total Nitrogen 7 93 79 8 70 66 174
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Table 32: Latin America Nitrogen Imports by Country 2027 (thousands of tonnes of product) Concluded.
Ammonia Haiti Honduras Jamaica Martinique Mexico Nicaragua Puerto Rico * Panama Trinidad Total Central America South America Argentina Bolivia Brazil Chile Colombia Ecuador Fr Guiana Guyana Paraguay Peru Surinam Uruguay Venezuela Total South America Total Latin America 190 2 510 407 135 0 0 0 0 0 0 0 0 1,245 2,484 547 14 5,115 645 845 235 0 46 25 250 13 249 9 7,999 10,812 250 0 0 0 0 0 0 0 0 0 0 0 0 250 300 469 10 775 10 190 57 0 0 0 418 0 0 123 2,051 2,629 0 1 1,959 5 10 15 0 13 2 75 0 2 8 2,089 3,487 1,737 10 3,074 336 382 135 0 1 54 198 0 440 101 6,468 7,511 925 13 3,938 689 627 153 0 24 20 304 6 185 64 6,947 9,935 0 0 0 0 1,169 0 0 0 0 1,239 Urea 0 148 19 0 2,083 90 0 31 0 2,821 UAN 0 0 0 0 50 0 0 0 0 50 AN 0 42 1 0 300 0 0 1 0 579 AS 2 8 22 0 887 0 9 4 0 1,398 DAP/MAP 0 64 16 9 550 39 1 19 0 1,043 Total 1 94 16 1 2,309 48 2 19 0 2,987
Currently, the major nitrogen supplier into Latin America is Russia with 2.0 million tonnes of nitrogen followed by the Ukraine with 0.8 million tonnes of nitrogen accounting for 47% of the total nitrogen imports in 2007. These two countries supplied nearly 4.0 million tonnes of urea, 1.9 million tonnes of ammonium nitrate, 0.4 million tonnes of ammonium sulphate and a small volume of ammonia into the region. Latin American suppliers sold 1.0 million tonnes of nitrogen with Trinidad as the leading supplier, followed by Venezuela and Argentina. The United States was the next largest with 0.7 million tonnes of nitrogen, over half of this nitrogen was in ammonium phosphates (DAP & MAP).
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Table 33: Latin America Nitrogen Imports by Country 2007 (thousands of tonnes of product)
Ammonia Supplier Russia Ukraine USA China Trinidad Venezuela Argentina Qatar Saudi Arabia All Others Total Latin America 27 7 4 0 506 85 57 0 0 1 688 2,378 1,587 209 791 232 473 245 288 137 131 6,471 0 0 100 0 0 0 0 0 0 0 100 1,719 206 132 0 0 0 0 0 0 527 2,584 259 121 803 0 0 11 0 0 0 1,380 2,574 1,336 0 2,388 931 0 0 0 0 0 858 5,513 Urea UAN AN AS DAP/MAP Total Nitrogen 1,969 831 727 512 522 290 160 133 63 6518 5,858
In 2027, all of the ammonium nitrate and ammonium sulphate imports and nearly all of the DAP and MAP will be imported from outside the region in 2027. The largest nitrogen product imported from outside the region will be urea with an estimated 6.9 million tonnes in 2027. Overall, an estimated 6.2 million tonnes of nitrogen will be imported from outside Latin America in 2027 compared to 4.8 million tonnes of nitrogen in 2007. Table 34 shows how imports could look like in 2027.
Ammonia Supplier Russia Ukraine USA China Trinidad Venezuela Argentina Other L. America Qatar Saudi Arabia Africa All Others Total Latin America 0 0 0 0 1,668 700 6 110 0 0 0 0 2,484 3,000 1,000 175 0 1,600 2,100 600 200 500 500 1,095 44 10,418 0 0 0 0 0 0 300 0 0 0 0 0 300 1,700 0 62 0 0 0 0 800 0 0 0 100 2,662 600 100 1,400 184 0 0 0 7 0 0 170 1,026 3,487 1,000 0 3,586 500 0 61 0 666 0 500 1,000 199 7,512 Urea UAN AN AS DAP/MAP Total Nitrogen 2,244 481 969 119 2,104 1,550 377 562 230 310 699 301 9,935
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8.2 Target Markets

Bolivia is a land-locked country with a relatively low level of nitrogen consumption and even with above average growth, total nitrogen consumption during the next twenty-years is not expected to exceed 20 to 25,000 tonnes per year. Therefore, the bulk of the production from a new world-scale nitrogen complex in Bolivia will need to be exported. It should have become obvious from the import tables shown above, that for nitrogen, ammonia and urea are the growth products. It should have also become obvious that Brazil, Argentina, Mexico and Chile are the Latin American countries that will show the most growth in imports.
8.3 Price Forecast for the major ammonia and urea suppliers into Latin America
Nitrogen products compete on a delivered cost basis where both domestically manufactured nitrogen products will compete with imported nitrogen, cif domestic port of import. Some additional points are:
Domestic products may have an additional local freight advantage over imports if the production facility is away from the port and is closer to the market, but for smaller countries, this advantage is often insignificant.
The international broker (importer) most often purchases fob at the suppliers port of export and assumes the shipping and market risk. Since ocean shipping rates are volatile, the differential between a suppliers port of export and the domestic buyers port of import is also volatile.
Most international sales are quoted in US dollars while domestic buyers usually buy in local currency. Exchange rates are important, especially if the local currency is not tied to the US dollar.
Fertilizer prices are published in several industry trade journals like Fertilizer Week, The Market, FMB, FERTECON, Profercy. As a rule, prices are determined by a survey of buyers and sellers, however these published prices may not be representative of actual transactions since discounts, premiums or other allowances may be used. A number a tonnage contracts are based or indexed to these published prices.
The following are average annual published prices from Fertilizer Week that are considered the most meaningful for the Latin American market.
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Table 35: Ammonia & Urea Prices, 1999 to 2027 (US Dollars per metric tonne)
Ammonia fob Black Ammonia fob UreafobBlack UreafobArab Sea Gulf Ureafob Caribbean Urea fobNorth Africa
Sea Caribbean
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
84 138 122 100 183 230 241 246 270 541 316 340 400 358 373 386 405 427 455 489 458 436 420 397 430 473 510 551 520
92 147 136 108 197 247 271 274 285 552 341 365 445 403 418 432 452 474 503 538 508 487 472 449 483 527 565 607 577
66 102 98 95 138 176 219 223 308 494 240 229 219 214 224 239 254 269 284 309 309 294 279 264 264 274 294 314 334
79 110 108 109 149 200 242 239 316 517 253 238 228 224 234 249 265 280 296 321 321 305 290 274 274 283 302 323 344
79 135 116 116 157 192 232 230 324 550 275 233 233 229 239 254 270 285 301 326 326 310 295 279 279 288 307 328 314
81 137 110 116 161 207 252 234 334 553 270 268 258 254 264 279 295 310 326 351 351 335 320 304 304 313 332 353 339
The diagrams below show historical and forecast prices for ammonia and urea. Fertilizer prices are believed to be cyclical. Published prices from different fob locations generally move together and the forecast has adopted this same pattern for forecasting future prices. Record prices occurred in 2008 as world supply and demand became very tight. However, BSC believes that these prices increased were well above the level that would have been expected. The skyrocketing prices were the result of:
A perfect alignment of record high crop prices that produced very strong fertilizer demand Exceptionally strong buying from India that almost guaranteed an outlet for international suppliers High feedstock costs that increased production costs putting pressure on European and North America nitrogen manufacturers The introduction of an export tariff in China that suddenly reduced urea exports
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The combination of these events moved the market from a relatively tight supply to extremely tight. Market prices responded by moving sharply higher including a $150 increase in just one month during 2008.
Diagram 4: Published Ammonia Prices 1999 to 2027 (US Dollars per metric tonne)
700 Price History 600 Price Forecast
500
400
300
200
100
Black Sea
Caribbean
As shown on Table 35, average 2008 ammonia prices will be about twice the level of the 2007 average, the previous record year for ammonia. Average urea prices were 65% higher than the 2007 record level. For comparison, the average ammonia price during the previous twenty years (1988 to 2007) was estimated at $155 per tonne and the 2008 average was $541 per tonne, 3.5 times higher than the twentyyear average. For urea, the previous twenty-year average was $139 per tonne and the 2008 average was $494 per tonne, also 3.5 times the historical period.
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Diagram 5: Published Urea Prices 1999 to 2027 (US Dollars per metric tonne)
600
Price History
500
Price Forecast
400
300
200
100 Black Sea 0 Arab Gulf Caribbean North Africa
BSC believes that future ammonia and urea prices will also be cyclical but trending upward as capital and operating cost increase along with feedstock costs. The cycles in the nitrogen industry are caused by imbalances in overall supply and demand. Overbuilding of new capacity in the very profitable years will eventually result in the additions to supply (new capacity) exceeding the growth in demand. Since this new capacity needs to operate at a high level to recover capital and operating costs, higher production increases competition for market share and with limited demand, prices are pulled downward to a point where some older, higher cost capacity closes to balance the market. This represents the bottom of the price cycle.
These lower market prices result in lower profitability and little or no investment in new capacity. With a period of limited additions to new capacity, eventually the growth in demand exceeds the growth in supply and the market begins to tighten once again. Prices increase until they reach a point where investment in new capacity is again warranted. Since building a new ammonia/urea plant can take up to four years, these additions to new capacity are slow to produce new supply and market prices continues to grow until it reaches a peak where supply and demand are very tight producing the top of the price cycle. This cycle repeats itself every eight to ten years.
BSC has developed cost models for many of the worlds nitrogen plants. These models help us determine which plants will close at different price levels. These models also help us estimate when, where and at what price new capacity will be built. The results of this model will be covered in more detail in the next section. The bottom and top of the price cycle are the result of this model.
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9. Conclusions & Recommendations

9.1 Target Markets
The obvious conclusion is that urea (and possible ammonia) should be sold into Bolivia and exported into the surrounding countries. The logic behind this is that Bolivia is a land-locked country with a relatively low level of nitrogen consumption and therefore, the bulk of the production from a new world-scale nitrogen complex in Bolivia will need to be exported. Brazil, Argentina, Mexico and Chile are the Latin American countries that will show the most growth in urea consumption and imports.
Ammonia and urea are also the nitrogen products targeted by most of the worlds new projects. As far as the markets are concerned, most new suppliers want to target sales into nearby countries where demand is growing and where they would have a delivered cost advantage over many of the existing suppliers. Therefore, the Latin American ammonia and urea market would be the logical target markets as many of these countries would offer a fright advantage over non-Latin American competitors.
Although Bolivia is landlocked, it borders Peru, Brazil, Paraguay, Argentina and Chile. One of the largest cities is Santa Cruz, the center for agriculture and location of recently discovered natural gas reserves. Santa Cruz is east of La Paz, Bolivias Capital. Puerto Suarez is an important inland river port located 10 km west of the border with Brazil and 631 km from Santa Cruz. It is connected to the Rio Paragauy and the Rio Parana waterway by the Tamengo Canal where it is connected to the Atlantic. It is also connected to the rest of the country and Brazil by road and railroad. This is not intended to be a geography lesson but to point out that logistics may be a challenge. Depending on the location of the ammonia/urea plant, some product could move to the Atlantic for export, but it would be expensive. It is more likely that all of the production would be distributed into Bolivia and the surrounding countries.
Table 36: Argentinas Domestic Urea Supply/Demand Balance (thousands of product tonnes)
1997 Capacity Production Imports Total Supply Domestic Demand Exports Total Demand 150 134 364 498 498 ** 498 2007 1,263 993 499 1,492 1,247 245 1,492 2017 2,113 1,952 611 2,563 1,922 642 2,564 2027 2,113 2,100 811 2,911 2,533 378 2,911 Change 2007 to 2027 850 1,107 312 1,419 1,286 133 1,419
Source: British Sulphur Consultants
Urea imports into Brazil are also forecast to grow 2.9 million tonnes during the next twenty-years
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One possibility would be Argentina (Table 36 above) who imported 0.5 million tonnes of urea in 2007. Argentina imported most of its urea from Russia (178 thousand tonnes) and the Ukraine (158 thousand tonnes), Qatar (97 thousand tonnes) and Saudi Arabia (34 thousand tonnes). The Russia and the Middle Eastern suppliers have relatively low gas costs and therefore relatively low production costs. Offsetting these low production costs will be ocean freight costs. Freight costs are volatile and are currently about $20 to $22 per tonnes from Yuzhnyy (Black Sea) to Brazil and about $24 to $49 from the Arab Gulf. The excepting is the Ukraine who buys gas from the Russians and will soon be paying world gas prices. Urea imports are forecast to grow 312,000 tonnes over next twenty-years.
Another possibility is Brazil who imported 2.2 million tonnes of urea in 2007.In 2007, Brazil imported from many of the same suppliers including Russia (698 thousand tonnes), the Ukraine (893 thousand tonnes), Qatar (192 thousand tonnes) and Saudi Arabia (38 thousand tonnes). The same comments apply as above concerning relatively low production costs offset somewhat by ocean freight costs. Argentina (155 thousand tonnes) and Venezuela (85 thousand tonnes) also ship into Brazil. These countries also have relatively low gas and production costs and ocean freight costs are less because of their proximity to Brazil. BSC is forecasting an additional 2.9 million tonnes of urea will be imported by 2027. BSC is also forecasting that Argentina, Venezuela and in the future, Trinidad will become major suppliers into Brazil.
Table 37: Brazils Domestic Urea Supply/Demand Balance (thousands of product tonnes)
1997 Capacity Production Imports Total Supply Domestic Demand Exports Total Demand 1,409 1,302 898 2,200 2,140 60 2,200 2007 1,749 1,284 2,206 3,490 3,490 3 3,490 2017 2,759 2,603 3,519 6,122 6,122 0 6,122 2027 2,999 2,903 5,112 8,015 8,015 0 8,015 Change 2007 to 2027 1,250 1,619 2,906 4,525 4,525 -3 4,525
Urea imports into Chile were 0.5 million tonnes in 2007. Chiles largest urea suppliers are Venezuela (192 thousand tonnes) and China (132 thousand tonnes). Other urea importers include the USA (55 thousand tonnes) and small tonnage from Russia, the Ukraine and Indonesia. Exports from China are expected to dry up as their domestic urea demand increases. Imports from Indonesia will also dry up as opportunities for Asian business command higher net-backs. BSC is forecasting urea imports to grow by 151,000 tonnes during the next twenty-years.
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Table 38: Chiles Domestic Urea Supply/Demand Balance (thousands of product tonnes)
1997 Capacity Production Imports Total Supply Domestic Demand Exports Total Demand 17 0 291 291 291 0 291 2007 17 0 494 494 494 0 494 2017 17 0 515 515 515 0 515 2027 17 0 645 645 645 0 645 Change 2007 to 2027 0 0 151 151 151 0 151
Urea imports into Peru were 0.3 million tonnes in 2007. Current suppliers include Russia (149 thousand tonnes), the Ukraine (87 thousand tonnes and China (86 thousand tonnes). The Ukraine and China are likely to reduce sales into this market. BSC is forecasting imports will decrease by 89,000 tonnes during the next twenty-years as Peru begins production from a new ammonia/urea complex scheduled for a 2012/13 completion. Exports could also be eliminated if Peru decides not to export.
Table 39: Perus Domestic Urea Supply/Demand Balance (thousands of product tonnes)
Capacity Production Imports Total Supply Domestic Demand Exports Total Demand 1997 0 0 212 212 212 0 212 2007 0 0 339 339 339 0 339 2017 1,089 1,044 250 1,294 879 415 1,294 2027 1,089 1,089 250 1,339 1,124 215 1,339 2007 to 2027 1,089 1,089 -89 1,000 785 215 1,000
Urea imports into Uruguay were 0.1 million tonnes in 2007. Once again, Russia (63 thousand tonnes), the Ukraine (19 thousand tonnes) and Argentina (51 thousand tonnes) were the largest. BSC is forecasting imports to grow 109,000 tonnes during the next twenty-years.
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Table 40: Uruguays Domestic Urea Supply/Demand Balance (thousand tonnes)

1997 Capacity Production Imports Total Supply Domestic Demand Exports Total Demand 0 0 35 35 35 0 35 2007 0 0 140 140 140 0 140 2017 0 0 194 194 194 0 194 2027 0 0 249 249 249 0 249 Change 2007 to 2027 0 0 109 109 109 0 109
Total urea consumption in Bolivia is forecast to grow to 14,000 tonnes by 2027. A world scale plant could produce about 1.1 million tonnes of urea and a new plant in Bolivia would need to exports at least 1.0 million tonnes. Table 37 above shows that the best opportunity for exporting urea will be by rail or truck into Brazil where urea imports are currently 2.2 million tonnes 2007 and are forecast to grow to 5.4 million tonnes by 2027. A secondary target would be by barge into Paraguay, Uruguay and Argentina. The major offshore competitors in 2007 were Russia, the Ukraine, Qatar, Saudi and China. Russia and the Middle East suppliers are likely to maintain and even grow sales into Latin America while the Ukraine and China are likely to reduce sales.
9.2 Latin American Competitiveness

The key components of competitive position and profitability in the market for nitrogen producers are the cost of manufacture and delivery to the market. The vital issue for the Latin American nitrogen producer is to remain competitive with imported nitrogen. The following strategies for the Latin American nitrogen suppliers are likely: Investment in technology improvements that reduce cost, particularly feedstock costs are necessary for survival. Investment in nitrogen capacity in lower cost regions both within the region and possibly outside of Latin America will be investigated. Marketing agreements with offshore nitrogen manufacturers to supply Latin American customers will also become more common. Consolidation to improve product flexibility, logistics or market penetration. Remain competitive. Remain competitive or parish.
The BSC Nitrogen Cost Model estimates that the site costs for ammonia producers in South and Central America in 2008 will be range between $100/mt for the best players (e.g. Profertil Bahia Blanca in Argentina and Nitroven El Tablazo and FertiNitro in Venezuela) to over $400/mt for the most vulnerable plants (e.g. Ultrafertil Araucaria in Brazil). Trinidad production costs are standing in a position between
low-cost Venezuelan plants and high-cost Brazilian plants. The site costs for producers from Trinidad vary in the range of $150-200/mt. On average, feedstock costs account for about 80% of ammonia site costs in the South and Central American regions.
Diagram 6: Breakdown of Ammonia Site Costs for South and Central America Producers, 2008
Source: BSC Nitrogen Cost Model
Trinidad is the location for a number of new nitrogen projects in the Latin American region. Project activity has been high in recent years spurred by low cost of gas and proximity to the US Gulf Coast markets. The government of Trinidad and Tobago has been very supportive of investments in the nitrogen industry but now requires projects to include more downstream products as well as ammonia. This increases the total investment requirements and moves these producers into urea and UAN markets. The largest exporter in the Latin American region is Trinidad which accounts for 90% of total exports from South and Central American countries. The single largest destination for Trinidad product is the U.S. market, with only small volumes traded inside the Latin American region (mostly to Brazil) and to West European consumers (such as France, Belgium).
BSC expects further closure of ammonia capacity in Mexico. Gas prices in Mexico are linked to those in the USA and production costs are therefore considerably higher than other producers in Central and South America.
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Diagram 7: Ammonia Business Costs for Trinidad vs. Major Destinations (USA, WE, Brazil), 2000-2020
Some of the urea producers in Latin America enjoy relatively low gas costs when compared to manufacturers outside the region and as such, are competitive on a global scale. However, the region does not export much urea as there is currently not enough spare capacity due to high domestic demand. The graph below shows the average business costs for the regions that compete in the Latin American market.
Diagram 8: Breakdown of Urea Site Costs for South and Central American Producers, 2008
Urea Site Costs ($/mt) by Region 2008
500 Europe 450 FSU North America
400 East Asia 350
300
South Asia South East Asia South America
250
200 Africa 150 Middle East 100
50
0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
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Diagram 9: Average Business Costs of Competitors in the Latin American Urea Market
A benchmarking analysis of the production costs of Latin American urea producers versus their competitors shows that Argentina and Venezuela will retain their low-cost competitiveness in the longterm.
Diagram 10: Average Production Costs (US$ per metric tonne)
What all of these cost curves are showing is that manufacturing plants that have low cost feedstock (natural gas) are the lowest cost producers of ammonia and downstream nitrogen products because they convert ammonia on-site. For a nitrogen importer outside the region, the cost of transportation increases the delivered costs into Latin America and can make some of the local nitrogen manufacturers more competitive.
9.3 Conclusions
Feedstock costs determine the competitiveness of the nitrogen plant. Investors consider the availability of relatively low feedstock (natural gas) costs as their number one criteria when considering a new project. The term relatively low feedstock costs may seem ambiguous but the investor has a good idea what other nitrogen plants are paying for their gas. Low feedstock costs are necessary to remain competitive and are also required to repay the huge capital costs associated with an ammonia/urea investment. Energy costs are increasing around the world. The days of fixed price feedstock contracts are over. Nearly all gas suppliers sell gas at a price indexed to the selling price of the nitrogen product (ammonia, urea, UAN). The manufacturer with the lowest cost will survive during the cyclical decline and prosper during the cyclical upturn.
After feedstock costs, location is the second most important factor. Location includes both the proximity to the market and also a location where political risk is minimized. Nitrogen is an internationally traded commodity with an estimated 42.6 million tonnes of N (more than 100 million tonnes of nitrogen products) exported in 2007. Today, about one-third of the worlds nitrogen consumption is imported. Ocean freight costs increase the delivered cost to the buyers and reduce margins. International nitrogen trade is continuing to grow as most of the new capacity is being built in countries with low cost feedstock that will be targeting export markets. A location advantage could partially offset a disadvantage in production costs.
Location also includes minimizing or eliminating political risk. The capital requirements for a new world scale ammonia/urea facility are in excess of $1.5 billion. The debt/equity split can be 50/50 in todays market. These are long-term investments requiring ten-years or more to repay capital and interest and recover equity. All projects have market risks associated with them and with limited funds available; investors are selecting projects where political risk is minimal.
As stated at the beginning of this report, world crop production will need to increase to satisfy future demand for food, feed, natural fibers and fuels. With proper land use practices, Latin America has the potential to become the major supplier into these growing world agricultural markets. Latin American nitrogen demand is increasing and much of this regions nitrogen supply will be imported.
The major challenge for ammonia and urea manufacturing in Bolivia is to be competitive and this requires a relatively low feedstock costs. Information on feedstock costs in Bolivia were not provided but BSC believes that the worlds lowest cost ammonia producers have a current feedstock costs below $2 per thousand cubic feet (million BTUs). At $2 gas, a new, efficient ammonia/urea plant would have cash production costs of about $100 per tonne of urea. Debt service (principal plus interest) could add an additional $100 per tonnes during the first ten-years of the project. At the bottom of the price cycle in 2012, BSC is forecasting that fob Caribbean urea price will bottom out at around $230 per tonne. With $2 gas, this project should be able to cover production cost and service its debt even at the bottom of the price cycle. Profit margins will increase substantially as the market
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Ammonia & Urea Markets in Latin America

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