Fertiliser Prices Set to Decline

The planned investments in Zimbabwe’s fertiliser industry will trigger significant reduction in cost of the products and make them more competitive on both local and the export market, according to a Government medium term strategy of reviving the sector.

Zimbabwe’s fertiliser products are probably the most expensive in the region, partly due to high costs leading to massive production inefficiencies.

This makes the commodity unaffordable to many farmers, particularly small scale and communal.

Zimbabwe’s demand for fertiliser in a normal and good farming season, is about 600 000 tonnes (both basal and top dressing), of which 70 percent goes towards Government farming programmes.

Under the Five-Year Fertiliser Import Substitution that the Government has adopted, nearly US$80 million would be invested to enhance capacity of local firms with prices expected to gradually decline by an average 28 percent over the next four years.

Ammonium nitrate, according to the roadmap crafted by the Ministry of Industry and Commerce, will gradually drop to US$18 for a 50 kilogramme bag from the current US$25 while the price of phosphates will decline to US$9,25 from US$13.

The roadmap will be largely anchored on ramping up production at Sable Chemicals, the country’s sole ammonium nitrate producer and Chemplex Phosphates.

An investment of nearly US$40 million would see Sable Chemicals increasing output to 240 000 tonnes of AN by 2024. This would in turn reduce imports from the current 220 000 to 10 000 tonnes, according to the five year strategic roadmap.

About US$36 million would be invested in Chemplex’s subsidiaries — ZimPhos and Dorowa Mines and this is expected to propel phosphates production to 100 000 tonnes from 80 000 tonnes while bringing down imports to 140 000 from 180 000 tonnes.

Fertiliser Association of Zimbabwe president Mr Tapuwa Mashingaidze said he was optimistic that the roadmap would result in improved production efficiencies, which would lead to drop in prices. “Fresh investments will result in higher efficiencies and that reduces costs,” Mashingaidze, who is also chief executive of Chemplex said.

Industry and Commerce Minister Dr Sekai Nzenza, said the planned investments would enhance efficiency of local producers, thus enabling fertiliser products to be more competitive.

“Our fertiliser products will target the export market and become competitive within the region,” Dr Nzenza told Business Weekly. “We will leverage on the Africa Continental Free Trade area with our quality products. We will bring Zimbabwe into the limelight of local production within Africa.”

Zimbabwe used to be a major exporter of fertiliser until late 90s when it lost its competitiveness largely to economic challenges. From being a major exporter, the country is now spending several millions of United States dollars to import fertiliser.

In the past seven years, Zimbabwe spent a whooping U$622 million on fertiliser imports.

The large chunk of the money was forked out by the Government for State-assisted farming programmes such as Command Agriculture and the strategically important Presidential Inputs Scheme for small-scale farmers and vulnerable households.

Had local fertiliser producers been adequately supported, the Government would have spent just US$400 million, not to mention the impact this would have had on industries — both forward and backwards linkages.

There are 12 fertiliser companies in Zimbabwe with the newer ones being involved in making blended NPK compounds. Out of these, three companies are involved in the primary production of raw materials. These are Dorowa Minerals which mines phosphate rock in Buhera, which is in turn converted to fertilizer grade phosphates by ZimPhos in Harare

Then Sable Chemicals in Kwekwe produces AN from imported ammonia following decommissioning of its electrolysis plant three years ago. At the secondary level, three companies have granulation capacity and these are Zimbabwe Fertilizer Company, Windmill and FSG. Windmill also operate blending plants.

FSG, Omnia, ETG and several other companies operate blending plants whereby granulated materials are physically mixed to make various grades of NPK compounds. The degree of value addition is obviously higher for primary producers.

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