According to the company’s website press release on September 15, 2022, the energy crisis at the European level causes the management of Azomureș, the only producer of agricultural fertilizers in Romania, to adopt a new set of measures to reduce activities on the production platform for the coming months.
Azomures production has been significantly reduced during 2022. Energy prices in Romania have been much higher than production costs. Currently close to 70% of European fertilizer production is shut down.
"It's been a year since we drew attention to the problems that can arise in the industrial area, with the increase in energy prices. Energy prices have been high since fall 2021, significant spike hikes have been realised after the Russian invation – energy market continues to be volatile after closure of NorthStream 1. Despite the fact that Romania had at its disposal a support scheme, which other European states have applied, until now there has been no form of support for the industry that uses natural gas as a raw material in the production activity. The population is supported by capping the price of gas and electricity, but what happens if people run out of jobs to pay the bills? This is where the greatest danger is and unfortunately we are in a position to take new measures, some of which have an impact on our employees", said Harri Kiiski, the general manager of Azomureș.
The companies that provide various maintenance services on the Azomureș platform have been notified that their activity will be reduced by at least 30% in the coming months, with a potential direct impact on the employees of these companies. More than 200 other direct employees of Azomureș are also affected, delegation to other companies or technical unemployment being the solutions identified so far. Only essential staff are retained for night and weekend shifts, which will reduce the income of a significant number of employees. From an operational point of view, the facilities are ready in any case to be restarted at 50% capacity, when the economic realities are met.
The authorities in Romania will soon have at their disposal a new set of measures that can be applied to support the local industry, including that of fertilizers. Their application represents the maintenance of thousands of active jobs and the collection of substantial revenues to the state budget, directly and indirectly through the companies that depend on the large industrial platforms.
European commission has lately included fertilizer industries to key industries that should be kept operational “financial support measures to support companies in energy intensive industries such as fertilizer production”
Prior to the press release on September 15, 2022, the company announced on June 22 temporarily suspension of its production of ammonia due to the price of natural gas. The European gas market has risen sharply. In recent days, prices have risen from 80 Euro Mwh to 125 - 130 Euro Mwh. The explosion of a liquefied gas (LNG) export terminal in the United States, problems in the gas transmission chain and massive gas storage operations for the winter season 2022 - 2023 have again led to a price increase. At the same time, the fertilizers prices has decreased due to the agricultural season, the main activities now being those of crop harvesting. Under these conditions, it is obvious that fertilizer production is currently not economically sustainable. Consequently, Azomureș has taken the decision to suspend temporarily the production of ammonia (intermediate product obtained from gas, used for the manufacture of fertilizers), the installations will be stopped in safe conditions starting with June 23rd. We will continue to produce fertilizers until the existing ammonia stock is depleted. Similar decisions have been made by other companies in Europe, the cause being the same, the price is unsustainable from an economic point of view.
"It is serious what is happening today on the gas market for most European fertilizer producers. In Romania, we continue the dialogue with government authorities in order to apply economic aid offered by the European Union, already applicable in many European countries. For example, Bulgaria provides capped price of gas for its industries, 72 Euro Mwh. Until today, Romania does not implement the aid scheme for energy-intensive industries, given the European legal framework. As a producer, we know that it is difficult to ensure the necessary quantity for the next agricultural season if we do not produce during the summer. The scheme provided by the European Union must be applied, "said Harri Kiiski, general manager of Azomures.
The staff on the Azomures platform will continue their activity according to the normal work schedule where needed. At this moment, technical unemployment is not taken into account, but it remains an option if the suspension of the activity will be extended.
Azomureș is the most important producer of fertilizers for agriculture in Romania. Azomureș also supplies raw materials (Urea and Melamine) for several industrial targets in Romania. The annual production (under normal operating conditions) is 1.6 million tons of fertilizers, approximately 75% of the production being intended for Romanian farms. Azomureș is part of the Swiss group Ameropa, one of the largest traders of fertilizers and grains globally.
