14 Industrial Chemistry The Fertilizer Industry in the Year 2000* By K. GILBERT The British Sulphur Corporation Ltd. Parnell House 25 Wilton Road London SWl V 1NU 1 Introduction Making forecasts is a chancy business. Making any forecast presupposes a precise knowledge of today and the past an unlikely circumstance in itself. Taking a view in 1984 of a particular industry in the year 2000 a look ahead of 17 years has the advantage that the forecast will be forgotten well before it can be compared with what really happened. But will it? Forecasts are being made all the time. A view based on the best possible knowledge is better than no view to a company considering a major investment (or even survival itself) or a government considering its medium term financial strategy.Economists market researchers futurologists and others are all involved in what was once the province of the soothsayer and the astrologer. We still have those as well and they are still as right and as wrong as they always were. To get back to fertilizers and the examination of past forecasts. In October 1964 Ignatieff Doyle and Couston of the FAO Rome presented a paper to the Fertilizer Society entitled ‘Future Fertilizer Requirements of Developing Countries and Crop Response to Fertilizer in these Countries’.’ The authors did what I am now doing. They compared a forecast made by an FA0 committee in 1946 for 1960 with the actual outcome. The total consumption of N and P205was forecast (over a period of 14 years) with considerable accuracy but the regional forecasts were wide of the mark.The authors also gave figures for P,05 consumption comparing a forecast for 1959/60 made in 1953 (a period of 6 years) and once again the regional figures were wide of the mark. Having shown that their own past forecasts were wide of the mark they bravely set out to comment on 1980 consumption. I am not being fair to the authors because what the FA0 stressed then and now are nutritional goals. Fertilizer consumption then becomes a consequence of the goals taking into account the amount of land available cropping pattern and so on. The authors quote figures prepared by their colleague Parker. He calculated that in order to meet food requirements in 1980 fertilizer use had to increase in four developing regions to the amounts shown in Table 1.* Based on a lecture given at the Annual Chemical Congress of the Royal Society of Chemistry University of Exeter April 1984. ’ Proceedings No. 83 The Fertiliser Society London 29th October 1964. 345 346 K. Gilbert Table 1 Estimated fertilizer requirements for 1980 nutri-tional goals (million tonnes plant nutrients) Fertilizer consumption Region 1959/60 1980 Asia and Far East 2.53 20.0* Near East 0.25 3.6 Africa 0.40 8.6 Latin America 0.82 7.3 4.00 39.5 * Includes 5.0 millions for Mainland China We now have figures for fertilizer years 1979/80 and 1980/81 for comparison although the definition of the regions is a little different (Table 2). Table 2 Fertilizer consumption (million tonnes nutrients) Forecast Actual Region 1980 1979/ 80 1980/81 Asia and Far East 20.0 -3.6 -Near East Asia" -13.186 13.402 Other Communistb -14.1 19 16.406 Africa 8.6 2.819 3.265 7.3 -Latin America Central America' -1.707 3.528 South America -4.6 18 5.292 Total 39.5 36.449 41.893 a Excluding Communist Asia.Excluding USSR Eastern Europe but including Cuba. Excluding Cuba. The average of years 1979/80 and 1980/81 was 39.171 million tonnes and so the out-turn was remarkably close to the perceived need-less than 1% out over 20 years. The authors also examined a forecast made by Steward.2 He based his estimates on a high standard of nutrition and he predicted that world consumption of fertilizers Table3 Fertilizer consumption (million tonnes) of N P205 and K20 in 1960 and estimated consumption in 1970 and 1980 in three selected areas of the world Compounded rate of Estimated 1960 increase O/O consumption Area Consumption 1960-1970 1970-1980 1970 1980 Developed countriesa 20.0 3 3 26.9 36.1 E.Europe and USSR 5.0 12 5 15.5 25.3 Developing countriesb 2.7 15 10 10.9 28.3 World 27.7 6.8 5.3 53.3 89.7 a Includes USA Canada Western Europe Oceania and Japan. Includes all countries of Latin America Near East Far East and Africa except Mainland China and Japan ' D. D. Steward 19649 Foreign Agriculture I1 No. 19 U.S.D.A. Washington D.C. 34. Industrial Chemistry The Fertilizer Industry in the Year 2000 would reach 90 millon tonnes of plant nutrients by 1980.The FA0 authors pointed out that this estimate required a 15% p.a. annual increase in fertilizer use in the developing countries between 1960 and 1970 followed by an annual 10% p.a. increase between 1970 and 1980. They felt that this was a very optimistic view. Steward's figures are given in Table 3 We compare his forecast for world total with the out-turn in Table 4. Table 4 Fertilizer consumption 1970 and 1980 (million tonnes nutrients) Forecast Actual i 970 1980 1970" 1980' 53.3 89.7 66.2 109.4 Average of Fertilizer years 1969/1970 and 1970/1971. Average of Fertilizer years 1979/1980 and 1980/1981 What appears to have thrown out these forecasts was an incorrect view of the potential growth in the developed world and Eastern Europe. The compound rate of growth for the developed countries was forecast at 3% p.a.over the 20 year period but growth was much faster than this. By 1970/71 Western European and North American consumption combined had reached 33.5 million tonnes and it was 44.4 million by 1980/81. In Eastern Europe and the USSR the 1970/71 consumption was 18.5 million tonnes compared to the forecast of 15.5 and by 1980/81 consump- tion had reached 30.1 million tonnes compared to the forecast of 25.3 million tonnes. The developing world did not do at all well. Our consumption statistics show that the group consisting of Africa Central America South America and Asia (but not including the Communist countries) which is roughly comparable with Steward's developing countries in Table 3 reached a consumption of 10.4 million tonnes in 1970/71 and 25.5 million tonnes in 1980/81.This preamble has allowed me to say something about forecasts but it also serves to show what strides were made by the fertilizer industry from the late 1940s to 1980. Turning to my own view of the future I intend to deal with the subject as follows. First I will give a picture of the fertilizer industry as it exists today then I will try to describe the industry in the year 2000 in terms of size location ownership size of plants technology and finally trade. 2 A Picture of the Industry as it Exists Today The World Fertilizer Industry is a very large business. In terms of the three major nutrients -nitrogen (N) phosphorus (P20,) and potassium (K20) it accounts for about 1 14 million tonnes of consumption.The fertilizers that are used vary in nutrient content but it is reasonable to assume that 250-300 million tonnes is handled in product terms. This scale of production requires multi-million tonnes of raw materials-hydrocarbons phosphate rock sulphur and potash. World-wide there are about 6500 plants making fertilizers. These plants do not include the large number of blending plants making both solid and liquid products that are a particular feature of the North American fertilizer scene. 348 K. Gilbert An analysis of consumption shows that Western Europe and North America have declined in importance (in percentage terms) as other regions have grown in importance. The present situation is given in Table 5.Table 5 Fertilizer consumption by region and nutrient 1982/83 (Preliminaryjigures) ( thousand tonnes) N p20 K2O Total Western World 33 863 17 971 13 594 65 401 Communist World 27 147 12 410 9 045 48 652 Western Europe 10 514 5 664 5 072 21 205 Africa 1 809 1072 346 3 227 North America 9 368 4 366 4 757 18 491 USSR 8 908 5 616 4 961 19 485 Eastern Europe 5 343 3 472 3 422 12 246 Other Communist 12 946 3 319 662 16 927 Central Americaa 1461 526 167 2 154 South America 1184 1518 1038 3 740 Asiab 9 228 3 796 1 969 14 993 Oceania 272 1 029 242 1 543 a Not including Cuba. Not including Communist Asia The basic raw materials for the fertilizer industry are hydrocarbons with natural gas being the most important for ammonia production; phosphate rock for the production of single superphosphate phosphoric acid and triple superphosphate ; sulphur for the production of sulphuric acid and thence phosphoric acid; and potash.Ammonia phosphoric acid and sulphuric acid can be considered as inter- mediates. Some phosphate rock having the right solubility characteristics is used directly as a fertilizer. The main products are as follows Ammonia.-Natural gas is the most important hydrocarbon raw material for ammonia production but naphtha fuel oil and coal can also be used. The electrolysis route avoids the direct consumption of hydrocarbon entirely if the power is generated in a nuclear or hydroelectric plant. Natural gas is converted into hydrogen and carbon dioxide and the hydrogen is combined with nitrogen to give ammonia.All the process stages are catalysed and are carried out at elevated temperature and/or pressure. The production of 1 tonne of ammonia requires 32-42 million Btu natural gas or 0.9 tonne naphtha or 1.9 tonnes of coal. Urea.-Carbon dioxide usually from the ammonia process is reacted with ammonia at elevated temperature and pressure to give a solution of urea which is evaporated to give solid urea or is used in the preparation of UAN solutions. The production of 1 tonne of urea requires 0.58 tonne ammonia and 0.76 tonne carbon dioxide. Ammonium Nitrate (AN).-Ammonia is oxidized over a catalyst at high temperature to give nitric acid. Nitric acid is neutralized with ammonia to give AN solution which is evaporated to a melt which is then granulated.1 tonne of AN requires 0.78 tonne of 100% nitric acid and 0.21 tonne anhydrous ammonia. Industrial Chemistry The Fertilizer Industry in the Year 2000 Ammonium Sulphate (AS).-Most AS arises as a by-product in caprolactam manufac- ture and from the removal of ammonia from coke oven gas. Small amounts are made directly from ammonia and sulphuric acid. 1 tonne AS requires 0.26 tonne ammonia and 0.74 tonne sulphuric acid. Nitrogen Solutions.-Combinations of urea and ammonium nitrate (UAN) ammonia and AN and ammonia and urea have become major sources of nitrogen for agriculture. The most popular combination is a mixture of AN and urea in proportion to give maximum solubility (approximately 45% AN 35% urea and 20% water containing 32% nitrogen).Single Superphosphate (SSP).-Made by mixing pulverized phosphate rock with sulphuric acid allowing to set and cure and then crushing and sizing. Although easy to make it has a low nutrient content which increases its cost of transportation per unit P205. 1 tonne SSP of 20% P205 content requires 0.64 tonne phosphate rock 70% BPL (32% P205) and 0.37 tonne sulphuric acid 100%. Phosphoric Acid.-As far as the fertilizer industry is concerned most phosphoric acid is made by the wet process involving the acidulation of phosphate rock with sulphuric acid followed by filtration to remove the calcium sulphate (phosphogyp- sum) liberated. The solution of phosphoric acid is then concentrated to the desired level which for so-called merchant acid is 52-54% P205 and for superphosphoric acid is 68-72% P205.Phosphoric acid can also be made by burning phosphorus (made in an electric furnace) and by acidulating phosphate rock with hydrochloric acid. These generally more expensive routes result in a high quality acid suitable for industrial applications. The production of 1 tonne P205 as phosphoric acid by the wet process requires about 3.3 tonne phosphate rock 70% BPL (32% P205) and 2.8 tonnes sulphuric acid 100°/~. Triple Superphosphate (TSP).-Made by treating phosphate rock with phosphoric acid. The process is similar to that for SSP but TSP has a much higher P205 content of 44-46% and is therefore a more attractive commodity in international trade. 1 tonne of TSP of 46% P205 content requires 0.40 tonne of phosphate rock 70% BPL (32% P205) and 0.85 tonne of phosphoric acid 40% P205(0.34 tonne P205).Ammonium Phosphates.-Diammonium phosphate (DAP) is the most popular prod- uct of this type but a range of compositions can be made depending on the proportions of ammonia and phosphoric acid used. 1 tonne of DAP requires 0.23 tonne ammonia and 1.175 tonne phosphoric acid 40% P205(0.47 tonne P205). 1 tonne monoammonium phosphate (MAP) requires 0.15 tonne ammonia and 1.35 tonnes phosphoric acid 40% P205(0.54 tonne P205). Nitrophosphates.-Acidulation of phosphate rock with nitric acid converts the insoluble phosphate into a soluble form (the object of all the acidulation processes) and also produces a product that contains nitrate nitrogen.Phosphoric acid is not produced as such. The choice of a nitrophosphate route depends on many factors but an important consideration is the cost and availability of sulphur as compared to the cost and availability of hydrocarbon feedstock. 350 K. Gilbert Potash.-Potash minerals are mined or are recovered from dry lakes and salt lakes. The most common minerals are sylvinite (mined) langbeinite (mined) and carnalite (salt lakes). The potash (potassium chloride) is liberated and separated from common salt or magnesium chloride by a variety of methods including sizing flotation heavy media separation electrostatic separation and crystallization. Non-chloride Potash.-In most fertilizers potassium chloride can be used and is the cheapest form of KzO.Potassium sulphate and nitrate are preferred for some crops. They are usually made from KCl using sulphuric acid and nitric acid respectively although potassium sulphate does occur naturally in minable deposits and in certain salt lakes. The volumes are small compared to potassium chloride. Sulphur.-Sulphur is a key raw material for phosphoric acid and SSP production. It is also in its own right an essential plant nutrient. Whilst most sulphur is burnt to give sulphuric acid not all sulphuric acid is made from sulphur. Smelter acid is an important source for the fertilizer industry and in certain locations sulphuric acid from pyrites is important. It is a matter of concern (economically and environ- mentally) to the phosphate fertilizer industry that the sulphur used in producing phosphoric acid ends up as calcium sulphate waste.In addition to the main nutrients N P and K there are less important nutrients in volume terms that are just as important to the well being of the plant crop. These are calcium magnesium boron copper iron manganese molybdenum and zinc. A deficiency of any one can adversely affect the plant even though the other nutrients are available in sufficient amount. 3 Size of the Industry We have already given a view of the present size of the industry. This section deals with its growth prospects to the year 2000. The Fertilizer Industry exists as a means to an end; the end being food production and to a much lesser extent production of other agricultural products such as fibres.At the present time large numbers of people are inadequately fed whilst at the same time agricultural surpluses arise in the developed world. The problem is not just one of inadequate global food production but arises from the inability of some people to buy food and to move it from areas of surplus to areas of need. Even this is an oversimplification. To supply a starving people with food is common humanity but in the longer run to help them grow their own food is preferable. The supply of finance for fertilizer purchase is receiving the attention of agencies such as the World Bank. In some circumstances this assistance can be much more helpful than a larger sum for the construction of a fertilizer plant. A recent report prepared for the U.N.World Food Council says that some of the dire predictions made a decade ago about world food scarcity were wrong and the threat of a global food crisis now seems remote. The change of mind is due to a substantial recovery in world cereal production and the resulting downwards pressure on grain prices. Nevertheless new mouths have to be filled and so population growth has to be taken into account in long-term fertilizer forecasting. Industrial Chemistry The Fertilizer Industry in the Year 2000 351 By the year 2000 a world population of 6 billion is probably ine~itable.~ The lowest level is 5.9 billion. These increases represent a compound growth rate of 1.44-1.82% p.a. The compound growth between 1950 and 1980 was 1.89% pea.and between 1970 and 1980 1.83% p.a. Fertilizer consumption in nutrient terms increased at an average rate of 5.41% p.a. between 1970/71 and 1980/81. It would appear that the Fertilizer Industry had no difficulty in keeping well ahead of population growth and we have no reason to suppose why it should not do so up to 2000. However the need for fertilizer growth on a per capita basis is greater in the developing world than in the developed world. Population growth in the develop- ing world from 1980 to the year 2000 is forecast at about 2.04% p.a. compound. Apart from population growth two important factors are arable land availability and cropping intensity. In the FA0 study ‘Agriculture Toward 2000’ it is estimated that 72% of the required increase (in agricultural production in developing countries) will have to come from the intensification of existing agriculture and 28% from the expansion of arable land.4 The FA0 suggest that by 2000 arable land in use will increase by the amounts shown in Table 6.Table6 Availability and use of arable land in the developing countries Arable area in use as a YO of potential area Region Current 2000 Africa 30 39 Far East 79 87 Latin America 25 39 Near East 63 67 Developing countries 40 50 Source FA0 Other factors of importance in agricultural production are water availability the provision of better seed research crop protection (standing crop and stored produce) power and energy the provision of advisory services and the availability of finance.Farmer income has a strong bearing on fertilizer use. At the subsistence level the farmer does not use any fertilizer. At the sophosticated farmer level for example in the USA some farmers will cut back on fertilizer application levels if low crop prices are expected. Future demand for fertilizers can be affected to a great extent by a change in the USA situation. A 10% change in consumption in North America is equivalent to over 2 million tonnes of nutrients more than the total used in Oceania and about the same as the total used in Central America. In 1982/83 nutrient consumption in North America was 4.895 million tonnes down on the usage level of 2 years previously. This is roughly equivalent to a loss of 1 year’s growth on a world basis.Sources FA0 and The Global Report to the President ‘Entering the twenty-first century’ Penguin Books 1982. J. W. Couston ‘World Food Production and Fertilizer Demand Prospects’ FAO Rome International ‘Sulphur ’82’ Conference Proceedings British Sulphur Corporation London 14-1 7 November 1982. 352 K.Gilbert The availability of manufacturing capacity is unlikely to be a constraint to fertilizer consumption other than in the short term. Any impending shortage would raise price expectations and make investment in new capacity more worthwhile. The one exception may prove to be the nitrogen sector in the medium term where the rate of plant building may not keep up with demand. In developing countries with cheap gas it can take 7-10 years to plan a project organize finance and build a plant.Raw material availabilities need to be considered. All the basic raw materials should be available at a price. Phosphate rock and potash are plentiful although a gradual move to lower-grade deposits will increase production costs Hydrocarbon sources for ammonia production will be costed in terms of their fuel value and the average cost into ammonia plants will rise in real terms but there is no reason to expect a general shortage of feedstock. The only question mark is against sulphur supply which is also largely fuel related as more and more arises from oil refinery desulphurization processes and sour-gas processing. Sulphur supply and demand will be in a delicate balance in the early years of the forecast period but may have eased slightly by the early 1990s as USSR production increases substantially.The remaining question is can any technological changes significantly affect fertilizer demand in the period to 2000? The most talked about is nitrogen fixation. Professor Postgate of the Agricultural Research Council Unit of Nitrogen Fixation at the University of Sussex has recently reviewed the prospects.’ His conclusion is that major commercial exploitation of current and very interesting laboratory experi- ments could be made in the time frame of ‘a few years’ for augmenting the effectiveness of existing symbiotic systems by genetic manipulation to ‘two to three decades away’ for somatic hybridization. He points out that there are immediate and short-term possibilities involving an expanded production of legumes such as soya beans the winged bean chickpeas and lupins.Azolla a water fern which harbours nitrogen-fixing cyanobacteria is showing potential as a green manure in tropical agriculture and in particular in rice production. Despite these developments the effect on industrial nitrogen fertilizers in the forecast period is expected to be minimal. A significant downward trend in nitrogen demand might be expected when efficient diazotropic associations with cereals are developed by genetic manipulation but this stage might only be reached in the early part of the 21st Century. Questions as yet unanswered have been raised about the energetics of these systems. The nitrogen fixation mechanism has to be fuelled by the plant and so there could be a corresponding yield loss.It may be more effective to use nitrogen fertilizers after all A new study only a brief review of which we have seen concludes that innovations in plant genetics will add $5 billion a year to the value of major crops over the next decade an amount that will climb to $20 billion a decade later. The report forecasts that world food production 25 years from now would rise 5-10% as a result of biotechnology alone. J. R. Postgate FRS ‘Probable Impacts of Biological Nitrogen Fixation on Fertilizer Use’ ‘Fertilizer ’83’ Conference Proceedings British Sulphur Corporation London 13-16 November 1983. ‘The New Plant Genetics’. Report by L. William Teweles and Company Milwaukee USA reviewed in 7he New York Times 8 December 1983.Industrial Chemistry The Fertilizer Industry in the Year 2000 Taking all these factors into account we forecast increases of nutrient consumption to the following range by 2000 (million tonnes) 19821 83 2000 '% change N 6 1.03 112-1 18 83.5-93.3 p205 30.38 55-58 8 1.O-90.9 K2O 25.00 (1982) 4547 80.0-88.0 These increases are equivalent to the output of 170-190 new plants for ammonia production and 147-164 new plants for phosphoric acid production. Two points have to be borne in mind. In the early years of the period some of the extra requirement will come from existing capacity. Then the closure rate of old and inefficient plants has to be taken into account. This is particularly the case with ammonia where energy efficiency is such an important factor bearing on cost of production.This indicates that a substantial building rate of about 10 ammonia plants and 9 phosphoric acid plants a year is required. 4 Location of the Industry The trend over recent years has been for the production of basic fertilizer materials to move towards raw-material sources and towards the developing world. Sometimes these factors are coincident and reinforcing. They also have a bearing on the pattern of trade. These trends are likely to continue. The trend towards conversion of raw materials in the countries in which the raw materials are found rather than shipping the raw materials as such is a natural development. The raw materials have a low value. Conversion into an intermediate product enhances the value of the basic resource and the income arises in the country of conversion and more people are employed.A country shipping phosphate rock at say $35 per tonne f.0.b. can convert the rock into phosphoric acid to sell at $300 per tonne P205f.0.b. As about 3.3 tonnes rock is required for 1 tonne P2O5 about $185 is available to purchase other raw materials and to pay for the conversion into phosphoric acid. The move of basic production to the countries with a strong raw material base is shown most clearly for phosphoric acid. Morocco an important rock supplier particularly to Europe has made massive investments in phosphoric acid plants and is shipping increasing amounts of acid. Over the period 1971-1982 Moroccan rock production increased by 48.7% and exports increased by 17.6% but exports peaked in 1974 and have since fallen by 25.2%.In the same period phosphoric acid production increased by 792.9%. Tunisia is the second largest phosphate rock producer in Africa. It too has increased its phosphoric acid production at the expense of rock exports. Over the period 1971 to 1982 Tunisia increased its rock production by 32.7'/0 its rock exports declined by 1 11.6% but its phosphoric acid production increased by 456.9%. Two other phosphate rock producers in the developing world Jordan and Brazil also processed more of their own rock. Jordan (the largest rock producer in Asia) 354 K. Gilbert and Israel have only recently started up wet phosphoric acid production using sulphuric acid.Brazil was a substantial importer of phosphate rock and phosphoric acid. Rock imports peaked at 1.556 million tonnes in 1977 and phosphoric acid imports peaked at 0.818 P205 million tonnes in 1980 having increased from about 22000 P205 tonnes in 1971. By 1982 acid imports had fallen to 0.317 million tonnes. Western Europe has traditionally been a strong manufacturer of fertilizers includ- ing phosphate despite its weak raw-material position particularly for phosphate rock. It has been able to buy rock from North Africa Togo Senegal USA USSR and Israel for conversion into phosphoric acid and other phosphate intermediates. The region is likely to remain an important rock consumer through to 2000 although rock imports are now at best stagnating whilst phosphoric acid imports continue to grow steadily.My colleagues Kurtanjek Park and Phillips in a paper to The Fertiliser Society in 1983’ wrote ‘It can be clearly demonstrated that vertically integrated ( i.e. rock-mine based) producers of P205intermediates and fertilizer products and especially those whose mining/manufacturing facilities are state-owned enjoy cost advantages deriving from their control of the mineral raw materials in particular of phosphate rock which prima facie would make their competitive strength irresistible and sound the death-knell of primary P205 manufacture in West Europe’. My colleagues were looking ahead to 1990. Despite the apparent inevitability of a decline in basic phosphates production in Western Europe they concluded their paper with the view ‘... that notwithstanding the irreversible demise of West Europe as a major factor in world P,05 export markets the West European phosphate fertilizer industry which with few exceptions is integral with the West European nitrogen industry will maintain its dominant position in the domestic markets and whilst benefitting from the increased availability of competitive liquid and solid P205intermediate supplies on the world market to enhance its profitability it should not be expected completely to succumb to pressure from the vertically integrated (rock-mine based) P205producers. It will not however be able entirely to resist inroads from this quarter’. Ammonia production-location changes are more difficult to predict.Natural gas is found in all regions and ammonia manufacture is only one option for its utilisation. Gas arising in an area of low demand can be moved to customers in other areas by pipeline or ocean-going vessel. Alternatively the gas can be converted into ammonia or urea for shipment. The production of methanol is another alternative. Out of a 1982 world production of 76.9 million tonnes ammonia (as N) only about 5.6 million was traded internationally. The largest net exporter in 1982 was the USSR but their exports of 1.407 million tonnes only amounted to 9.2% of their production. If ammonia projects are considered then the trend is for more of them to be located in the developing world in which we include China and the USSR.Of the ’ M. P. Kurtanjek M. N. Park and T. D. Phillips ’Manufacturing Versus Importing A Techno-Economic Review of the Outlook for the West European Phosphate Industry’ Proceedings No. 214 The Fertiliser Society London 21st April 1983. Industrial Chemistry The Fertilizer Industry in the Year 2000 59 plant projects which we list as under construction contracted and bidding (50% likelihood) with a total capacity of 16.46 million tonnes 37 plants with a total capacity of 8.724 million tonnes are in the developing regions of Africa South America and Asia and a further 13 plants with a total capacity of 5.156 million in Eastern Europe. Nitrogen is the basic nutrient and one that must be used every year. All agricultural countries need an assured source of supply and often see an ammonia plant as a strategic necessity.In these circumstances the raw material situation is of less importance and a political rather than economic decision may be made. Political factors are not absent from the West European and US scenes. The pricing of gas is crucial to the future of the ammonia business in a free-trade world. Governments decide the price of gas either directly or through their taxation policies or through their regulatory processes as in the USA. One decision would keep ammonia production in West Europe another would result in its decline. 5 Ownership There are two main trends as far as basic production is concerned. The first is that the competitiveness of the business a need for rationalization and a desire for a basic raw-material position is leading to fewer and larger companies in the Western World.The second is that more and more of the fertilizer industry is government owned. Regarding the first we have seen its effects in recent years in the UK with the take-over of Fisons by Norsk Hydro and that of Albright and Wilson’s fertilizer operations by ICI. Other small companies have been absorbed and we are left with three.. . ICI Norsk Hydro and UKF. The French industry seems to be under constant reorganization. The Spanish industry is facing a major reorganization. In both these countries in the future there will be fewer plants and less competition amongst the domestic companies (probably state organisations) that remain. Nine8 has suggested that the ideal number of producers supplying a homogeneous market is three but it is hard to imagine the EEC for example being supplied by three fertilizer companies.The second trend is towards state ownership. Sheldrick’ in the Thirteenth Francis New Memorial Lecture to the Fertiliser Society pointed out that the percentage of fertilizers produced in developed economies would fall to about 43% of the world total by 1990 from about 76% in 1950 whilst production in centrally planned economies would increase to 36% from 19% and in developing economies to 21‘/o from 5% over the same period. As we know much of the industry in developed economies is in state hands with only the large USA industry uniquely private. By 1990 a minimum of 66% of the world industry will be state owned and with the higher growth-rate in the developing world the trend is likely to continue through the 1990s so that by 2000 70% or more will be state owned or controlled.This trend in ownership has implications for trade. An increasing emphasis on government to government deals and barter deals is likely. This would result in a * C. H. Kline ‘Profit Strategies in World Chemicals’ Hyurocurbon Processing January 1984 W. F. Sheldrick ‘The Changing Structure of the International Fertilizer Industry’ Proceedings No. 212. The Fertiliser Society London 17th March 1983. 3 56 K. Gilbert further limitation of free trade although as Sheldrick says it might also add beneficial stability to a market which is subjected to cyclical crises.6 Size of Plants Over the years chemicals plants have got bigger. During the 1960s there was almost a cult of bigness in the chemical industry. I remember many presentations on the economies of scale. A greater realism prevails today. Certainly capital costs per tonne of capacity are lower as plant size increases but the costs of not operating a large plant at a high utilization are daunting and to have one idle for any length of time can be disastrous. The situation in the fertilizer industry is that plant sizes on a single-stream basis are reaching a practical limit and it seems unlikely that we will see a significant change in unit sizes in the period up to the year 2000. The average size of plants in operation will increase however as new large plants are constructed and old small plants are retired.From our computer data-base of fertilizer plants we have made an analysis for two basic fertilizer products ammonia and phosphoric acid. In the fertilizer year 1967/68 there were 463 ammonia plants with a total operating capacity of 41 018 000 t.p.a. Thus the average size was 88 590 t.p.a. (277 t.p.d.). North America had the highest average at 102480t.p.a. and Oceania the lowest at 27 000 t.p.a. By 1982/83 the number of plants had increased by 15.6% to 535 but the total operating capacity had increased by 152.5% giving an average size of 193 600 t.p.a. (605 t.p.d.). The most marked change was in Asia. In 1967/68 91 plants had an average capacity of 68010 t.p.a.In 1982/83 121 plants had an average capacity of 247 620 t.p.a. The extent of the change for phosphoric plants is similar. In 1967/68 there were 186 phosphoric acid plants with an aggregate operating capacity of 10 142 000 t.p.a. and an average capacity of 54 200 t.p.a. By 1982/83 there were 278 plants (an increase of 49.5%) with a total capacity of 31 918 000 t.p.a. (an increase of 214.7%) and an average capacity of 114 810 t.p.a. (an increase of 11 1.8%). A consideration of projects which were under construction or contracted as at February 1984 shows that for ammonia there were 50 with a total nameplate capacity of 14 487 000 t.p.a. and an average capacity of 289 740 t.p.a. (905 t.p.d.). The largest plants in this project category were of 407 000 t.p.a.(1272 t.p.d.). The number of ammonia plant projects at the bidding stage in February 1984 was 9 with an average capacity of 219 220 t.p.a. In addition there were 56 plants with an average size of 281 690 t.p.a. at the study stage. The equivalent numbers for phosphoric acid projects are (thousand tonnes) Total Average No. plants capacity capacity Under construction and contracted 22 330 1 150.05 Bidding stage 4 658 164.50 Study stage 33 6458 196.70 Industrial Chemistry The Fertilizer Industry in the Year 2000 Most of the plants at the bidding and study stages should be built well before 2000 and there will be others built before that time which have not yet been considered at all. There will be a considerable number of retirements of old plants.It is reasonable to assume that these will be usually of less than average size. In the case of ammonia the average size of the plants in operation in the year 2000 should be about 275 000 t.p.a. It will not always be possible to build the largest plant (gas supplies in a particular location may be limited or there may be market constraints) but we have assumed that most will be of the largest size. The same reasoning applied to phosphoric acid results in the conclusion that the average size in the year 2000 should be about 165 000 t.p.a. As with ammonia we have assumed that most plants built in the 1990s will be of the largest practical size that is over 700 t.p.d. There is an argument that there is a place for relatively small ammonia plants.Plants of 400 t.p.d. or less possibly as small as 10 t.p.d. could use simple technology with reciprocating compressors and could be designed and constructed by Third World engineering companies such as those in India. If the small plant was located in a situation close to its market and was protected from competition either by government regulation or by its distance from alternative supplies then it could be viable. U.N.I.D.O. has been a focus for these ideas but it has to be said that there are many sceptics. In this section we have been concerned with basic production units where chemical processes are carried out. The ready availability of the granular products of these units -MAP DAP TSP urea -together with granular potash encourages the trend towards relatively small blending units.These units consisting of raw material and finished product storage and simple mixing equipment are inexpensive and their operation can give a high level of service to farmers in their immediate vicinity. This type of operation is very well developed in the USA where many blenders also handle pesticides and liquid fertilizers and apply tailor-made formulations. As the basic plants get bigger we will almost certainly see at the interface between the fertilizer industry and the farmer more of these smaller companies depending for their success on a good knowledge of their market area and rapid response to the farmers’ needs. 7 Technology Fertilizer technology is a very complex matter and the subject of hundreds of papers each year.A series of detailed monographs would be needed to do it justice. In this section some of the main trends are briefly described. The first is the trend towards energy efficiency. This is most marked in ammonia technology but is also important throughout the industry. The Fertiliser Institute Washington DC carry out an annual Energy Use Survey of the US Fertilizer Industry. Their figures for the average energy requirement for manufacturing ammonia in centrifugal plants are given in Table 7. The energy requirement figures are in the range 10.79-11.21 Gcal/tonne. Pro- cesses are available for plants which would operate at an energy efficiency of 7.0 Gcal/tonne but these are not fully proven designs ie. operating experience is very limited.7.0 Gcal/tonne probably relates to battery-limits gas usage in LHV 358 K. Gilbert Table 7 Ammonia manufacture -Energy requirements* ( 1000 Btu/ tonne) 1979 (Based on 10 387 37 1 tonnes production) 44 473 198 1 (Based on 1 1 8 15 294 tonnes production) 42 969 1982 (Based on 8 734 464 tonnes production) 42 834 * Total energy requirement including start-up shut-down catalyst reduction and fuel for turbine and engine driven compressors or pumps. The natural gas require- ment excluding start-up shut-down and catalyst reduction amounts to about 95% of the above figures. Source TFI units (lower heating value) the usual way that contractors quote gas usage. Natural gas is normally sold on the basis of HHV (higher heating value) and plant operators normally refer to gas conversion on this basis.LHV is about 90% of HHV. Where gas is very cheap the operator might well go for a proven and reliable design with a somewhat higher gas usage. Where gas is expensive the low gas usage design will be considered but reliability remains very important. The choice of ammonia plant technology has recently been reviewed by Brown." My own company has reviewed the subject of revamping ammonia plants" to improve energy efficiency and therefore reduce operating cost. Energy savings are also possible in phosphoric acid manufacture. In the USA the energy requirement to manufacture filter-grade acid ranges from 2402-3 129 thousand Btu/tonne P20 and it requires a further 5084 thousand Btu/tonne P205 on average to convert filter grade into merchant grade 54%.The concentration is usually accomplished by using steam from an on-site sulphuric acid plant. Most phosphoric acid is made by the dihydrate process. This process requires approximately ten times as much low-pressure steam as does a plant operating a hemihydrate process (per tonne P205 as 54% P205 strength). This is an attractive saving if an oil coal or gas-fired boiler is used to generate the steam or if the steam is generated in a sulphuric acid plant and can otherwise be sold or if the sulphuric acid plant cogenerates electricity. Sulphuric acid production is an important and often integral part of the phosphate fertilizer business and many of the latest plants haive cogeneration facilities.The heating value of a tonne of sulphur is equivalent to that of 2 barrels of oil. In early 1982 Monsanto compared the cost of a new technology 1980s plant and a mid-1970s plant based on a capacity of 1,800m.t./day in a phosphoric acid complex. The capital cost of a new early 1980s plant at that time was $25 million compared with $21 million for a plant using mid- 1970s technology. Adding the turbogenerator would cost $5 million for a total capital cost of $30 million. But the plant could generate 15 000 kW for sale with a value of $6 million/year. All costs were based on 1981 dollars. After a period of stability during the recession energy costs are likely to begin to rise again as business activity picks up. The cost increase for oil and gas may well lo F.C. Brown 'Ammonia Plant Preferences in the 1980s' Proceedings No. 218. The Fertiliser Society London 19th October 1983. 'Revamping Ammonia Plants Improve Process Operation and Economics'. Supplement to Nitrogen No. 141 January-February 1984. Industrial Chemistry The Fertilizer Industry in the Year 2000 be higher than general inflation. In any case as we have shown savings in energy can lead to substantial cost savings at today’s oil and gas prices and so the fertilizer industry and plant designers will continue to look for economies. The second trend of note is that leading to a greater tonnage of blended fertilizers made by simple mixing. ‘Bulk blends’ are mixed fertilizers where no chemical reactions occur between the raw materials.They are thus distinct from granular products where chemical reactions and/or melting take place during the mixing and granulation stages. The latter method results in storage stable fertilizers. In past years simple mixing did not give satisfactory products. Dusty materials with a tendency to segregate and cake were the norm. These inferior products were quickly replaced by granular fertilizers. The situation has now changed in that raw materials of consistent and appropriate granulometry are available for bulk blending and it is recognized that in many circumstances bulk blending is preferable to granulation. According to Taylor,’* bulk blends account for approximately 70% of the solid compound fertilizers sold in the USA today. The number of bulk blending plants in the USA has increased from 450 in 1960 to 8000 in 1983.Taylor believes that bulk blending will be the first production alternative selected in many developing nations. The main reason is the lower capital cost requirement. Taylor cited a capital charge (depreciation) per metric tonne of fertilizer over a 10 year plant life of about $10 for a chemical granulation complex ($7-10 million investment) and about $3 for bulk blends ($2-3 million investment). A bulk blend plant is simpler to operate than a granulation plant and since bulk blends are free from the process restrictions associated with chemical granulation a wide range of nutrient ratio can be made from a few raw materials. Bulk blends are suitable for incorporating micronutrients and some pesticides.In the section on plant size it is suggested that the other advantage of the local blending plant is the opportunity this gives for a high level of service to the farmer. This factor is likely to become more important as the years go by. Liquid fertilizers have been important in the USA but have made less progress el~ewhere.’~ Liquids can be true solutions or suspensions. The use of liquids is facilitated by the kind of market structure seen in the USA with close contact between the fertilizer supplier (blender) and the farmer. The fertilizer supplier will often apply the fertilizer and so the farmer is relieved of the need to have expensive storage facilities and applicators. In Europe the trend towards liquids has been slow although if ammonia is included then Belgium Denmark France Netherlands and UK consume significant amounts.Apart from anhydrous ammonia the application of which requires special equip- ment and techniques the other fluids which do not require pressurization have some clear advantages over solids. These advantages include ease of handling accuracy of placement (row application or addition to irrigation systems) and suitability for incorporating micronutrients and pesticides. The last can be a big cost saver to the farmer if one or more passes over the field can be avoided. Larry Taylor ‘Increasing Role of Bulk Blending in Developing Nations’ Industrial Minerals Conference ‘Phosphates What Prospects for Growth’ Orlando Florida December 1 1-14 1983.l3 ‘Production and Use of Fluid Fertilizers’ (12 papers from a session with this title). Proceedings of The British Sulphur Corporation’s Second International Conference on Fertilizers ‘Products and Techniques for Plant Nutrient Efficiency’ London 1978. 360 K. Gilbert The initial disadvantage of fluids is the requirement for expensive storage facilities. Granular and blended fertilizer can be stored on the ground under cover but liquids require tanks pumps and valves. This disadvantage is particularly marked in developing countries where it is impracticable to ship and handle small quantities of fluids whereas bagged granular fertilizer can readily be used. For high- value irrigated crops liquid fertilizers are ideal. In some systems fertilizer is delivered to each plant.Israel has pioneered some of these systems known as ‘fertigation’. The composition of the nutrient can be varied with time to give optimum results. The trend to fluid fertilizers might be encouraged by the growing availability of super phosphoric acid which has a concentration of about 72% P,05 and a high level of polyphosphoric acid. This is converted into ammonium polyphosphates which are a good basis for fluid fertilizers. We expect fluid-fertilizer usage to grow at above the rate for total fertilizers over the period to 2000. Despite this solid granular and blended fertilizers will remain the most significant market segment. The final technical trend is that towards greater efficiency of fertilizer use. This trend is being driven by increasing costs of nutrient input and by environmental factors particularly in the case of nitrogen.A range of approaches are being used. Timing and accuracy of application can lead to greater economy of utilisation as was mentioned under the discussion of fluid fertilizers. Where losses of nitrogen are high following fertilizer application as they are with urea in tropical agriculture coating of the granules with a material to retard solution is a possibility. Sulphur- coated urea is a commercial product albeit on a small scale and rubber coatings have been investigated in Malaysia. Sulphur coating has the added advantage that sulphur is an essential nutrient particularly in tropical agriculture. An alternative approach to slow release is to prepare reaction products of urea such as urea-formaldehyde condensates (ureaform) isobutylidene diurea (IBDV) and crotonylidene diurea (CDU).These products are relatively expensive which limits their use to high value crops non-food horticulture and the hobby market. They are used in Western Europe Japan and the USA with production concentrated in West Germany and Japan. The use of nitrification inhibition is another approach. A large number of com- pounds inhibit the nitrosomas bacterium in its conversion of ammoniacal nitrogen into nitrite in the first stage of the nitrification process. In so doing they make the nitrogen available to the plant for a longer period and increase the efficiency of fertilizer use by plants which can otherwise be as low as 50%.Most nitrification inhibitors are applied as coatings to complex fertilizers or as additives to fluid fertilizers. The most well known nitrification inhibitors are dicyandiamide and the propietary products EXTEND (Kalo Laboratories Inc.) and N-SERVE (Dow Chemicals) which have made a significant impact on the North American market. Finally the fertilizer can be fabricated into a super granule. For example urea with a granule size of greater than 10mm has been evaluated in rice fertilization. It is thought that super granules are a more economic method of slowing the release of nitrogen than the labour-intensive mud-ball method of making urea available at a controlled rate to paddy rice. Industrial Chemistry The Fertilizer Industry in the Year 2000 361 Granules of urea between 5-10mm are known as forestry grade and are used in North America and Scandinavia as a forest fertilizer using aerial spreading methods.These techniques and products will be further developed over the next 16 years and should be considerably more important by the year 2000. 8 Trade The move of raw-material producers into the main fertilizer-intermediates ammonia urea phosphoric acid TSP and MAP/DAP has the consequence that trade in these materials increases and that in raw materials declines. This has been mentioned earlier in connection with the location of the industry. The patterns of trade are also changing. Table 8 gives figures for changes in total trade over a 10 year period and show that ammonia phosphoric acid and DAP have increased rapidly.Table 8 Fertilizer materials -total trade 1972-1982 (million tonnes) Compound 1972 1982 growth ('10) Raw Materials Phosphate Rock 43.1 43.4 negl. Sulphur 9.6 14.5 4.2 Intermediates Phosphoric Acid (P,O,) 0.4 2.9 21.9 Ammonia 2.9 6.9 9.1 DAP 3.1 (1976) 5.1 7.4 TSP 2.1 3.0 3.6 Urea 7.0 12.0 5.5 If we look at phosphoric acid in more detail (Table 9) we see that over the period 1971-1982 West Europe East Europe S. America and Asia became substantial importers and Africa (primarily N. Africa but also the Republic of S. Africa) North America and West Europe provided the increased exports. Table 9 Phosphoric acid regional trade ( thousand tonnes) Production Zmports Exports 1971 1982 1971 1982 1971 1982 West Europe East Europe Africa 2733 1029 382 3230 3703 2495 267 - 968 750 - 156 - 552 7 1249 N.America 5047 7675 13 34 90 967 C. America 245 311 - 11 65 75 S. America 76 480 46 3 72 - - Asia 1040 1633 16 788 32 80 Oceania 87 130 - - Trade in phosphoric acid has been growing at a rate of over 20% p.a. compound over a period that Pz05 consumption in fertilizers has been growing at a rate of 3.25% p.a. compound. 362 K. Gilbert As basic fertilizer production continues to move to those countries such as Morocco Tunisia Jordan and the Gulf states where raw materials are plentiful and inexpensive but where the domestic fertilizer markets are relatively small exports will continue to increase at the expense of production in countries (particularly West Europe and Japan) which do not have a raw material position.The cost of phosphate rock in Western Europe to a user is the sum of the cost of production inland transportation and handling in the country of production profit ocean freight and discharge handling and transportation costs in the country of receipt. The integrated phosphate rock/ phosphoric acid producer has a tremendous cost advantage which may amount to more than 50% of the ‘into’ plant cost of a company in say Germany. The advantage that arises to a producer of rock and phosphoric acid is partially offset by the delicate balance required when pricing the two products in a competitive market. The other trend in fertilizer trade has also been mentioned earlier.It is the growing tendency for governments to deal with governments and for barter deals to replace conventional business with money payment. A typical example of the first is the arrangement between Morocco and Poland by which Morocco supplies Poland with phosphate rock in return for sulphur (which is converted into sulphuric acid for phosphoric acid manufacture). It is difficult to see how both sides can benefit in such a deal. The ratio of tonnes phosphate rock to tonnes sulphur has to take account of the market prices of these commodities. If the ratio accurately reflects market prices during the contract period then the only advantage would seem to be that there would be no call on the hard currency holdings of the individual countries.This may be crucial in some cases. The growing number of barter deals has two implications. First it will be a restriction of free trade and secondly it is to the advantage of the few large traders with the financial strength and spread of interests that is required to handle this kind of business. A small trader specializing in fertilizers who is offered copper or rice in payment may have to engage (and remunerate) another trader to place the payment commodity and valuing the business becomes extraordinarily difficult. A large general trader like Mitsubishi in Japan or Cargill in the USA both of whom have offices throughout the world is better placed to switch between commodities. The advantage to the fertilizer buyer would seem to be the elimination of the hard currency requirement but the value of the commodity used for ‘payment’ is almost certainly less than it would fetch for cash.Countries with severe balance of payments positions find barter trading attractive. A very recent barter deal couples Occidental Petroleum Corporation of the USA with Yugoslavia. Occidental will supply goods including coal oil phosphates and animal hides in exchange for as yet unspecified commodities industry products and services from Yugoslavia. Occidental’s deal with the USSR to trade polyphos- phoric acid for Russian ammonia potash and urea is a very well known one in the industry by virtue of the large quantities of materials involved. 9 Summary By the year 2000 the fertilizer industry will be about 80% bigger in terms of tonnage consumption of the three major nutrients N P and K than it was in 1982/83.The Industrial Chemistry The Fertilizer Industry in the Year 2000 proportion of world fertilizer production located in the developing countries will be greater than it is today with particular advances being made by resource-rich countries. Basic production will be in fewer hands and the proportion that is state owned will be higher than it is today. Downstream production of solid and fluid blends will expand with more small operations offering service to local farmers. The average plant size for basic fertilizer materials will increase as new large plants replace old small plants. Plants will become more energy efficient particularly as regards to natural gas for ammonia.Bulk blends will gain at the expense of granular compound fertilizers. Fluid fertilizers will make modest gains and fertilizers will be used more efficiently to maximise uptake by the crop and rninimise losses to the atmosphere and to water courses. Specialized fertilizers will make gains as highly intensive cultivation and agriculture under irrigation increases. International trade in basic fertilizers will increase as a consequence of the movement of production to resource-rich countries. Feeding the world’s growing population requires an efficient and productive fertilizer industry but it must be remembered that fertilizer although essential is only one of the vital inputs to agriculture and food sufficiency. In making the above forecasts we have assumed that progress will be made over a wide front -educational financial health and human happiness.