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Azomureş suspends production, claims that gas price soared 40% without reason, since October

11 December 2023

The Azomureş company announced on Friday that it is forced to suspend the production of ammonia and fertilizers in December, due to the lack of a clear strategic commitment from the authorities, a fact that will have a negative impact on Romanian industry and agriculture.

“Azomureş, a major Romanian fertilizer producer, has stopped production of ammonia and fertilizers for the month of December, due to a set of policies and lack of action by the authorities, which negatively affects the large local industry. The negative impact on both the industry and on agriculture in Romania raises concerns about the long-term prospects, and the company asks the authorities to support the Romanian fertilizer industry, recognized globally for its high quality”, Azomureş stated in a press release.

Azomureş CEO Josh Zacharias warned of a looming crisis in Romanian agriculture and industry and cited pressure on costs from local inflation, anti-competitive practices and a future 1% revenue tax.

“We calculate a 3% reduction in profitability for farmers in Romania due to the multiplier effect of input purchases, plus taxed income from the sale of crops. It’s a tragedy unfolding in slow motion,” said Josh Zacharias.

According to Azomureş, since the resumption of production in October, natural gas costs have increased by almost 40%, unrelated to the conflict in the Gaza Strip, and despite the region’s ample gas reserves, the European gas market remains significantly more expensive than other industrialized parts of the world (almost 5 to 10 times higher).

“The Romanian state has at its disposal various support levers for large industry, which derive from its own energy resources, which is a key difference from the EU in general – but, unfortunately, it does not use them. As a result, even if the other producing countries of gas in the world are building new fertilizer plants and other member states have implemented multi-billion euro packages in recent years to ensure that large industries continue production, in Romania, Azomureş, the last such company, is struggling to remain operational,” Josh Zacharias emphasized.

The general manager of Azomureş draws attention to the large differences in fertilizer prices in Romania compared to the rest of Europe and warns that farmers will pay more for their inputs without a local producer to compete with imports.

In addition, he claims, the company must support the burden of carbon certificates imposed by the EU on European producers, unlike competitors from outside the EU.

“I am fighting to secure more than 1,000 direct jobs and another 2,000 jobs that rely directly on Azomureş for their existence. And that’s before we take into account the tens of thousands of farmers who have relied on Azomureş fertilizers in the last 60 for years”, said Josh Zacharias in the press release quoted by Agerpres.

According to him, Azomureş also faces other challenges, which have their roots in the lack of action by the authorities, including gas subsidies in Bulgaria, showing that Romania does not have a similar policy and, as a result, Bulgarian imports of fertilizers in Romania are increasing.

Also, although there is an oversupply of subsidized gas in Romania, despite a significant surplus of natural gas traded by Transgaz, the additional gas is not made available to the market, because the large producers are not allowed to reallocate to industrial consumers, such as Azomureş.

The Azomureş management also mentioned tax fraud on importation and sanctions, in the sense that “in November, a ship with 30,000 tons of urea entered the port of Constanta with false documents to avoid taxes and sanctions and, until the authorities discovered the situation, half the shipment is gone.”

Zacharias claims that despite presenting concrete solutions on numerous occasions, Azomureş has yet to identify any significant change or support to remedy the situation.

“The company’s struggle is due to both the challenges of the market and the lack of effective policies,” concludes Josh Zacharias, who called on the authorities to urgently create a strategic committee to discuss the security of inputs for agriculture, as well as the future of the agricultural industry Romanian in general.

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