A takeover transaction on the Romanian fertilizer market is shining a ray of hope for local farmers currently confronted with high input prices and low prices for their products. Majority state-owned gas producer and supplier Romgaz is acquiring Azomureș – Romania’s largest fertilizer producer, the production of which has been switched on and off in the last couple of years due to high gas prices which made fertiliser production economically unviable.
Transaction meant to revive fertilizer production and stabilize markets
Romania is taking one of the most important strategic steps in recent years in the industrial and agricultural sectors, after Romgaz signed the contract to acquire the Azomureș platform, the country’s largest producer of chemical fertilizers owned by Swiss group Ameropa. Acting Prime Minister Ilie Bolojan himself announced the news, stressing that this transaction represents an essential investment for Romania’s food and economic security.
Considering the international context characterised by geopolitical tensions, trade obstacles, and significant increases in fertilizer prices, Romgaz’s acquisition of Azomureș is considered a measure to reduce dependence on imports and providing Romanian farmers with a stable supply source.
A multi million transaction
According to information presented by Prime Minister Bolojan, the total value of the transaction is 69 million euros. Of this amount, over 46 million euros represents the actual value of the plant, up to 10 million euros is allocated to raw materials and consumable inventories, and a maximum of 13 million euros is earmarked for maintaining operations and paying salaries over the next two months, until the actual takeover is completed. The transaction has been approved by Romgaz’s Board of Directors. Now a few regulatory approvals are still required before actual completion, however no obstacles are foreseen.
The importance of Azomureș for the Romanian farming community
Since 1962, Azomureș has been the leading fertilizer producer for Romanian agriculture. The plant’s operations have a direct impact on agricultural production costs and the competitiveness of Romanian farmers. In recent years, the plant has faced difficulties caused by high natural gas prices, leading to periods of shutdowns or reduced production. These issues have forced farmers to rely increasingly on imports, exposing the local market to sharp price fluctuations. By integrating Azomureș into the Romgaz structure, the Romanian government hopes to create a more efficient production chain.
The geopolitical context amplifies the importance of the transaction
The timing of this acquisition obviously relates to the current geopolitical context and the unprecedented instability on the global fertilizer market. Logistical bottlenecks (such as the Hormuz Strait), high costs, and depleted inventories could trigger a new surge in nitrogen fertilizer prices. While after several years of low or negative margins in crop farming, many Romanian producers cannot afford to bear both high fertilizer prices and low output prices at the same time.
The transaction will also allow Romania to make good use of the soon-to-be-extracted natural gas from the Black Sea. Instead of being exported as a raw material, part of this resource will be used in the Romanian chemical industry to produce fertilizers. This strategy can add value to the national economy and contribute to the development of industrial sectors with a major impact on agriculture and food security. At a time when Europe is seeking solutions to reduce dependence on imports and protect agriculture from external shocks.
About Azomureș and Romgaz
Azomureș is the main producer of agricultural fertilizers in Romania, part of the Swiss group Ameropa since 2012. The industrial platform located in Târgu Mureș (central Romania) includes a complex of facilities for the production of agricultural fertilizers - NPK, ammonium nitrate, CAN, granular urea - and various industrial products - melamine, technical urea, ammonia water, nitric acid and others. The annual production capacity is 1.8 million tonnes of fertilizers, 75% of the production being delivered to the local market.
Romgaz is the largest natural gas producer and the main supplier in Romania (70% state owned). At the moment it is jointly investing with OMV Petrom up to 4 billion euros in total in the development of the Neptun Deep project. This is the largest natural gas project in the Romanian Black Sea, estimated to yield approximately 8 billion cubic meters annually once plateau production is reached, while the first gas is expected in 2027.
Zie ook: Last operational fertilizer producer in Romania stopped production again | Agroberichten Buitenland
More information
Would you like to know more about developments in Romanian agriculture and agribusiness? Visit the Romania country page on Agroberichten Buitenland Romania or contact the LAN team at the Dutch Embassy in Bucharest via bkr-lvvn@minbuza.nl