GCC fertiliser production capacity surges by 12% in 2017

The fertiliser production capacity in the Gulf Cooperation Council (GCC) region has reached 42.3 million tonnes per annum in 2017, increasing by 12 per cent over the previous year, according to a new report of the Gulf Petrochemicals and Chemicals Association (GPCA).

According to the report entitled, '2016 GCC Fertiliser Industry Indicators', the industry expanded at the highest annual growth rate since 2011, and further outpaced the overall annual growth of 8 percent per annum over the past decade. The capacity additions in 2017 were mainly driven by Saudi Arabia, the largest fertiliser producer in the region, with projects such as Waad Al Shamal, a $7 billion joint venture between Ma’aden, SABIC and Mosaic.

In 2016, the GCC fertiliser industry generated $5.2 billion in sales revenue, with plans to invest $8 billion in new projects over the coming years. By 2025, the regional capacity is expected to reach 49.8 million tonnes, growing at a steady rate of 2 percent per annum. Of the additional 7.4 million tonnes of fertiliser capacity to be added between now and 2025, 95 percent will come from Saudi Arabia, increasing the country’s share in regional fertiliser production to 58 percent, up from the current 51 percent.

GCC fertiliser exports have also been growing at 7.3 percent per annum over the last decade. These exports account for about a third of the export volume of chemicals, with 90 percent sold in the international markets.

The growth in fertiliser exports has a significant multiplier effect throughout the local economy, generating an estimated $6.7 billion from supporting indirect economic activity in the region, including support services, packaging, warehousing and distribution.

The GCC fertiliser industry has also contributed to the growth of non-oil exports, expanding the sales in international markets. The economic growth in emerging economies has been an important driver of this expansion. In 2016, GCC retained its position as the world’s largest urea exporter, with a global market share of 32 percent, and the second largest exporter of diammonium phosphate (DAP), with a share of 14 percent.

Dr. Abdulwahab Al-Sadoun, Secretary-General, GPCA, remarked, "Much like any other fertiliser producing region globally, the GCC fertiliser industry’s sales revenue has been affected by an overall decline in the commodity markets, dropping by an estimated 21 percent from the year before. Nonetheless, the industry has remained resilient, despite the volatility in the global markets, continuing to expand with a commitment to long-term projects, growing export volumes and significant investment in niche, high-value and environment-friendly fertiliser products. Furthermore, the contribution of the fertiliser industry to the regional progress goes much beyond the financial growth, playing an important role in supporting food security and job creation."

Employing around 54,900 people, directly and indirectly, nationals account for 54 percent of the industry’s workforce. Over the past decade, direct job creation grew by a compound annual growth rate (CAGR) of 8.7 percent per annum, while the chemical industry grew at an overall average rate of 6 percent per annum.

The '2016 GCC Fertiliser Industry Indicators' report will be released at the 8th edition of the GPCA Fertiliser Convention, taking place between 26th and 28th September at the Ritz Carlton, Bahrain.