The sharp increase in import of ammonium nitrate (AN) from Russia has hit domestic fertilizer companies which are in the process of ramping up AN capacity with investment of over ₹4,000 crore.
The mining industry has also raised concern on dependence on imports for sourcing AN, which is key for conducting blast before start of mining ores such as coal, iron ore and limestone.
India has an installed capacity of 10.96 lakh tonnes per annum and an additional 10.19 lakh tonnes per annum capacity is being set up by large fertilizer companies including Rashtriya Chemicals and Fertilizers, Gujarat National Fertilizer and National Fertilizer.
Early this year, Coal India signed a joint venture with BHEL to set up AN plant with an investment of ₹11,782 crore in Odisha. The plant will tap into BHEL’s in-house developed Pressurised Fluidised Bed Gasification technology and use coal as raw material. The JV company will produce 2,000 tonnes of AN per day.
Shailendra Singh, Director General, Indian Ammonium Nitrate Manufacturers Association, said, import of ammonium nitrate has gone up to 2.39 lakh tonnes last fiscal from 91,236 tonnes in FY22 and this has resulted in the drop in domestic capacity utilisation to 72 per cent (91 per cent).
Curtail imports
There is a significant price gap between domestic and imported supply of AN from countries which have access to low-cost subsidised natural gas, a key raw material for producing AN, he said.
There is an urgent need to curtail imports and eventually stop so that domestic capacity is fully utilised. Self-reliance in AN will enable sustainable growth of coal production, which in turn will provide energy security to the country, he added.
Given the current fluid geo-political situation, it is important to support domestic production of AN, as any disturbance in imports will have an adverse impact on coal mining and subsequently hamper power production in the country.
The government recently increased customs duty on import of AN to 10 per cent from 7.5 per cent.
The impact of the hike in import duty on AN is expected to be between $8-9 per tonne, which is very nominal and is unlikely to reduce imports, said a senior executive of a fertilizer company.