Bangladesh seeks to produce fertilizer in Saudi Arabia amid dwindling supply

Hanwha Saudi Contracting Company signs a feasibility study agreement with Bangladesh for the establishment of a fertilizer plant in the Kingdom during a session at the Bangladeshi embassy in Riyadh, on Feb. 15, 2023. (Bangladesh Embassy in Riyadh)

• South Asian nation signs feasibility study agreement with Hanwha Saudi Contracting Company
• Bangladesh needs 1.6 million tons of DAP a year to fuel its agriculture sector

DHAKA: Bangladesh is preparing to set up a fertilizer plant in Saudi Arabia, its trade ministry said on Thursday, as the South Asian nation seeks to meet domestic demand amid a crisis in global supply.
Russia’s invasion of Ukraine in February 2022 exacerbated a global fertilizer shortage, boosting prices to all-time highs. The price hikes have already affected Bangladesh’s agriculture sector, threatening the country’s food security.
Talks on the establishment of a diammonium phosphate fertilizer plant in Saudi Arabia began last year, and on Wednesday a memorandum for a feasibility study was signed by the Bangladesh Chemical Industries Corporation and Hanwha Saudi Contracting Company.
The agreement was inked in a virtual meeting organized by the Bangladeshi Ministry of Industry and the country’s embassy in Riyadh, which said in a statement that it was the first Bangladeshi government initiative to set up an industrial plant on foreign soil.
“We estimate that it may take around six months for the completion of the feasibility study. Once we receive the positive report in the feasibility study, our government will start the agreement negotiations with the Kingdom’s authorities. Usually, it takes two-three years for a factory like this to start production,” Sharif Md. Mashud, deputy secretary of the Ministry of Industries in Dhaka, told Arab News.
The plant, co-owned by the countries, will help meet demand for the fertilizer in Bangladesh, which needs 1.6 million tons of DAP a year to fuel its agriculture sector.
The production volume of the Saudi-based plant will be established after the feasibility study.
“We have chosen Saudi Arabia for the fertilizer factory since the country has a huge supply of raw materials and they also have sufficient capital to invest. We are yet to fix the production capacity of this fertilizer factory,” Mashud said.
“Primarily, we plan to meet our local demand from this factory’s production. We import fertilizer regularly from different countries. The establishment of this factory would enable us to secure fertilizer imports for farmers.”
Bangladesh used to meet over 70 percent of its DAP demand from domestic production, but the figure has fallen in recent years.
“Now, the production volume has come down to 30 percent. Many of our local fertilizer factories are not functioning at full capacity,” Jahangir Alam, agricultural economist and former vice-chancellor of the University of Global Village in Barisal, told Arab News.
Sourcing fertilizer from different countries has become difficult, he said.
“If we can establish a joint venture fertilizer factory, our farmers will benefit a lot. The supply channel will be smooth, and it will check the increase of fertilizer prices during the peak demand season.”