Atlas Agro targets green hydrogen in Latin America

Atlas Agro is due to receive proposals by December 29 for the front-end engineering design (FEED) of its first nitrogen fertilizer plant in Brazil, estimated to require investments of US$850mn.

The project, in Uberaba, Minas Gerais state, will produce fertilizer from green hydrogen. 

In this interview with BNamericas, Atlas Agro's operations director, Rodrigo Santana, talks about the facility and the company's local and regional plans.

BNamericas: What is the status of Atlas Agro's project to produce fertilizer from green hydrogen in Brazil?

Santana: We’re a young company, created two years ago, but whose founders and executives have more than 20 years of experience in the fertilizer industry. One of the founders was the CEO of EuroChem and, before that, global CFO of Yara Fertilizantes. The other was president of Yara in Brazil. 

Our headquarters are in Switzerland. Our project team is based in Madrid, Spain. And we have project development offices in the US and Brazil, which are the priority markets initially defined. But our ambition is to expand into other countries, including Latin America.

After studies, we identified Uberaba in Minas Gerais as the location for the plant in Brazil due to the strong demand from local agriculture and good electricity availability in the region. The area is in an industrial fertilizer district. 

We’ve already submitted a preliminary water concession request to [water regulator] ANA, which should come through within the next two months. This is important to guarantee water availability.

And we've applied to the mines and energy ministry to present energy consumption studies. The government will then define the connection points, which will give us legal certainty to move forward. [Grid operator] ONS will then issue the access decision.

We’re making progress in negotiations with various clients in the region who are interested in acquiring the product. And we’ve begun the process of selecting major global specialists to carry out the FEED, which is a very important milestone, as it’s an investment of 50mn reais [US$10mn] to develop the engineering plans for the plant. Then, after mapping the project risks, we'll make the final investment decision.

The deadline for submitting proposals is next week [ending December 29]. Brazilian, European and Asian are companies taking part.

The idea is to select one or two participants at the beginning of next year. FEED takes 10 to 12 months. If we make the final investment decision at the end of 2024, we'll start construction the following year. There will be 32 months of construction, and the plant is expected to start operating in late 2027 or early 2028.

BNamericas: What will be the investment in the plant and its production capacity?

Santana: The planned initial investment is US$850mn. We're going to produce between 500,000t/y and 530,000t/y of green fertilizer. 

It will be an integrated plant. On the same site, we will produce hydrogen, ammonia and fertilizers.

BNamericas: Where will the renewable energy come from?

Santana: We requested a quotation on the market from large energy generating companies in Brazil and received 66 proposals. We’re negotiating with some of these companies; the prices offered are within our business range. It will certainly be a self-production model. We need 300MWh, and most likely it will be a combination of solar and wind energy.

BNamericas: What other projects is Atlas Agro working on?

Santana: Today, we have a project in the USA, in Richland, Washington state. It’s in the final FEED phase. We selected Spanish contractor Técnicas Reunidas. And now there are two months left to finish the FEED. If we make the final investment decision, it's likely that we'll start building the plant in the first half of 2025.

BNamericas: What about Latin America?

Santana: We see opportunities to establish more plants in Brazil, which imports 12Mt/y of nitrogen fertilizers. 

There are other countries with great potential in Latin America, with high demand for nitrogen fertilizers. But it's important for the cost of energy to be competitive. There are at least two or three other countries in the region with strong demand and competitive renewable energy costs.

BNamericas: Is the plan to use green hydrogen, rather than natural gas, as a raw material based purely on ESG considerations or is it an economically convenient strategy?

Santana: Our focus is 100% green. We're not going to produce anything fossil fuel-based. The technology isn't competitive everywhere, but with some improvements that we're going to make and in certain locations, it will become competitive. 

I still see Brazil struggling to have enough competitive natural gas to attract the fertilizer industry. There are countries with a [natural gas production] cost of US$2/MMBTU, and it's hard to imagine that Brazil will reach that level.

On the other hand, Brazil has competitive renewable energy. The big point is the discussion about regulating green hydrogen. The problem is the charges, the rate for using transmission lines, etc. If there are no incentives, it will be difficult to attract green industries to the country.

We're competing with the rest of the world. The US, for example, has launched a billion-dollar program that's industrializing the country. Europe, Japan and Canada are also looking at this. 

Many companies are waiting for this discussion on incentives to reduce the risk of the initial investment and invest billions in Brazil, which would have a significant impact on the Brazilian GDP.