Yara to buy Brazil’s Vale Cubatão Fertilizantes complex for $255m

Norwegian chemical company Yara has entered a $255m agreement to acquire the Vale Cubatão Fertilizantes complex in Brazil.  

The Cubatão nitrogen and phosphate complex has an annual production capacity of about 200,000t of ammonia, 600,000t of nitrates and 980,000t of phosphate fertiliser.

Around 970 permanent and 930 contracted employees are employed at the complex.

The acquisition will help the Norwegian firm as a nitrogen producer in Brazil, strengthening its production footprint and complementing its existing distribution position. 

Yara president and chief executive officer Svein Tore Holsether said: "I am pleased to announce this agreement, which will bring nitrogen production assets into our growing portfolio in Brazil, strengthening both our industrial and fertiliser production and sales.

"The nitrogen assets have a strong competitive position, as Brazil is a net importer of nitric acid and nitrates.

"This deal is an important step towards establishing a more complete position in Brazil, strengthening our position as a long-term competitive industry player, committed to developing and investing in Brazilian agriculture and industry."

"Exploration is expected to start shortly in the form of a ground magnetic survey over portions of the project."

For the production of ammonia, natural gas feedstock is sourced from local suppliers, while additional ammonia, phosphate rock, sulphur and other raw materials are supplied via a nearby import terminal which is not part of the transaction.

Last year, the complex around 1.3 million tonnes of nitrogen and phosphate products, generating pro-forma net revenues of $413m and an EBITDA of $30m.  

Yara expects to make upgrading investments of about $80m up to 2020 in order to realise annual synergies of $25m through a combination of cost, assets, and product portfolio optimisations.

The acquisition is subject to the approval of relevant competition authorities and other regulatory approvals. It is expected to close in the second half of next year.

The company noted that the deal is also subject to the right of first refusal of a third-party not being exercised by end of this year.