Arabian Gulf petrochemicals majors are increasing output of fertilizers, amid a brewing food crisis caused by booming populations in emerging markets.
Annual output of producers in the region is tipped to reach 32 million tonnes by 2016, up from 21 million tonnes last year, estimates the Gulf Petrochemicals and Chemicals Association.
The region's abundant reserves of gas, a feedstock used to make fertilizer, give it a competitive advantage over Europe and global producers.
"This growth enhances the industry's ability to meet the increasing demand for fertilizers at both the regional and global levels and consequently its ability to participate in the realisation of food security and sustainable development globally," said Rashid Ahmed bin Fahad, the Minister of Environment and Water during a keynote speech yesterday to open the third annual GPCA Fertilizer Convention.
Globally, the fertilizer industry is expected to grow only 2 per cent this year as a surplus of new plants outweighs demand from food producers for chemicals to grow crops and feed livestock. But longer term, the outlook for the industry is rosier.
The United Nations food and agriculture organisation estimates agricultural output needs to rise by 60 per cent over the next four decades to meet demand from surging populations in Africa, Asia and South America. Rising income levels of consumers will stoke demand further.
"More than 16 billion people are moving from poor to middle class and this means people's tastes change. It takes more energy to produce meat than vegetarian food," said Yahya Saleh Al Yami, the vice president for phosphate and industrial minerals at the Saudi Arabian Mining Company (Maaden), a part-government owned mining and fertilizer producer in the kingdom.
In partnership with Saudi Basic Industries Corporation (Sabic), Maaden is already running the largest ammonia plant in the world, producing 1.1 million tonnes per year.
It is also developing a 21 billion Saudi riyals (Dh20.56bn) phosphates project in Umm Waal in the north of Saudi Arabia.
Qatar Fertilizer Company finished work on the world's largest single-site factory for both ammonia and urea last year.
The UAE already has 34 fertilizer plans including seven making organic fertilizer. Abu Dhabi Fertilizer Industries, one of the largest players in the UAE industry, is planning further expansion.
"The UAE has supported the fertilizer industry since the first factory opened in the country in 1977," said Mr bin Fahad. "Ongoing development will not only see the expansion of capacity but also further advances in health and safety and environmental performance."
Higher output across the Gulf should help the region capture a greater share of the global market. Within five years, the region is set to corner 36 per cent of global urea exports and a quarter of the world trade in phosphate fertilizers.
"The GCC states have successfully converted their gas and sulphur feedstock advantage into a high-value downstream industry responsible for a significant proportion of the region's non-oil exports and providing much-needed local jobs," said Abdulwahab Al Sadoun, the general secretary of the GPCA, which represents the industry in the region.