Grupa Azoty could rebuild fertilizer capacity in Poland amid supply shocks, CEO says

By Rafal Wojciech Nowak and Tristan Veyet

GDANSK, Sept 14 (Reuters) - Poland's Grupa Azoty is considering rebuilding domestic fertilizer capacity and calling off plant closures as global supply disruptions and the European Union's trade barriers have made the sector vital to the bloc's food security.

"Today it looks like a major change in direction. We are talking about rebuilding our own production capacities and defining the fertilizer industry as strategic," CEO Marcin Celejewski told Reuters on Friday.

However, fully rebuilding the capacity would require EU support, including special funds and a supportive regulatory framework, Celejewski said.

He cautioned it was too early to formally commit to a change in the company's strategy while the wars in Ukraine and the Middle East continue.

Meanwhile, Azoty is capitalizing on a supply gap created after new EU import tariffs and a carbon border levy erased foreign fertilizer producers' cost advantage, prompting them to pull back from the region.

"We will essentially start up all our ammonia production capacities," Celejewski said, adding the company was reversing its earlier plans to close factories and rely on imports, while new investments were already under way.

It is also reconsidering land at its Police plant in northwestern Poland, previously envisioned for a green ammonia hub, as an option for a conventional ammonia investment.

Azoty has no plans to sell speciality fertilizer maker Compo Expert, which complements its core fertilizer portfolio, after looking into a possible sale in the past, Celejewski said.

State-controlled Azoty has faced severe financial challenges since 2022 due to high gas prices and massive debt tied to its flagship Polimery Police petrochemical project.

The chemicals maker has agreed to sell the Polimery Police plant to state energy group Orlen, a deal awaiting court approval, while it finalises a long-term debt restructuring with its creditors.

Celejewski said the company was curbing capital spending even on profitable installations and would lack funds for major investment until the debt restructuring was finished.

(Additional reporting by Conrad KüpperEditing by Milla Nissi-Prussak)