EU Fertilizer Giants Suspend Production


Sanctions on Russia implicate Lithuanian fertilizer plants, EU fertilizer giants suspend production

The Lithuanian company Lifosa, a major fertilizer producer in the European Union, has stopped production due to the impact of eu sanctions against Russia, TASS reported on April 10. The plant has been operating at minimum capacity for the past two weeks because of disruptions to supplies of raw materials from Russia and Belarus, and fertiliser capacity will be sharply reduced even if it resumes operations in May.

Lifosa Factory (Image source: Lithuanian National Radio and Television)

On April 10, Lifosa general manager Rimantas Prosceviius told Lithuanian state Radio television (LRT) that the company officially stopped production at 1800am on April 10 to switch to equipment protection. The suspension was due to sanctions imposed on the company's indirect owner, Andrei Melnichenko, a Russian oligarch.

Lifosa's parent company is Eurochem, an international fertiliser producer, of which Mr Melnichenko is a former board member and beneficiary, the report said. Mr Melnichenko was forced to step down from Eurochem's board on March 10 after being placed on the EU's sanctions list.

The sanctions have directly affected Lifosa's cash flow, with factory accounts frozen a month ago.

The general manager of the company said that the production workshop has been suspended on 10, but because the equipment needs maintenance, some employees will continue to work, the maintenance plan is also in progress.

Rimantas Prosceviius, General Manager of Lifosa

According to a TASS report on April 13, the Lithuanian authorities announced on the 12th that they have frozen funds totalling 18.2 million euros, 3.9 million US dollars and 3.8 million rubles from Russian individuals and entities in accordance with EU and US sanctions against Russia.

Russia and Belarus are among the world's biggest suppliers of fertiliser. Lifosa's plant in Kedyniai, Lithuania, has been operating at minimum capacity since March on surplus raw materials due to disruptions in supplies from Russia and Belarus. The plant employs about 1,000 people.

Lifosa hopes to solve the raw material problem without supplies from Russia and Belarus, but even if production resumes in May, it will operate at minimum capacity, Lifosa's general manager said.

As a major phosphate fertilizer supplier in Europe, Lifosa2020 had revenue of 315.2 million euros, down 10.6% from 2019, and net profit of 16.8 million euros. Ninety-eight percent of the company's production is exported, mainly to France, Germany and other European countries such as Ukraine.


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