Russia plans to phase out export duties on fertilizers completely. The current levies will be abolished on January 1, 2025, Russian State Secretary Alexey Sazanov told the Interfax news agency.
Russia’s current fertilizer levy consists of 7% of the export value – a so-called ad valorem levy – with a minimum of 1.100, 1.800 and 2.100 rubles per tonne (approximately €10, €17 and €20) for nitrogen, potash and phosphate/slurry, respectively. The levy has been in effect since September 1, 2023. “The fertilizer levies will be largely abolished as of January 1, 2025,” Sazanov told Interfax. “There are no plans to extend them.” Instead of an export levy, Russia is increasing taxes on mineral extraction. That will come into effect early next year, the undersecretary of state said.
Addictive
For example, Russia is the EU's largest supplier of urea after Egypt, with 1,5 million tonnes in 2023. In that year, 13% of Europe's potash imports, or 290.000 tonnes, also came from Russia. The import of relatively cheap Russian nitrogen fertiliser is a thorn in the side of the European fertiliser industry. Before the Russian invasion of Ukraine, European fertiliser factories ran on relatively cheap gas. Due to the loss of Russian gas supplies due to the war, up to 70% of European nitrogen production came to a standstill at the height of the energy crisis. The fact that Europe is now importing fertiliser directly from Russia is a dangerous development from a strategic point of view, according to Fertilizers Europe, the association of fertiliser producers. "There is a risk that Europe will become addicted to cheap urea from Russia," said Antoine Hoxha, director of Fertilizers Europe, to Bloomberg this summer.
To protect producers, Europe has imposed an import duty of 5,5% on ammonia and 6,5% on urea. This duty has been temporarily suspended for a large number of countries in the first six months of 2023. This has displeased Fertilizers Europe. The duties have now been reinstated, but a few large countries such as Egypt, Algeria and Trinidad and Tobago have been excluded. In addition to the loss of cheap energy, the investment climate is also cited as a disadvantage for the European fertilizer industry. Due to additional requirements in the area of greening and strict environmental regulations, the industry is lagging behind other regions, it is argued.