Essa Group of Indonesia to build US$1.3bn fertiliser plant in Tanzania

Essa Group, the largest private liquefied petroleum gas refiner and ammonia plant operator of Indonesia, has signed a memorandum of understanding with Tanzanian government entities to establish a US$1.3bn urea fertiliser factory near the southern city of Mtwara. The plant is expected to stabilise fertiliser prices in Tanzania and improve food security.

The facility will produce one million tonnes of fertiliser annually. Construction is scheduled for completion by 2027, with production set to begin in 2029. It is anticipated that the project will create 389,000 jobs.

As part of the agreement, the state-owned Tanzania Petroleum Development Corporation (TPDC) will supply natural gas to the project. TPDC operates a nearby gas processing plant handling resources from the Mnazi Bay field. Natural gas is a primary feedstock for producing ammonia, which is synthesised by combining hydrogen from natural gas with nitrogen from the air. Urea is then produced through a chemical reaction involving ammonia and carbon dioxide, resulting in a compound with a high nitrogen content that promotes plant growth and enhances crop yields.

In Tanzania, fertiliser use is notably low at 9.3 kg per hectare of arable land, compared to the global average of 139.8 kg. However, fertiliser consumption increased from 500,000 tonnes in 2022/2023 to 800,000 tonnes in 2023/2024, with future demand expected to reach one million tonnes. Currently, Tanzania imports 90% of its fertiliser needs. The new plant is expected to address Tanzania's fertiliser shortage, decrease dependency on imports and save foreign currency, and enable exports to neighbouring countries.

Essa’s investment comes after the visit of Tanzanian President Samia Suluhu to Jakarta where she signed five agreements with President Joko Widodo signed five agreements covering agriculture, minerals, and the marine economy. In a bid to enhance engagement with Africa, Indonesia will host the 2nd Indonesia–Africa Forum in Bali from 1-3 September, which will focus on issues related to economic transformation, energy, mining, food, health, and development cooperation.

 

References

‘Tanzania: The African Development Bank provides a USD 2 million partial credit guarantee and a USD 528,600 grant to facilitate access to fertilizer for smallholder farmers’, The African Development Bank, 30 May 2023

‘Tanzania's Samia inks gas, health and agriculture deals in Indonesia’, The East African, 27 January 2024

‘Vice Minister of Foreign Affairs emphasises spirit of Asian-African conference in lead-up to 2nd Indonesia-Africa Forum’, Ministry of Foreign Affairs Republic of Indonesia, 29 June 2024

‘TPDC 2024 || Fertilizer Factory’, TPDC Tanzania, 31 July 2024

‘Groundbreaking venture as Tanzania signs 3.2 trillion shillings project for fertilizer manufacturing project’, Tanzania Investment Centre, 31 July 2024

‘ESSA Group to build 3.5trn/- fertiliser plant’, The Guardian, 01 August 2024

‘The government signs a memorandum of understanding with the Indonesian company Essa’, Tanzania Fertilizer Regulatory Authority, 02 August 2024

‘Fertilizer consumption (kilograms per hectare of arable land) - Tanzania, East Asia & Pacific, Indonesia, World’, World Bank Group, Accessed 11 August 2024

‘Gas Supply Company Limited (GASCO)’, Tanzania Petroleum Development Corporation, Accessed 11 August 2024

‘Gas’, TanzaniaInvest, Accessed 11 August 2024

‘How fertilizers are made’, Fertilizers Europe, Accessed 11 August 2024

‘About Essa’, Essa Group, Accessed 11 August 2024