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Plan for tariff on Brazil ammonium nitrate stirs debate

A proposal to present a tariff on ammonium nitrate imports has actually pitted chemical market lobby Abiquim versus regional fertilizer mixers and powerful food manufacturers that prefer foreign supplies.

The request by Abiquim, still pending before the advancement and trade ministry, highlights wider ramifications of Western sanctions on Russia, which the lobby says ended up boosting exporters in Asia by providing cheap access to gas used as feedstock and fuel to make crop nutrients.

Critics of the levy on ammonium nitrate, which is likewise used in explosives, state the tariff would penalize about 90% of domestic intake as Brazil relies generally on imports for supply.

The nation imported 1.1 million metric loads last year, 84%. from Russia, according to trade data. This year through May,. imports were 629,497 metric loads versus national output of. 64,143 heaps, according to Sao Paulo-based fertilizer group. Siacesp.

Norway's Yara, the only Brazilian producer,. protected Abiquim's proposal but yielded it's not the long-term. response.

Undoubtedly, the structuring service for the nation is to. have competitive natural gas, though the tariff is an. important tool to guarantee market equality and secure the. nationwide industry, it said in a declaration to .

Yara's domestic production capacity is 416,000 heaps. The. company stated it made some 90,000 lots of ammonium nitrate for. agricultural use in 2015.

Abiquim's President Andre Cordeiro said in an interview the. temporary tariff would level the playing field against imports. at a time the domestic chemical industry's usage capability. hit a 30-year low, averaging 64%.

He kept in mind natural gas rates can cost up to 7 times more. in Brazil, adding a deluge of cheap imports can lead companies to. close doors, including Yara's system in Sao Paulo state.

Abiquim asked for the levy on ammonium nitrate to go from. no to 15%. It likewise proposed tariffs on more than 60 other. imported chemicals averaging 11%, Cordeiro stated.

AMA, which represents Brazilian fertilizer mixers,. knocked the proposal as protectionist, implicating one. international company of managing domestic materials in a. file sent out to the development and trade ministry.

AMA particularly pointed out Yara can produce more than 2. million heaps each year at its European plants while output in. Brazil is much smaller sized and not entirely destined to make. fertilizer.

Other groups strongly opposing the tariff include Brazilian. soy, corn, cotton, coffee, beef and sugarcane lobbies. They. argued in a public consultation it could raise local food. production expenses.

With the rate of gas in Brazil and other external. aspects, producing nitrogen fertilizers in the country has. become an economically inviable activity, Yara stated.

(source: Reuters)