Monomeros recovery hinges on sanctions exemption

US sanctions on Venezuelan state-owned fertilizer producer Monomeros Colombo-Venezolanos should be lifted in less than two weeks, according to its chief executive, allowing the company to quickly recover lost output.

Monomeros chief executive Jon Bilbao said the US government likely will issue an 18-month license this month allowing the Barranquilla, Colombia-based company to reopen international credit lines and resume raw material imports from US and other suppliers. Those ties were cut when sanctions were imposed last year against state-owned PdV and Pequiven, which owns 100pc of Monomeros.

Before the sanctions Monomeros historically supplied nearly 50pc of overall agricultural fertilizer demand in Colombia, including 70pc of the fertilizer used by Colombian coffee, potato and palm growers. Its branded fertilizer products including Nutrimon, Nutrimon Plus and Ecofertil, designed specifically for Colombian soil, were used by over 3mn Colombian farmers. It also produced components of animal feed products used in the cattle, dairy and other livestock sectors. The company also imports, distributes and exports industrial chemicals including nitric acid, sulphuric acid, sodium sulphate, sodium carbonate, caustic soda, sulphur, phosphoric acid, ammonia and methanol.

The sanctions cut Monomeros' operations to less than 50pc of nameplate capacity, and reduced its share of the Colombian fertilizer market to less than 40pc. The sanctions led to financial and import bottlenecks that Bilbao — a veteran Venezuelan oil and petrochemicals executive who was named chief executive in March by opposition leader Juan Guaido — blames for $20mn in 2018 losses and $6mn lost during the first five months of 2019.

Bilbao has said repeatedly that the imminent sanctions exemption will allow the company to raise output in second-half 2019 to over 80pc of capacity, generating $6mn of profit this year.

Urea and ammonia imports previously sourced from Pequiven's 2.8mn t/y Fertinitro complex in Anzoategui state will not resume because of US sanctions, Bilbao said. Monomeros instead will source its urea and ammonia import needs with other suppliers in the US, Europe and Asia.

Even without sanctions, Fertinitro's ability to supply the needs of Monomeros is dubious at best, a Pequiven official tells Argus. Fertinitro's has the nameplate capacity to produce 1.5mn t/y of urea and 1.3mn t/y of ammonia, but is mostly off line due the combined impact of a gas supply deficit, an unstable electricity grid and equipment breakdowns that Pequiven lacks the cash to repair, the official said.

Monomeros, with a design capacity of 1.3mn t/y of fertilizers, animal feed components and other industrial products, operates two mixing and distribution centers located at the port of Barranquilla and the Pacific port of Buenaventura. It employs up to 1,500 direct and indirect workers nationally in Colombia.