A major nitrogen fertilizer complex, with a price tag of $1.5 billion, has commenced construction in Lerdo, Durango, Mexico, initiated by the energy firm Fermaca.

The company has stated that once the facility, named Fermachem, is operating at full capacity, it is projected to fulfill close to 60% of Mexico's domestic urea requirements.

The plant is engineered to produce an annual output of approximately 1 million tonnes of urea, equating to a daily production rate of around 2,860 tonnes.

The natural gas feedstock essential for its operations will be supplied by its affiliated company, Essentia Energy.

Mexico currently relies on imports for 80% to 90% of its fertilizer needs, with urea imports for 2024 estimated at about 1.7 million tonnes.

Supply disruptions in the natural gas and ammonia markets, stemming from conflicts in the Middle East, have led to significant price increases for urea in the region.

This new Durango complex is expected to substitute a substantial portion of these imports, thereby reducing Mexico's future dependence on the global nitrogen fertilizer market.

Fermaca's Chief Executive Officer, Ray Fletcher, indicated that the project will establish a domestic nitrogen fertilizer supply chain for Mexican growers, with operations scheduled to commence in the third quarter of 2029.