Fertilizer producer Yara, known in the Netherlands for its factory in Sluiskil (Zeeuws-Vlaanderen), is the next company in a long line that has recorded mega profits in times of crisis. The net result for 2022 was 2.6 billion euros, seven times as much as in 2021.
Yara, which is headquartered in Norway, produced less fertilizer and other nitrogen products last year than in previous years, but was able to raise prices so high that the financial situation of 2022, which was dominated by the war in Ukraine, did not worsen financially. Sales increased from 14.8 billion to 22.3 billion euros, the profit from over 350 million to 2.6 billion euros.
With this, Yara joins a list of companies that can add a huge profit in 2022 despite turbulent market conditions. This previously applied to ExxonMobil, Shell and BP, among others. The mega earnings at those oil giants led to the necessary social anger. In the White House, for example, US President Joe Biden got excited about the profit of ExxonMobil (52 billion euros), while in the Netherlands there was a lot to do about Shell’s net result (38 billion).
High natural gas consumption
Yara also relies heavily on fossil fuels for the production of fertilizer. The Sluiskil plant, the largest of Yara’s 28 sites, is responsible for 5 percent of Dutch natural gas consumption, is second on the list of ammonia emitters and in the top 10 of CO2 emitters.
Partly due to the high gas prices, production in Zeeuws-Vlaanderen was also lower last year. “We used about 15 percent less natural gas than in the previous year,” says Gijsbrecht Gunter, external relations manager at Yara Sluiskil, to give an idea.
According to Yara, the lower production is problematic for Africa, for example. “People go hungry when there is not enough fertilizer,” Gunter said a few months ago when this site visited Yara, referring to the continent’s lower agricultural yields.
So it did not prevent Yara from increasing its profit sevenfold compared to 2021. Gunter: ,,But I can’t say anything about that. Then I’m going out of my league, that’s at the head office in Oslo. I can say that we also had a good financial result in Sluiskil. But due to the high natural gas prices here, you are talking about a lower profit percentage than the rest of the group.”
‘Europe must act’
Svein Tore Holsether, Yara’s Norwegian CEO, says the company has “showed resilience in a challenging situation” with the high profit figure. Holsether does express concern about European industry, in particular because of US President Joe Biden’s Inflation Reduction Act. Biden allocates billions in subsidies for companies that green their production process.
The European Commission is busy doing something about this, although the Netherlands has turned against the plan for a new fund. However, according to Yara, a European initiative is badly needed. “The US law creates much-needed momentum, and forces Europe to act quickly,” says Holsether. “If Europe does not act, it risks losing two things: its ability to become more sustainable and an important industry.”
In Sluiskil, Yara is working on solutions that can replace natural gas, such as green hydrogen. The company says it cannot do this without a government subsidy. And, warns Gunter: “The tasks imposed on us by the government must be realistic.”
At the fertilizer plant Yara , the country’s largest gas consumer, just about all the crises of our time come together:
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