Mexico Invests US$3.2 Billion to Boost Fertilizer Production

Private investments exceeding US$3.2 billion in fertilizer complexes in Durango and Sinaloa signal a strategic push to expand domestic production and reduce Mexico’s 70% dependence on imported agricultural chemicals. Driven by global supply chain disruptions and higher urea prices, the projects will leverage cross-border natural gas infrastructure to strengthen fertilizer production and improve food security. The investments are expected to benefit the agribusiness, petrochemical, and grain sectors, while reinforcing regional supply chains and enhancing Mexico’s competitiveness under the USMCA.

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Private developers Fermachem and Gas y Petroquímica de Occidente (GPO) are advancing more than US$3.2 billion in combined investments for two major fertilizer manufacturing complexes in Mexico. The projects, which will establish domestic production capacity for granulated urea and ammonia, aim to reduce Mexico's heavy reliance on imported agricultural inputs and limit exposure to international price volatility. 

"In an environment of growing volatility, the fertilizer market becomes a critical factor for food security and agri-food inflation in Mexico," said Juan Carlos Anaya, Director, Grupo Consultor de Mercados Agrícolas (GCMA). "The strategy must focus on expanding alternatives and strengthening domestic production to reduce exposure to external crises."

Fermachem Urea Complex

Fermachem’s US$1.6 billion Agro-Nitrogen Industrial Complex in Lerdo, Durango, broke ground in June 2026. The company, part of private holding company Fermaca Dreams, plans to leverage pipeline infrastructure operated by sister company Esentia Energy Systems to secure competitively priced natural gas from Texas. Scheduled to begin commercial operations in 2029, the complex will use self-generated electricity and carbon capture technologies to produce 1 million metric tons (t) of granulated urea annually, replacing an estimated 58% of Mexico's urea imports.

According to the National Association of the Chemical Industry, Mexico imported 1.7 million t of urea in 2024, leaving domestic agricultural producers dependent on foreign suppliers for more than 80% of total consumption. Construction of the Durango facility is expected to generate 3,000 direct and indirect jobs, followed by 450 permanent positions once operations begin.

Fermachem Chief Executive Officer Ray Fletcher said Durango was selected for its strategic location, competitive access to natural gas, and favorable conditions for large-scale industrial investment. Fernando Calvillo Álvarez, Co-President, Fermaca Dreams, described food sovereignty as the project's primary objective, alongside job creation, noting that the company committed more than MX$200 million to community investment programs. Durango Governor Esteban Villegas Villarreal described the complex as "a before-and-after moment for Durango.

GPO Ammonia Plant

Meanwhile, GPO, the Mexican subsidiary of Swiss energy group Proman, is constructing a a US$1.63 billion anhydrous ammonia plant in Topolobampo, Sinaloa. Designed to produce 2,220 t per day—approximately 800,000 t annually—the facility has reached roughly 80% completion and is expected to begin commercial operations in 2027. The coastal complex aims to supply Mexico's northwestern agricultural region while reducing national ammonia import dependence by 70%. The project is backed by long-term natural gas supply agreements with CFEenergía.

Once operational, the Topolobampo facility will become Latin America's largest merchant ammonia plant, positioning Sinaloa as a strategic hub for chemical production and agricultural input security. Beyond industrial output, the project is expected to generate up to 10,000 direct and indirect jobs while integrating more than 7,000 local suppliers, transport companies, and small businesses into its regional supply chain.

Mexico’s Fertilizer Crisis

Mexico currently imports approximately 75% of its fertilizers from the Persian Gulf—including Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman—as well as from Russia and other countries. Amid ongoing geopolitical tensions, urea prices have risen by roughly 40%. According to the World Bank, urea traded at US$472/t at the end of February before climbing to approximately US$800/t on international markets following the outbreak of hostilities.

Heavy dependence on imported inputs has prompted agricultural associations in major producing regions—including Sinaloa, Jalisco, Michoacan, Sonora, and El Bajio—to urge the federal government to grant temporary tariff relief on Chinese ammonium sulfate. Mexican importers currently pay a compensatory duty of nearly US$180/t, keeping domestic prices around US$530/t instead of roughly US$330/t without the tariff.

In response to rising input costs, the federal government launched the Fertilizers for Well-Being program, which distributes approximately 50-kilogram fertilizer packages to small-scale producers. However, analysts argue that the initiative has had only a limited impact on overall agricultural productivity. Anaya noted that the program operates on a relatively small scale and excludes medium-sized and large commercial producers.

The federal government has also begun investing in domestic petrochemical production using existing industrial infrastructure. In June 2026, PEMEX, along with the Ministry of Energy (SENER), announced a MX$93 billion in a petrochemical reactivation program, which includes a MX$25 billion ammonia and urea plant in Poza Rica, Veracruz. The plant, which broke ground in 2025, is targeting an annual output of 708,000t of granulated urea.