Mota-Engil, PEMEX to Build US$1.2 Billion Fertilizer Plant

Construction firm Mota-Engil has partnered with PEMEX to build a US$1.2 billion fertilizer plant in Veracruz, aiming to boost Mexico's agricultural productivity and reduce fertilizer imports. Additionally, the project highlights environmental benefits through the production of AdBlue. 

The Portuguese company began operations in Mexico in 2008. To date, it has participated in several infrastructure projects, including the Mayan train during President López Obrador's administration. The agreement with PEMEX, which involves an investment of US$1.2 billion, includes the engineering, construction, financing, and operation of a plant to produce ammonia, urea, and AdBlue in Veracruz.

The plant is projected to have an annual production surpassing 700,000t. This volume represents 131% of the ammonia production that PEMEX aims to achieve in its petrochemical complexes in 2024, which currently stands at 533,000t, as stated by Octavio Romero, Director, PEMEX, in May during a morning conference with President López Obrador, as reported by El Economista.

The construction of the plant is expected to significantly strengthen the productive autonomy of Mexico's agricultural sector and help reduce fertilizer imports. According to the monthly fertilizer import report from Grupo Consultor de Mercados Agrícolas (GCMA), between January and May 2024, fertilizer purchases reached historic levels, increasing by 29.5% in volume and 10.5% in value compared to the same period in 2023. However, inventories in the domestic market continue to accumulate due to uncertainty caused by the lack of rain in the main producing regions.

Mota-Engil emphasized that the project will promote sustainable environmental solutions by reducing the emissions of polluting gases into the atmosphere, which involves incorporating AdBlue into fuels. AdBlue is an additive used in diesel vehicles, prepared from a solution of urea and water. This substance aims to reduce the nitrogen oxide (NOx) emissions from vehicles equipped with a Selective Catalytic Reduction system. The use of AdBlue can reduce harmful emissions released by a diesel vehicle during combustion by up to 90%. According to the United Nations Environment Programme (UNEP), nitrous oxide (N2O), as a greenhouse gas, is 300 times more potent than carbon dioxide (CO2).

The contract signed by the federal company and Mota-Engil stipulates that the client will provide the primary raw materials, in this case, gas and water, to the operator, who will be solely responsible for their transformation and delivery of the final product without changing the price, raw material risk, and/or any responsibility in the sale of the final product.

The project will be developed in three phases. The first phase will involve feasibility engineering studies lasting four to six months. The second phase, which includes the construction of the plant, is expected to take 42 months. Finally, the third phase, focusing on the technical operation of the plant, will span 20 years.

According to the agreement between both parties, the remuneration will be based on availability payments during the 20-year operation period of the plant, and the investment remuneration will correspond to a fixed rate, updated annually according to the inflation rate, while the operation remuneration component is linked to performance.

Mota-Engil Mexico will be responsible for the overall coordination of the project. Additionally, the Spanish company Duro Felguera will oversee the execution of the first two phases. Currently, it is already carrying out the first phase's work, amounting to a value of US$15 million.  Following this initial project, Mota-Engil and Duro Felguera are expected to collaborate on additional ventures, playing key roles in Mexico's energy transition and nearshoring-related industrial projects.