German Fertilizer Factory Halts Production Over Energy Prices

The European energy crisis continues its rampage across the industrial landscape. For the SKW nitrogen plant in Piesteritz, one of Germany’s largest producers of fertilizer and AdBlue, high energy prices have made production economically unfeasible. According to a spokesperson of the factory, one month of production would create losses in excess of the previous year’s profits. Local and regional politicians are imploring Federal Chancellor Olaf Scholz to act.

The situation at the factory in Piesteritz had already been precarious for a long time. Officials had expected to shut down production by October, considering that the new German gas levy in combination with the extremely high gas prices would lead to €30 million in gas-related costs alone (an amount the factory cannot afford). But reality caught up with SKW Piesteritz even earlier; production has come to a full stop and if nothing changes, employees will be placed on “Kurzarbeit” whereby they will be sustained, for a fraction of their wages, by government subsidies.

Such a halt in production may not only have disastrous effects on agriculture—as fertilizer shortages would increase the risk of crop failures—but also on already strained transportation supply chains, as AdBlue is a key component in keeping modern diesel trucks on the streets. The solvent is needed to treat exhaust fumes in order to fulfill eco standards imposed upon diesel trucks.

The Minister of Economy of Sachsen-Anhalt, Sven Schulze of the Christian-democratic CDU, is in regular contact with ownership of the factory and pleaded for federal support from the government—so far to no avail. Thomas Brockmeier of the Chamber of Commerce and Industry in Sachsen-Anhalt referred to the gas levy as the “deathblow” to energy-intensive factories such as the SKW Piesteritz. In a letter to Chancellor Olaf Scholz, co-signed by Christian Tylsch of the CDU and the Mayor of Wittenberg Torsten Zugehör (independent), the authors warn of the “impending standstill of the Federal Republic.” So far, however, no official reaction from the government has transpired.