ATOME PLC (AIM:ATOM) said disruption caused by the ongoing Middle East conflict is reshaping global fertiliser markets and strengthening the strategic case for its Villeta project in Paraguay.
The company said the supply of key inputs, including gas, ammonia, urea and sulphur, has been significantly affected following strikes on major production facilities in the Gulf region.
Qatar Energy halted LNG and downstream operations, impacting Qafco’s 5.6 million tonne per year urea facility, while Iranian ammonia and urea production is largely non-operational.
ATOME highlighted the importance of the Strait of Hormuz, through which 20-30% of global fertiliser-grade nitrogen and 45% of sulphur flows, warning that disruption could have severe consequences for food supply.
Prices have already risen sharply, with urea and ammonia recording significant increases and sulphur prices up 40% from elevated levels.
The company said Asia is also under pressure, with India reducing fertiliser production due to gas rationing and plant closures reported in Pakistan and Bangladesh, increasing reliance on imports.
ATOME said the impact of the crisis is likely to be long-term, pointing to structural shifts including rising geopolitical risk premiums, increased focus on domestic fertiliser security and a move towards local, low-carbon production.
The company said these trends support its 260,000 tonnes-per-year Villeta fertiliser project, a plant powered by hydropower and located within the Mercosur agricultural region. Under a long-term offtake agreement, Yara International is buying 100% of production.
Terje Bakken, ATOME's director of ammonia and fertiliser markets, said: "Current events are a stark validation of what we are building at ATOME.
"Whilst supply effects can be short term, we believe the consequences of the crisis will be long term.
"There is already a 'New Normal' as companies and governments create their own 'war rooms' assessing the vulnerabilities and risks of old supply systems.
"The world cannot continue to rely on concentrated, fossil-fuel-dependent supply from geopolitically unstable regions to feed its population.
"Villeta, being in the centre of one of the most important agricultural regions of the world, is exactly the locally resilient, renewably powered fertiliser solution that markets, and the sector now are urgently seeking."