Achema, Lithuania’s biggest fertiliser manufacturer based in Jonava, has announced it is stopping its plant as of September 1 due to high prices of natural gas, one of the key ingredients.
For the time being, only the production of resins and technical gases will be maintained, the company said in a press release on Wednesday.
“In the current market situation, most Western fertiliser producers are forced to shut down their factories and Achema is no exception. The record prices of natural gas directly affects the cost of production, and the prices of our fertilisers are becoming uncompetitive in comparison with the production of US and Russian producers,” Ramūnas Miliauskas, CEO of Achema, is quoted in the statement.
During the shutdown, some employees will continue to work to ensure maintenance and protection of the equipment, while the rest will be furloughed.
Natural gas is the main raw material for the production of nitrogen fertilisers, accounting for around 70 percent of the cost, the company said.
Since September last year, only one of the two ammonium production plants at Achema has been operating, which means that the company has been operating at one-third of its capacity.
Achema’s CEO Miliauskas said last spring that the company used to sell about 30 percent of its fertilisers on the Lithuanian market, but this year purchases almost stopped.
Union president: ‘Situation is difficult’
Achema trade union president Birutė Daškevičienė said that the union was in consultation with the management about how to ensure that employees do not lose income.
“The situation is difficult, we are trying to find the best solutions with the company’s management and we are ready to cooperate. At the moment, the most important thing is to ensure that the company survives and that the employees receive an income from which they can survive and wait until the company recovers,” Daškevičienė told BNS on Wednesday.
The union is still working on the exact position, which it promises to announce in the near future, she said.
The plant, which has been operating at partial capacity since autumn 2021, is the largest consumer of natural gas in Lithuania.
Mindaugas Sinkevičius, the mayor of Jonava where the plant is based, said the company must take care of its workers during the downtime.
“We understand that the downtime will not be for a few days – my unofficial understanding is that there is talk of a deadline of 30 November – so that is at least three months of downtime. It is also not fully known how many workers will be affected, but it is probably obvious that the vast majority of them will be, so the main question is how the employer will behave in this case,” Sinkevičius told BNS on Wednesday.
The Labour Code requires that Achema pay the equivalent of 40 percent of average salary to its employees during downtime, Sinkevičius noted, but it could demonstrate “social responsibility” and agree on a “fairer remuneration”.
“The reason why I say this is because, although the company does not publish its results for the first half of the year, it is public knowledge that the first half of the year was profitable for the company, and we need to understand the situation of the employer and the employees: everything is getting more expensive for everybody, from heating, to electricity, to the price of groceries. It would be socially irresponsible to shift this burden entirely onto the employees,” Sinkevičius said.
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