Aquila said it is targeting its energy risk management expertise at the ailing fertilizer industry, which has suffered tremendously over the past two years from volatile natural gas prices. Natural gas can account for up to 80% of a fertilizer product’s costs.

“This represents an opportunity for Aquila to help chemical fertilizer firms manage, for example, the price and margin risks associated with the impact of natural gas prices on their business,” said Aquila COO Ed Mills.

Aquila will enter the nitrogen market first, and within 12 months it plans to expand into the sulfur and phosphate markets. Target clients will be large resellers of chemical fertilizers and farm cooperatives “who are willing to share the risks and rewards in strategic areas of their business,” said Mills.

Aquila will focus geographically in areas where the company already is well established. While the company has a global footprint, providing energy, coal and risk management services in North America and Europe, much of the U.S. chemical fertilizer market is within easy reach of the company’s base in Kansas City, MO. Roughly 90% of the nitrogen used for agriculture in the United States is applied within 500 miles of Kansas City.

“The chemical fertilizer market is undergoing significant upheaval as a result of the volatility in natural gas prices and supplies,” said Kevin Fox, senior vice president and general manager of Aquila’s commodity transaction group. “Without help in managing the risks associated with such a market, the domestic industry stands to lose profitability at a time when the industry is facing extremely difficult conditions worldwide.”

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