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Green fertilizer project in Paraguay uses Itaipu energy to produce fertilizer without fossil fuels, attracts Wall Street support, closes 10-year contract with Yara, and aims to become a regional shield against natural gas volatility and Middle East routes
The green fertilizer project in Paraguay took shape with the decision by the British company Atome to move forward with the construction of the Villeta factory, valued at US$ 665 million. The unit will be installed in the South American country with the proposal to produce nitrogen fertilizers without using fossil fuels, replacing natural gas with renewable electricity from the Itaipu hydroelectric plant to separate hydrogen from water by electrolysis.
The announcement involves Atome, international financial institutions, hydrogen-related investors, and the buyer Yara International, at a time of tension in the Middle East and concern for global food security. The plan draws attention because it targets one of the most fragile points in the global agricultural chain: the dependence on natural gas and the passage of nitrogen fertilizers through the Strait of Hormuz, a route through which between a quarter and a third of global exports in this market pass, according to the provided information.
Why Paraguay is betting on this project as a strategic response
The project’s logic goes beyond sustainability. According to Olivier Mussat, CEO of Atome, the central issue is food security. The argument is that if fertilizer production remains strongly linked to natural gas and vulnerable geopolitical routes, agriculture will continue to be exposed to supply shocks, price increases, and the risk of a food crisis.
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With accelerated population growth and high global demand for food, producers need to adopt technological solutions to increase productivity and ensure sustainability in the field.
For Latin America, this point holds special weight. The region is an agricultural exporting powerhouse but still depends on fertilizer imports. In this scenario, the Villeta factory appears as an attempt to create structural protection against international instability, using local energy resources to produce an essential input within the continent itself.
How the factory will produce fertilizers without natural gas
Traditionally, most nitrogen fertilizers are made by combining nitrogen from the air and hydrogen extracted from natural gas. The Paraguayan project breaks with this model by using renewable electricity to separate hydrogen from water, a process known as electrolysis.
In practice, this means that the green fertilizer factory in Villeta aims to completely eliminate the use of fossil fuels in production. The energy base for this will be Itaipu, which will provide long-term electricity to power large-scale electrolyzers and make the operation viable.
The numbers that explain the size of the bet
The total investment in the Villeta plant amounts to US$ 665 million, divided between US$ 420 million in debt and US$ 245 million in equity. The operation received support from institutions such as the International Finance Corporation, the European Investment Bank, and the Hy24 fund.
The project also includes a binding 10-year contract with Yara International, which has committed to buying the entire production of the factory. The estimate is about 260,000 tons per year, a volume still less than 1% of the global nitrogen fertilizer market when the unit begins operation in 2029.
Why Itaipu changes the economic viability equation
One of the biggest historical challenges of green hydrogen has always been its cost. The Villeta project attempts to solve this equation with a specific advantage of Paraguay: access to abundant and cheap hydroelectric energy. According to the projections cited in the information, the cost of electricity will be around US$ 30 per megawatt-hour in a long-term contract.
This point is decisive because it reduces one of the strongest barriers to industrial-scale production. Without cheap energy, green fertilizers tend to lose competitiveness. With Itaipu, Paraguay is trying to transform precisely this factor into its greatest strength.
What Wall Street saw in this project
The operation gained prominence because it was treated as an unprecedented financial milestone for this type of industry. According to Mussat, Atome managed to demonstrate that it is possible to close and finance a green fertilizer factory on an industrial scale, something that, according to him, had never been done in this way before.
This financial support did not come solely from environmental expectations. Investors’ interpretation is that cheap, non-fossil energy sources can pave the way for a localized industry less dependent on natural gas prices. This gives the project a weight that combines food security, energy autonomy, and industrial opportunity.
What changes for Paraguay with the Villeta factory
For decades, Paraguay exported part of Itaipu’s energy surplus to neighboring countries at low prices. The new factory represents an important change in this pattern because it proposes using this clean energy within the country itself to create jobs and produce a higher value-added good.
The perspective in Asunción is one of paradigm shift. Instead of just selling raw energy, Paraguay is now trying to capture more industrial value with a product directly linked to global agriculture and supply security.
How the Strait of Hormuz enters the center of this story
The green fertilizer project gained even more relevance due to the geopolitical situation. The information states that between a quarter and a third of global nitrogen fertilizer exports pass through the Strait of Hormuz, a corridor pressured by recent tensions in the Middle East.
With the conflict and reduced gas shipments, fears of price increases and supply disruption grew. In this environment, producing fertilizer with renewable electricity in South America ceases to be merely an industrial initiative and comes to be seen as a way to reduce the region’s exposure to international shocks.
Why this model could become a reference for world agriculture
Even if the Villeta plant represents less than 1% of the global market at the start of operation, the project is observed as a proof of concept on a relevant scale. If it works as planned, it could show that it is possible to produce nitrogen fertilizer outside the traditional logic based on fossil fuels.
This is precisely what makes the model attract so much attention. The project does not promise to dominate the market immediately, but rather to prove that there is an industrial route capable of freeing part of global agriculture from dependence on natural gas.
What’s at stake beyond the factory itself
Ultimately, the dispute is not just about a new industrial plant in Paraguay. What is at stake is the attempt to redesign part of the foundation that sustains global food production. If fertilizers continue to depend on sensitive routes and natural gas, any geopolitical crisis will continue to have the potential to affect crops, agricultural costs, and food prices.
That’s why the Villeta project gains such significant weight. It connects hydroelectric energy, green hydrogen, industry, international financing, and food security in a single long-term bet.
If Paraguay’s model truly works in Villeta, can Latin America finally reduce its external dependence on fertilizers, or will this type of factory still take time to truly change the game?
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