"We have discovered that by consolidating the industry we would be compounding the problems," Industry and International Trade Minister Mr Obert Mpofu said.
"We are now closely looking at alternative ways of running the industry to achieve maximum production levels.
"Whatever route that we will take should improve stabilisation in the sector."
Chemplex Corporation, Sable Chemicals and Yara, a Norwegian fertilizer firm with a controlling stake in Windmill, were the three companies slated for amalgamation into the National Fertilizer Company.
Minister Mpofu said his ministry had realised that the critical issue was not about ownership but the availability of foreign currency for the importation of raw materials.
"The fertilizer industry could be consolidated but without addressing the issue of foreign currency this move would not have yielded much," the minister said.
Last week, TA Holdings published a cautionary statement advising its shareholders that negotiations for the disposal of Sable Chemicals had been discontinued.
"We published a cautionary statement advising that negotiations that could result in the disposal of TA Holdings Limited fertilizer interest were in progress. We now advise that the negotiations have been discontinued," said TA Holdings in a statement.
Local fertilizer firms have the capacity to produce 1,3 million tonnes a year if adequate raw materials are made available.
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A few years ago the industry had the capacity to produce enough for domestic consumption with the surplus being exported. It is against this background that the Government is pursuing strategies to restore viability to the industry.
Had the proposed amalgamation sailed through, Government was going to pay TA $6,5 trillion for Sable and $4 trillion for its investment in the Zimbabwe Fertilizer Company.
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