Yara International ASA announced on June 14 that it is postponing the planned expansion project at its production plant in Belle Plaine, Canada. Yara views the Belle Plaine site in Saskatchewan as an optimal location for a future North American nitrogen expansion, but will spend more time evaluating construction cost development and other key project parameters.
“We are not ready to initiate a Belle Plaine expansion today, primarily due to recent increases in construction cost both in Canada and North America generally,” said Jørgen Ole Haslestad, Yara president and CEO. “There is also a significant risk of future nitrogen over-supply in North America as new project initiatives are announced, despite deteriorating project profitability.”
The Yara Belle Plaine facility has current production capacity of 0.7 million mt/y of ammonia and 1.2 million mt/y tons of urea and UAN. The planned expansion project comprised an integrated world scale ammonia and urea line that would have added approximately 1.3 million mt/y of urea capacity.
“Yara’s growth options remain significant, including a number of opportunities for profitable investments in value-added product capacity, downstream facilities and plant de-bottlenecking projects,” said Haslestad. “We also expect to find profitable commodity nitrogen growth opportunities going forward, and a future Belle Plaine expansion remains an option for Yara when the construction cost situation improves.”
Yara’s announcement follows Agrium Inc’s decision in early June to suspend engineering development on its proposed $3 billion nitrogen greenfield project in the U.S. Cornbelt (GM June 10, p. 1). Agrium stressed that its project, which would produce roughly 1.8 million mt/y of primarily urea and UAN, was still on the company’s radar, but it had decided instead to focus on efforts to secure a strategic partner and a gas contract for the project at this time.
Yara first announced its Belle Plaine expansion plans in February 2012 (GM Feb. 13, 2013), and reported a year ago that the project had been approved for a fast-track process (GM June 18, 2012). The company said then that the expansion, which was to be located next to the existing plant on Yara’s 660-acre Belle Plaine site, was expected to be online by the second half of 2016, with construction starting in 2013. No projected costs for the project were divulged.
At present, the site has one ammonia plant, one nitric acid plant, and one urea granulation plant. Yara celebrated the facility’s 20th anniversary last October, and said last year that the existing ammonia-urea plant had been expanded and upgraded several times and had reached its maximum capacity.
The expansion would have added two granulation units to produce urea and urea-plus-sulfur, the latter of which Yara currently markets in Europe but said would be a good fit for the canola crop segment in Western Canada and the upper Midwest.
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