Terra Industries Inc. President and CEO Michael Bennett told analysts Oct. 25 that a decision in a natural gas bidding process in Peru could come in the next month. Terra representatives were in Peru this last week to participate in the bidding. Should Terra and its partner, Orica Ltd., win access to the gas, they could proceed with plans for an approximately $1 billion nitrogen plant at the southern port of Pisco. Earlier, Bennett was in Peru to express Terra’s strong interest in such a project should the company be awarded the contract. Bennett said this gas reserve is the only one available at this time.
Bennett expects the plant would produce 1,800 st/d of anhydrous ammonia and would likely include upgraded products. Orica would want the ammonia for the production of industrial ammonium nitrate to serve its mining customers in South America. Terra expects the balance of the ammonia would be marketed in South America, Mexico, and the U.S. West Coast. In addition, Bennett said a local entity is interested in upgrading the product to urea.
Bennett said the Terra and Orica stakes in the new venture would both be significant; however, the percentages had not been firmed up. He also said it was possible that another partner could be added. Bennett noted that there was some interest by South Koreans in the project, though he said he had not met with them. Regional press reports have suggested that India’s Oswals Group might also be interested in a new nitrogen project in Peru (GM Sept. 3, 2007).
Bennett said equipment from Terra’s idled Donaldsonville, La., nitrogen plant could be moved to Peru to improve the construction timeline. Noting that the typical construction time for a new facility would be four years, he said the Donaldsonville equipment could cut that substantially.
As for the capital going into a $1 billion project, Bennett estimated some 70 percent would be financed and 30 percent equity infused. He estimated Terra’s share could be $75-$100 million.