Dyno Nobel North America (Dyno), Salt Lake City, plans to close ammonium nitrate and nitric acid production at Battle Mountain, Nev., early next year. At Maitland, Ont., the company will also halt ammonium nitrate production early next year, but will continue to produce nitric acid. Both sites will continue as transloading operations. Dyno said the development of transloading operations will ensure that there are no disruptions to customer supply and service.
According to the company, ammonium nitrate and nitric acid capacity at Battle Mountain is approximately 150,000 st/y and 119,000 st/y, respectively. At Maitland, nitric acid capacity is 350,000 st/y and AN is 220,000 st/y. All AN prill has gone into the explosives market. The company said that the Maitland plant produced a very small amount of UAN and 10 percent AN solution for the agricultural market.
Dyno said the Battle Mountain decision was driven by substantially reduced customer demand. The change is effective from the end of January 2010. The transloading operation will employ about a third of the current workforce of 31 people.
Dyno Nobel Vice President, North American Nitrogen Plant Operations Phil Morrow said the decision followed an extensive review of the continued viability of the site. “The review examined the best way to meet customer requirements for quality and service balanced with the economics of supplying a market where demand has reduced substantially.”
Dyno said the Maitland decision was driven by the closure of an Invista facility, a major customer, and the general softening in customer demand. At one point the Invista facility consumed some 40 percent of the plant’s nitric acid production.
The change to the Maitland operation is effective from the end of January 2010. It is expected that the continuing operation will employ about a third of the current workforce of 60 people.
“Manufacturing at the site has been under pressure since Invista ceased operations about six months ago,” said Morrow. “In July, we reduced production from three nitric acid plants and two AN plants to one acid and one AN plant, resulting in a workforce reduction from 101 people to 60 people.”
Dyno Nobel’s owner, Incitec Pivot Ltd. (IPL), Melbourne, said last week that pricing came under pressure in the second half as the North American market became long in AN by around 600,000 st. IPL said a recovery in explosives volumes, and firmer pricing, is largely dependent on the timing of the general recovery of the U.S. economy. IPL is assuming a slow recovery in the U.S. economy from 2011 onwards, and a push back in some benefits from 2010-2011 to 2012.
At both locations, Morrow said the company would call for expressions of interest from employees seeking a voluntary separation. “To transition employees through this difficult time, we will be developing appropriate separation packages including career change and financial counseling.
“Safety is the highest priority,” he said. “We recognize that this will be a difficult time for our employees and we must all be even more vigilant regarding safety. It is important that we watch out for each other to maintain a safe workplace.”
Also last week, IPL moved into the loss column for the year ending Sept. 30, 2009, citing a major write-down involving Dyno Nobel. IPL reported a net loss of A$179.9 million, versus year-ago net profit of A$604 million. The result included material items totaling A$527.7 million after tax, compared with A$42.9 million for the previous year. Excluding these items, IPL booked net profit of A$347.8 million, down 46 percent, primarily reflecting the impact of the fall in fertilizer prices, partly offset by the contribution from the Dyno Nobel explosives business acquired in June 2008.
Some A$490.6 million of IPL’s write-down was for Dyno Nobel goodwill, which is now down to A$2.9 billion. This reflected changes in both the weighted average cost of capital and the current softness in the North American explosives market. IPL said it was important to point out that the writedown does not reflect any change in its view of the mediumterm outlook for explosives. IPL said Dyno Nobel EBIT was US$222 million during the year, up by 27 percent in U.S. dollar terms in the middle of the worst financial market dislocation since 1930. This performance reflects the quality of the explosives business’s market position.
In other news, IPL said there has been no change to the 12-month delay announced in February 2009 regarding its Moranbah ammonium nitrate project in Australia. It expects to have an update on the project in March 2010. Total cost of the Moranbah project is put at A$935 million, with A$340 million already spent.