Incitec Pivot Ltd. (IPL), Southbank, Victoria, now expects its Waggaman, La., ammonia plant to restart production by mid-April, according to a company statement on April 6. Waggaman has a nameplate capacity of 800,000 mt/y of ammonia.
The company as of mid-February had expected operations to restart by mid-March following the first planned turnaround since the plant was commissioned in 2016 (GM Feb 19, p. 33).
IPL said mechanical completion of the turnaround was completed on March 6, followed by start-up activity. But the facility was brought down on March 17 as a result of a dry gas seal failure and vibrations in the turbine on the induced draft fan, the company said.
Additional investigations into the root causes of both issues have been completed, and repairs are currently underway.
Based on the current work plan, IPL sees the further delay to the Waggaman start-up hitting FY2021, ending Sept. 30, earnings before interest and tax (EBIT) by A$36 million (or A$28 million on a net profit after tax basis), with A$15 million of that hit occurring in the first fiscal half and A$21 million in the second half.
The cost of the turnaround has been finalized at A$80 million (approximately US$61 million at current exchange rates), which will be depreciated over a four-year period. The impact of the depreciation has been incorporated in FY2021 earnings updates.
Shares in IPL fell as much as 14 percent, the most since March 2020, after the company said it expected the delayed restart of the Waggaman plant to hit FY2021 EBIT.
While IPL expects the repairs to Waggaman’s ammonia cooler (heat exchanger) to restart “at full production rates,” it said a replacement cooler is likely to be required in the next 12-24 months. An outage of up to three weeks is consequently expected in FY2022 or FY2023 to allow installation of the new cooler.
IPL explained that subsequent metallurgical analysis of the ammonia cooler following repairs revealed that “poor workmanship” of the original fabricated metal would likely prevent the repair from lasting until the next scheduled turnaround.
It reported that in other respects, the company’s business performance remains in line with the update provided on Feb. 15. The company further confirmed that the Dyno Nobel Americas Explosives’ Louisiana, Mo., ammonium nitrate (AN) plant has returned to service as planned, and the Cheyenne, Wyo., AN plant continues to operate after recent outages. Preparations for the second planned turnaround of the Moranbah, Queensland, AN plant starting in May also remain on track.
IPL will release its first-half FY2021 results on May 17.