Incitec Pivot Ltd. (IPL), Southbank, Victoria, said on Feb. 25 repairs and the restart of the 800,000 mt/y Waggaman, La., ammonia plant will take six to eight weeks. IPL said a rupture occurred in a section of pipe, resulting in a release of hydrogen (GM Feb. 18, p. 1).
The company said extensive investigations have revealed only minor damage to surrounding equipment, and repair work is primarily focused on the damaged spool piece. The root cause analysis indicates that the damage mechanism is limited to this section of pipe.
IPL said it has taken, and will continue to progress, measures to mitigate the impact of the closure of the plant, including calling force majeure on its external ammonia supply contracts.
IPL estimates that the incident and associated downtime will give rise to an impact on earnings before interest and tax (EBIT) of approximately US$95-$125 million (A$132-$174 million) and net profit after tax (NPAT) of US$68-$90 million4 (A$94-$125 million).
IPL said it has comprehensive property insurance coverage, and as a result, IPL’s insurers have been placed on notice of a potential claim. It said the estimated earnings impact outlined above does not factor in any potential insurance proceeds, noting that IPL has a total retention amount of US$40 million under its relevant insurance program.
IPL had major problems at the relatively new Waggaman plant during the fiscal year ending Sept. 30, 2021 (GM Nov. 19, 2021), including an extended turnaround and unplanned outages. Waggaman’s EBIT was US$3.6 million in FY2021, versus the prior year US$32.4 million.
Waggaman produced 437,200 mt of ammonia in FY2021 (FY2020: 729,000 mt), 40 percent less year-over-year, while sales of ammonia from the plant were 23 percent lower on the year at 563,500 mt (FY2020: 730,000 mt). The company replaced shortfalls in produced ammonia by third-party supplies.