Yara International ASA said Feb. 1 that it has acquired 16 percent of Burrup Holdings Ltd. (BHL) for US$143 million, increasing its ownership share in the company to 51 percent. Yara already owned 35 percent of the company. Concurrently, Apache Energy Ltd., Houston, which supplies natural gas to the Burrup ammonia facility in Australia, has acquired the remaining 49 percent of the shares in BHL and signed a new shareholders’ agreement with Yara.
"We are pleased to secure majority ownership in our Burrup activity and enter a closer cooperation with Apache Energy, representing another important step in Yara’s strategic growth ambitions. Today marks the end of a challenging period for what we have always regarded as a world-class asset, and we look forward to integrating Burrup fully into Yara’s global production system. Furthermore, today’s agreement allows us to intensify work on the planned technical ammonium nitrate (TAN) project in the Burrup peninsula together with Apache," said Yara President and CEO Jørgen Ole Haslestad.
BHL’s wholly owned subsidiary, Burrup Fertilisers Pty Ltd (BFPL), operates an ammonia plant – completed in 2006 and located at the Burrup Peninsula in Western Australia – with an annual production capability of approximately 850,000 mt. BFPL entered into a revised long-term natural gas supply contract with Apache Energy in November 2011. The plant is one of the world’s largest ammonia facilities, producing 6 percent of the total world output of tradable ammonia.
The Burrup Nitrates project will now proceed – with 75.5 percent Yara ownership and 24.5 percent Apache ownership – to construct a TAN plant with annual nameplate capacity of 330,000 mt near the existing Burrup ammonia plant. Yara said the proposed TAN plant’s proximity to the Pilbara mining industry, together with adjacent ammonia supply, gives it a distinct advantage over other ammonium nitrate suppliers. Yara has an agreement to market the entire output from the plant.
"We will re-name our Burrup activity to Yara Pilbara, marking a more active role for Yara in the region as we move swiftly to establish Yara standards of corporate governance. We now look forward to working with public and private stakeholders to shape and strengthen the long-term future of the Pilbara region," said Haslestad.
Apache paid $439 million for its 49 percent stake, including customary closing adjustments. Initially, Apache had won 65 percent of Burrup (GM Jan. 2, 2012, Dec. 19, 2011), which was being offered by ANZ Bank, which was selling the property due to the financial woes of previous shareholders Pankaj and Radhiki Oswal of India. As the minority 35 percent holder, Yara had through Jan. 31, 2012, to top Apache’s bid, and opted to negotiate with Apache instead (GM Jan. 30, 2012).
In December, Apache entered into negotiations with Australian company Orica Ltd. about its possible participation in the ownership of the TAN plant. Yara will continue with those negotiations.
"This new ownership structure will stabilize the Burrup project after a period of significant uncertainty, and secure a long-term economically viable market for our natural gas production in Western Australia," said Thomas Maher, vice president of Apache’s Australia Region and managing director of Apache Energy Ltd. "This ownership stake provides a means to increase the value of our Australian gas reserves because ammonia prices historically have been correlated to the generally higher prices of corn and crude oil on international markets. We are pleased to be associated with Yara, which is one of the world’s largest producers of ammonia fertilizers and has a long-term off-take agreement for Burrup’s production."
Through Apache Energy Ltd. and other Australian subsidiaries, Apache is a leading producer of natural gas for the domestic Wes