Another company has reportedly decided to stop selling ammonium nitrate. According to industry sources, Agriliance LLC informed customers in late August that as of Sept. 1, it would no longer handle or sell AN at its terminals, nor would it offer the product to customers in drop shipments directly from production points to dealer locations.
“They are not going to touch it in any form or fashion,” said one source, noting that Agriliance’s exit will likely create opportunities for other players in the South-Central and Southeast regions, where AN remains a widely used fertilizer. Agriliance confirmed the decision with Green Markets, but had no other comment.
“People are saying, ‘Gosh, what are we going to do?,’ ” said one Mid-South source, commenting that the departure of Agriliance, along with other suppliers in recent years due to growing security concerns about AN, amounts to a “pretty significant amount of tonnage.” Potential buyers “can still find ammonium nitrate,” the source said, “[but] it’s just a matter of finding someone who will sell it to you.”
Agriliance, formed in 2000 by its 50/50 joint venture owners Land O’Lakes Inc. and CHS Inc., is North America’s largest crop inputs company, serving approximately 2,200 farm supply dealers. Agriliance operates 149 company-owned retail locations, primarily in the southern U.S.
Richard Downey, spokesman for Agrium Inc., said the company has not changed its approach to AN since announcing this summer that it would continue to offer the product in bulk and bulk/blends through its Crop Production Services retail business ?Çô formerly Royster-Clark Inc. ?Çô in 13 locations in the Southeast and Tennessee. Royster-Clark had been a traditional supplier of AN, especially for the Southeast tobacco market. Prior to its acquisition of Royster-Clark, Agrium had bowed out of the production and sales of AN due to security concerns (GM July 4, 2005).
“We are encouraging our retail operations to basically discontinue ammonium nitrate use, unless there’s a very strong regional reason for its use, and that tends to be around the tobacco growing regions where Royster-Clark had a number of facilities,” Downey told Green Markets. “We are limiting the number of retail operations that we offer ammonium nitrate, and are blending a lot more ?Çô moving to a blending of that product.”
In other news, industrial grade AN producer Orica North America began the permanent closure of its manufacturing facility in Seneca, Ill., on Sept. 20, according to local news reports. The decision to close the plant, which has not been operating for the past two months, was dictated by economic conditions, said Orica Nitrogen President Don Brinker. “To remain efficient and competitive, we have no choice but to consolidate our ammonium nitrate production,” Brinker said in a news release.
Australia-based Orica is a leading global supplier of commercial explosives, with operations in more than 30 countries. In North America, the company supplies commercial explosives, initiating systems, and integrated blasting technology services to the mining, quarrying, and construction industries.
Industrial grade AN capacity at Seneca was 210,000 mt/year. Orica purchased the facility in 2000, along with another in Utah, from LaRoche Industries Inc. for approximately US$44 million through its wholly-owned subsidiary, Orica USA Inc. The sale was part of LaRoche’s bankruptcy proceedings.
The Seneca facility employed 44, who will continue working for the next several months while the plant is decommissioned. A smaller group of employees will then continue work next spring when dismantling operations commence. Orica estimated closing costs of A$9 million after taxes, plus site remediation costs of A$22 million, which will be recognized as individually significant items in the company’s financial statements for the year ending Sept. 30, 2006. Once remediation is complete, the 1,000-acre site will be sold.
Orica plans to continue supplying customer requirements for AN from its plant in Alberta, Canada, which company sources said is four times the size of the Seneca operation. The company also will continue the manufacturing operation at its joint venture AN company, Geneva Nitrogen Inc., of Orem, Utah.
Orica recently extended a major agreement to buy ammonium nitrate from El Dorado Chemical Co. through December 2010 (GM Sept. 11, p. 12).