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Wyoming and Australia ammonium nitrate projects see delays and cost increases, says Dyno Nobel
Dyno Nobel last week reported delays and higher costs at its ammonium nitrate expansion at an existing facility in Cheyenne, Wyoming (GM Nov. 20, 2006), and at its new greenfield project in Moranbah, Queensland, Australia.
The Wyoming expansion was initially expected to cost approximately $50 million and come online as early as the fall of 2007. However, the company now sees a cost of $80 million and a pushback of completion to 2008-2010. The company said that due to changing market conditions it has had to re-examine the Wyoming expansion, both from a scope and schedule perspective. Subject to confirmation of external cost estimates and the timing of customer expansion plans, the likely revised plan will see ammonium nitrate solution (AMSOL) and nitric acid plants commissioned in the second quarter 2008, and a deferral of the AN prill tower until 2010.
Dyno Nobel said the revised plan would also involve expanding AMSOL capacity from 150,000 st to 250,000 st/y, while the new prill tower would have a capacity in the vicinity of 250,000 st/y. The company said the expanded AMSOL output would allow it to leverage strong agricultural fertilizer demand during the interim period until the prill tower is commissioned.
Dyno Nobel said that the development costs at the new Moranbah project have substantially increased due to a delay in detailed engineering, increased project management costs, increased costs in critical trades, and labor and significant additional contingencies. The company said until the engineering and construction contracts are finalized, it will not be practical to estimate the likely final capital cost. However, the company said it is now evident that these costs will be significantly higher than the previous estimate of A$520 million. The project is now expected to be completed in the first half of 2009.
“We are obviously very disappointed with the increased cost for the Moranbah project,” said CEO Peter Richards. “We are not alone in being caught up in the tight labor and construction market; however, we have taken actions to help mitigate the extent of the additional costs. The project remains a strategic priority for the company and the economics of the Moranbah project remain attractive, despite these increases, and are underpinned by long-term customer commitments to ammonium nitrate volume.”
To date, the company says considerable progress has been made at Moranbah. Specifically, it says the ammonia tank foundation is complete, ammonia plant foundations ahead of schedule and 60 percent complete, relocation of ammonia plant to Moranbah 55 percent complete, and that direct man hours and procurement costs are in line with original estimates.
Dyno Nobel reported an 8.2 percent increase in revenues for the six months ending June 30, to US$669.4 million. The company cited six acquisitions in the period, as well as the opening of a new office in Indonesia. Richards touted the increased revenues in spite of a deteriorating US housing market and tightening labor availability and port availability in Australia. While net profit after tax was off 1.4 percent to US$43.4 million, when adjusted for non-recurring charges it was $48.4 million, up 22 percent from the year-ago $39.6 million.
Ammonia-to-hydrogen technology moves ahead
American Security Resources Corp. (ASRC), Houston, and Ohio University, Athens, Ohio, recently announced that American Hydrogen Corp., a unit of ASRC, has been granted a worldwide exclusive license to commercialize the patent-pending catalytic electrolyzer technology developed by Ohio University’s Dr. Geraldine Botte, associate professor of Chemical and Bio-Molecular Engineering at the Russ College of Engineering and Technology. Botte has developed a method of producing hydrogen from ammonia for a fraction of the current commercial cost. As a result, hydrogen can be used as a fuel source in a wide range of applications, including transportation and energy production.
“It is really amazing to see the ammonia electrolysis technology being taken into the marketplace: that is the dream of any investigator and faculty member,” said Botte. “Our interaction with American Hydrogen Corp. is excellent. We are really happy to partner with them, and we will support their goal of having products in the market very soon. The beauty of this technology is that it can go so many places,” added Botte. “It could drive a car here, but it could even be in a shuttle in a mission to Mars in the future.”
The first application of Botte’s research will be in fuel for a hydrogen generator that produces electricity for homes and offices. “We see the first sweet spot in the market being the introduction of the hydrogen economy in stationary applications, followed by mobile applications, and any place where power is intermittent, problematic and needs to be supported over an extended period of time,” said Ben Schafer, American Hydrogen Corp. president.
The ARSR/Ohio University deal includes a $600,000 contract to support research and development of the technology, including funding for several student and technical staff members. There is also an agreement that grants The Ohio University Foundation equity in ARSC.
Ammonia for fuel use has been gaining more attention in recent years. The fourth annual Ammonia Fuel Conference will be held this year Oct. 15-16 in San Francisco. For more information, see www.energy.iastate.edu/becon/download%20NH3/AmmoniaMtg07.html.
OSHA seeks comment on information gathering system for anhydrous
The Department of Occupational Safety and Health Administration (OSHA), a division of the Department of Labor, is seeking comment on whether its information system required for anhydrous ammonia handlers should be continued as is, or if changes are necessary to better protect employee safety while minimizing the burden on employers.
According to a recent Federal Register notice that was picked up by the Green Markets FR Today alert service, the Department of Labor is seeking the comments “as part of its continuing effort to reduce paperwork and respondent burden.” OSHA has proposed to extend the Office of Management and Budget approval “of the information collection requirements contained in the Standard on the Storage and Handling of Anhydrous Ammonia.”
These standards include paperwork requirements that apply to non-refrigerated and refrigerated containers and systems that employers use to store and transfer anhydrous ammonia in the workplace. OSHA requirements related to anhydrous ammonia specify that “containers and systems have nameplates if required, and that these nameplates be permanently attached to the system so as to be readily accessible for inspection.”
OSHA further requires that these markings – on containers and systems utilizing stationary, non-refrigerated storage containers, tank motor vehicles for the transportation of ammonia, and systems mounted on farm vehicles for the application of ammonia – provide certain information regarding “nine specific characteristics of the containers and systems.” The OSHA standards also specify refrigerated containers must be marked with a nameplate on the outer covering in an accessible place that provides information regarding eight specific characteristics of the container.
“The required markings ensure that employers use only properly designed and tested containers and systems to store anhydrous ammonia, thereby preventing accidental release of, and exposure of employees to, this highly toxic and corrosive substance,” the Federal Register notice said. “In addition, these requirements provide the most efficient means for an OSHA compliance officer to ensure that the containers and systems are safe.
OSHA said it has a particular interest in comments on the following issues: whether the proposed information collection requirements are necessary for the proper performance of OSHA’s functions, including whether the information is useful; the accuracy of OSHA’s estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used; the quality, utility, and clarity of the information collected; and ways to minimize the burden on employers who must comply by using automated or other technological information collection and transmission techniques.
Comments must be postmarked, sent, or received by Oct. 15, 2007, and can be submitted via email at http://www.regulations.gov. If comments are no longer than 10 pages, they can be faxed at 202-693-1648. Mailed comments must be submitted in triplicate to: OSHA Docket Office, Docket No. OSHA-2007-0019, U.S. Department of Labor, Occupational Safety and Health Administration, Room N-2625, 200 Constitution Avenue, NW., Washington, DC 20210.
Mosaic gets approval for Florida mine expansion
Tampa-The Hillsborough County, Fla., Commission voted 5-0 Aug. 22 to allow The Mosaic Co. to mine an additional 2,067 acres at its existing mine in the southeastern area of the county. Cattle farmers in the area had complained that noise and dust from the mining operation would be a problem for their livestock, according to an article in the Tampa Tribune. Mosaic did not respond to a request for a comment. The approval allows the company to mine within a 150-foot setback, rather than the normal 200 feet. The commission also denied a request that Mosaic not be allowed to mine between the hours of 9 p.m. to 6 a.m., rather than around the clock, after the company said it needed the 24-hour-a-day operation to meet its contractual obligations. The Tampa Bay Water Authority will monitor water at the site for metals and will do additional testing if the ph level increases. The tract will be mined for about five years. Previously, Mosaic leased the land to tomato farmers. The company was also seeking to have additional land rezoned to further expand its mining operations in the area by another 1,599 acres; a hearing was scheduled for Oct. 9.
Blue Source reports CO2 deal with Coffeyville
Salt Lake City-Blue Source LLC, an aggregator of greenhouse gas (GHG) emission reduction offsets and the leading developer of anthropogenic (man-made) carbon capture and storage (CCS) projects, on Aug. 21 announced that it has signed an exclusive agreement with Coffeyville Resources Nitrogen Fertilizers LLC, under which it will work to develop CCS options for the carbon dioxide (CO2) produced at Coffeyville’s petroleum coke gasification-based ammonia and UAN facility located in Coffeyville, Kan. Blue Source will work to develop options to sequester Coffeyville’s produced CO2, with particular focus on securing a market for the CO2 within the enhanced oil recovery (EOR) industry. Blue Source said Coffeyville produces a high purity CO2 in quantities that are of strong interest to the EOR market. When sequestered, this CO2 will reduce GHG emissions by more than 650,000 mt/y, and will enhance the nation’s domestic oil supply. Blue Source said it or its management team have designed, constructed, owned, and/or operated, in one form or another, all of the anthropogenic CO2 pipelines for EOR use developed in North America in the last 20 years.
Sherritt reports financing for Ambatovy project
Toronto-Sherritt International Corp. said Aug. 24 that it has executed financing agreements for the provision of US$2.1 billion of project debt to the Ambatovy nickel project with a group of international lenders based in Japan, Korea, Europe, Canada, and Africa. First disbursement of funds is expected after the satisfactory completion of certain conditions precedent; Sherritt expects these conditions to be satisfied later this year. The project construction is proceeding on schedule to achieve mechanical completion during the first half of 2010. Sherritt says the financing agreement represents one of the largest project finance agreements ever completed in the mining industry, and is based upon the total support of the government of Madagascar. All loans have a 17-year term. Sherritt and the other sponsors will provide completion guarantees for the financing until Ambatovy has satisfied the required completion tests, at which time the project debt will become non-recourse to the sponsors. Sherritt’s pro-rata share of the completion guarantees total US$840 million, of which US$598 million is guaranteed from the project’s other sponsors. Ambatovy’s other sponsors have also agreed to provide Sherritt with subordinated loans to an aggregate of US$236 million to fund Sherritt’s equity commitments to the Project. Upon the fulfillment of certain conditions precedent, SNC-Lavalin will acquire a 5 percent interest in Ambatovy from Sherritt, thereby reducing Sherritt’s interest to 40 percent. Sumitomo Corp. of Japan and Korea Resources Corp., leading a consortium of Korean business enterprises, each own a 27.5 percent interest in the project. Following completion of the project, a put/call arrangement will come into effect whereby SNC-Lavalin can divest of its interest to Sherritt and Sumitomo, or Sherritt and Sumitomo can acquire SNC-Lavalin’s interest. Ambatovy is a large-tonnage nickel and cobalt project located in Madagascar. The project has estimated probable reserves of 125 million mt grading 1.04 percent nickel and 0.099 percent cobalt; annual production capacity is estimated at 60,000 mt (100 percent basis) of nickel, 5,600 mt (100 percent basis) of cobalt, and approximately 190,000 mt (100 percent basis) of ammonium sulfate. The project has an estimated project life of approximately 27 years.
Agriliance earnings up 50 percent in 2Q
Inver Grove Heights, Minn.-Agriliance LLC reported earnings of $113.2 million for the three months ending June 30, 2007, up $37.7 million from the year-ago $75.5 million, according to co-owner Land O’Lakes Inc. Crop protection sales were relatively flat, with earnings off $6.1 million due to product mix and slightly higher operating costs. Crop nutrient volumes increased 3 percent from last year, and crop nutrient pretax earnings increased $42.3 million due to higher market prices and higher margins in nitrogen, phosphate, and potash. Retail business pretax earnings were $4.4 million higher than last year, primarily due to earnings in crop nutrients due to high market prices. Current year earnings include a $3.6 million restructuring charge in June related to the repositioning of Agriliance and acceleration of deferred financing costs. For the first six months, Agriliance reported earnings of $123.6 million, $58.9 million more than the year-ago $64.7 million. Sales of crop protection products increased 4 percent compared to prior year sales, and earnings decreased $10.5 million due to timing of rebates, product mix, and continued devaluation related to products losing patent protection. Crop nutrient volumes increased 4 percent and earnings increased $56.7 million due to higher market prices and higher margins, primarily in nitrogen, phosphates, and potash. Retail business earnings were $15.1 million higher than last year, largely due to increased earnings in crop nutrients due to higher market prices and earnings from new joint ventures.
Nitrogen results boost Rentech revenues
Los Angeles-Rentech Inc. reported a net loss of $6.9 million on sales of $50.4 million for the third quarter ending June 30, 2007, versus a year-ago loss of $12.0 million on revenues of only $17.3 million. Increased revenues were attributed to improved pricing and higher demand for nitrogen products. Rentech bought the former Royster-Clark East Dubuque nitrogen plant from Agrium Inc. in April 2006 and is in the process of converting it to run on coal gasification instead of natural gas. Rentech nine-month losses were $32.8 million on sales of $102.7 million, versus the year-ago loss of $30.2 million and sales of $17.4 million, respectively. In addition to East Dubuque, Rentech is involved in other gasification-related projects. “According to the EIA, worldwide demand for fuel is expected to increase by over 40 percent from 2004 to 2030 while supply decreases,” said Rentech President and CEO Hunt Ramsbottom. “Rentech intends to help address this problem by domestically producing large quantities of FT (Fischer-Tropsch) fuels through the use of its technology in an environmentally sound way.”
ICL Fertilizer income more than doubles
Tel Aviv-ICL Fertilizers, a unit of Israel Chemicals Ltd., reported operating income of $110.6 million on sales of $481.4 million for the second quarter ending June 30, up from the year-ago $47.4 million and $364.6 million. The company cited improved sales and prices for both phosphate and potash. Israel Chemicals also noted an increase in sales at its ICL Performance Products unit; however, sales were off at ICL Industrial Products’ brominated products. ICL Fertilizers six-month operating income was $186.4 million on sales of $933.2 million, versus the year-ago $102.0 million and $652.5 million, respectively. Israel Chemicals reported record sales for the second quarter at $962.9 million, up from the year-ago $847.3 million. Operating income was $167.2 million and net income $125.8 million, versus the year-ago $124.3 million and $92.3 million, respectively. Six-month sales were $1.84 billion, up from $1.56 billion, with six-month operating income of $305.3 million versus the year-ago $260.4 million. Six-month net income was $221.2 million, versus the year-ago $188.9 million. ICL noted that a dividend of $88.1 million will be paid on Sept. 18, 2007.