Incitec Pivot Ltd. (IPL) reported on June 6 that it expects the additional cost of sourcing shortfall gas for its Phosphate Hill plant in Queensland will be A$15-$20 million for the remainder of the fiscal year ending Sept. 30. This brings the total FY2023 EBIT impact from sourcing shortfall gas to A$75-$90 million (approximately US$50-$60 million at current exchange rates) as of June 6.
IPL had previously estimated the impact of the curtailments for FY2023 at A$60-$70 million. IPL said the increase follows a notice from gas supplier Power and Water Corp. (PWC) of a reserve shortfall under the gas supply agreement for Phosphate Hill. IPL said the expected full-year production from Phosphate Hill remains unchanged at 900,000-930,000 mt.
Gas for the Phosphate Hill plant is currently supplied under a long-term contract between IPL subsidiary Southern Cross Fertilisers Pty Ltd. and PWC. PWC also indicated that the gas reserve shortfalls are expected to be ongoing beyond FY2023 for the remainder of the term of the gas supply agreement with IPL, which runs until mid-2028.
To date, IPL said it has been sourcing replacement gas from a mix of third-party sources to make up the shortfall and to ensure operation of the Phosphate Hill plant. It said it intends to continue sourcing replacement gas from third parties and is assessing options for alternative gas supply for the plant.
PWC sources gas primarily from Eni Australia’s Blacktip gas field in the Northern Territory. Eni has notified that based on newly acquired interim data, there is an unexpected potential reduction in the gas reserves available from the Blacktip gas field.