Australian company Incitec Pivot Ltd. (IPL), the owner of Dyno Nobel North America, has commissioned an A$30 million feasibility study for a new anhydrous ammonia plant in the United States. IPL said the plant would leverage low-cost U.S. natural gas and backward integrate the entire ammonium nitrate production of the business.
A final investment decision is expected in the first quarter of 2013.
IPL told Green Markets that it is deferring to local authorities to reveal the location of the site. A company spokesman said more information could be released as early as next week, and that neither IPL nor Dyno Nobel owns the site. Dyno Nobel, which produces explosives and some fertilizers, currently has sites in St. Helens, Ore., Cheyenne, Wyo., Donora, Penn., and Louisiana, Mo.
“Importantly, the plant’s on a brownfield chemical complex site, and that site actually has several downstream plants operating today,” James Fazzino, IPL CEO, told analysts May 13. “And it used to be the site of an ammonia plant. And importantly, that means it’ll have a huge capital advantage in respect to infrastructure because that infrastructure already exists, and also importantly some of the licenses for the ammonia plant were already in place.”
Industry sources tell Green Markets that Louisiana is a likely site for the plant, due in part to its long history as a home for the nitrogen industry.
IPL last week released results for the first-half ending March 31, 2012. While the company’s Explosives unit saw a 21 percent increase in operating earnings (EBIT), the Fertilizer segment results were off 56 percent. Fertilizer EBIT was $60.9 million on sales of $707 million, down from the year-ago $138.6 million on sales of $652.9 million. Total volumes, however, were up 16 percent, at 1.29 million mt from 1.11 million mt. IPL said distribution and trading margins were $50 million lower due to falling global prices. In addition, repair costs at the Mt. Isa phosphate plant were $22 million. IPL said it had too much urea on hand at the wrong time, and it was also impacted by wet weather. It also said it bought DAP too early, just in time for prices to decline after Christmas.
“… It is very clear,” said Fazzino. “We’re an explosives business with a fertilizer arm, rather than a fertilizers business with an explosives business.” He said in maybe three or four years the vast majority of earnings will be from explosives; however, he stressed that while the fertilizer business has inherent volatility and creates noise in the results, that it is a quality business in terms of its market position and has great assets.
IPL noted that it restructured the fertilizer business two months ago by merging its domestic and international operations, and that the change is expected to dampen volatility in the business in the future.
Higher urea prices in the U.S. and lower gas prices were a positive at the St. Helens, Ore., plant, where the facility pulled in an additional $10 million in the first half. The plant, which also produces DEF (diesel exhaust fluid), is benefiting from that growing market. The facility is due to take a planned one-month turnaround in September.
Explosives EBIT was $177.5 million on sales of $842.4 million, up from the year-ago $146.9 million on sales of $771.5 million.
The Moranbah, Queensland, project is expected to commence producing ammonium nitrate in July, and is expected to produce 50,000 mt for the remainder of the year. The project is expected to cost over the budgeted $935 million, but the company said the overspend will not be material. Once up and running, IPL expects Moranbah to generate $165 million in earnings for the 2015 financial year, with it stair-stepping up to full production of 330,000 mt/y by that time. The production is all fully booked. IPL w