The Mosaic Co. President and CEO James Prokopanko recently told analysts that the company is serious about building a large anhydrous ammonia plant to fulfill the company’s internal needs for ammonia. The company currently produces about 500,000 st/y of ammonia at Faustina, La., but buys 1 million mt/y.
“We’ve now gotten serious – much more serious than we have been in the past about a nitrogen facility,” said Prokopanko. “We are ever more confident now that the gas prices are going to stay sustainably low in North America, and that is around the $5.00/mmBtu range or less. And I don’t know if it is going to stay much under $3.00/mmBtu.”
Mosaic is looking at a variety of options regarding gas, including long-term supply agreements, price contracts, formula pricing, and even buying a small gas field. “And we’re exploring all of those alternatives. And I think it’s only been recently that the realization has settled in with the gas producers that this $3.00/mmBtu might be the cap for a while.” However, Prokopanko noted that to date, the company has not found a gas supplier prepared to give it the kind of multi-year deal Mosaic would want, though he said the company will see if that changes with time.
Prokopanko also thinks the company would have permitting advantages to a plant in Louisiana and have access to a CO2 pipeline there.
Prokopanko said the company is doing its engineering and siting work. He expects a plant to be in the $1 billion range. “One thing we’ve done well, and that we’re proud of and we stick to is, these large projects on potash and phosphate, we’ve understood that if you do … extensive pre-engineering work, there is far less room for surprises on the capital spending.”
Prokopanko told analysts that if someone were interested in selling their nitrogen plant and it could serve Mosaic’s needs in Florida and Louisiana, the company would be interested. However, he doesn’t see too many nitrogen producers that are shy about their ownership. And he said Mosaic is not the only one right now that thinks investing in a nitrogen plant is a good idea.
Mosaic Executive Vice President-Operations James O’Rourke added that it is part of Mosaic’s goal to increase the total supply of ammonia, thereby building a new plant. He said buying someone else’s plant does not accomplish that purpose.
At this time, Prokopanko said the company is not at the point that it wants to actually produce so much ammonia that it would also become a seller of nitrogen. “We’re not saying no, but we feel confident that being self-sufficient is the right thing to do and that’s something we’ll consider further as we go forward. Now in doing that, we could build a plant or ten other people could build ammonia plants and the result is going to be cheap ammonia for everybody. And that might save us having to do the ammonia plant. So there’s a number of moving parts here, it just isn’t as simple as you might first think it to be.”