IFFCO Canada urea plant on hold until market conditions improve – Alert
Indian Farmers Fertiliser Co-operative Ltd. (IFFCO) and La Coop fédérée announced on Dec. 14 that the IFFCO Canada urea production plant project at Bécancour, Quebec, is being put on hold due to the current "low pricing cycle worldwide" for urea.
"As in many other resource sectors, current market conditions are unfavorable for completing the financing required, and this is disrupting the scheduled start of construction," the companies said. "Urea prices are at their lowest level in five years and as a consequence, investors are being prudent."
IFFCO Canada cautioned that the announcement did not signal the end of the project, and said the facility’s promoters and investors "believe that the world class project remains fundamentally viable, and that the support of the government of Québec and major institutional partners remains solid."
The urea production facility was first announced by IFFCO in October 2012 (GM Oct. 12, 2012), with a planned production capacity of 1.3-1.6 million mt/y of granular urea and 760,000 mt/y of diesel exhaust fluid (DEF). IFFCO’s partner in the project, Montreal-based La Coop fédérée, was expected to get 500,000 mt/y of urea from the facility for distribution in Canada and the U.S. IFFCO’s share of urea from the plant was to be marketed first to Quebec customers, followed by customers in the rest of North America, with the balance exported to India.
The cost of the facility was initially projected at C$1.2 billion, with construction slated to begin in 2014 pending the results of regulatory approvals, capital raising efforts, and a feasibility study. In December 2014, however, La Coop and IFFCO announced a "strategic pause" in their plans for the plant (GM Dec. 19, 2014), saying construction cost estimates had ballooned to more than C$2 billion. The companies said at that time that they were suspending the preparation of preliminary plans and specifications, as well as the signing of an EPC (engineering/procurement/construction) contract, to allow shareholders more time to "review the global strategy of financing, construction, and execution."
IFFCO and La Coop reported on Dec. 14 that they believe the Bécancour plant "will still fill a major need in Québec and Canadian agricultural markets," and said the project continues to received "unwavering support" from local authorities in the Bécancour Industrial Park & Port Facility. IFFCO Canada also reported that it will be keeping its offices in both Montréal and Bécancour open.
"We are halting the project as a result of the current poor rates for urea that is blocking the promoters and investors from attaining the plant’s anticipated profitability," said Claude Lafleur, IFFCO Canada director general. "We are waiting for the cyclical low point in the price of urea to end, which we expect will allow resumption of the project. In the interim, we continue to work on developing the project and preparing for its relaunch. It should be remembered that this is one of the largest industrial projects in recent years in Québec."