Incitec Pivot Ltd. (IPL), Southbank, Victoria, expects anhydrous ammonia production at the Waggaman, La. (WALA), ammonia plant to achieve 105 percent of nameplate capacity for the fiscal year ending Sept. 30, up from FY17’s 74 percent. The plant has a capacity of 800,000 mt/y.
“Waggaman has been a tremendous investment for our business,” said Nick Stratford, president of Dyno Nobel Americas. “We have built a plant that is in the bottom quartile of the global cost curve, due in part to U.S. gas prices, but also due to the world-class facility that’s been constructed.” The facility includes rail, pipeline, barge, and truck facilities on site.
He noted the recent commissioning of the Yara Freeport ammonia plant, adding that after Freeport no new plants are in the construction phase, and that U.S. ammonia imports may drop to 2 million mt/y. IPL expects no substantial new U.S. capacity for at least the next three years.
“Internationally, the significant change in the market is China, which has become a net importer of ammonia,” he said. “It is expected that up to 1 million mt of ammonia will be imported this year as they redirect their domestic gas towards power generation.”
Asked if now was a good time to monetize the Waggaman plant, IPL said no. “It will be a cyclical market, but we think that it’s going to firm for the next couple of years, and half of the ammonia production underpins the U.S. businesses,” said IPL Managing Director and CEO Jeanne Johns. “So, at this point, we feel as though we’re the natural owner of it, but obviously if that were to change, we would look at that.”
IPL said there will be a turnaround at its Gibson Island nitrogen plant in Queensland from September to December, which is the ending of the company’s old natural gas contract to the start of its new one (GM June 29, p. 29). “Given the high gas price, it really doesn’t justify spending a premium to speed up the work,” added Johns.
Johns noted that the company had made good progress on Gibson Island this year, and provided the plant another year of operation. “The team led by Seth Hobby [Executive Commercial Officer] here, has done a really good job of securing interim supply as well as attainment for a potential long-term solution.
“And while we’ll leave no stone unturned to find a solution for Gibson Island, if we cannot find affordable gas, it’s important to remember that we have a very viable, competitive, and distinctive fertilizer distribution business,” added Johns.
IPL has downgraded phosphate production expectations at its Phosphate Hill facility in Queensland to 840,000 mt for FY18, down from earlier projections of 880,000 mt. The company cited a problem with a phosphoric acid vessel that was discovered during the recent plant turnaround. Due to the turnaround and the repair, the company expects better production in FY19, returning to the traditional 1 million mt/y range.
IPL also noted that it has been finding new markets for its phosphates, sending a 55,000 mt cargo to the U.S. in August.
Despite increased production from Saudi Arabia and Morocco, IPL noted offsetting factors that have help firm prices, including increasing global demand, plant closures such as The Mosaic Co.’s facility at Plant City, Fla., low Chinese exports, and stressed non-integrated producers.
As for Australia fertilizer markets, James Crough, interim president of Incitec Pivot Fertilizers, said most of New South Wales and Southern Queensland has been severely impacted by drought conditions this year, and the company is acutely aware of the impact this is having on the region. The company said this will have an adverse impact on nitrogen margins and sales volumes in these markets. However, citing segment planning, he said the company is on track to achieve near 10-year-high sales results and market share gains in the North Queensland Sugar, Winter Crop Phosphorous, and Extensive Pasture segments.
Gregory Hayne, president of Dyno Nobel Asia Pacific, told analysts that the Moranbah ammonium nitrate plant in Queensland, Australia, is expected to have record annual production of 360,000 mt. He noted that the plant is in a privileged location among the premier Bowen Basin coking coal mines, and is underpinned by a long-term low-cost gas agreement. “We are in early feasibility on a number of different ideas to boost production on a sustainable basis, and it’s our intention that the next significant expansion of ammonium nitrate in Queensland will come from the Moranbah plant at the right time,” Hayne said.
The company said it would want to be confident that it could actually sell out any extra capacity that would be installed. While saying Moranbah is the lowest cost producer, Hayne also cautioned that for now into 2019 and 2020 the East Coast Australian AN market is long. Australian AN producers, including an IPL joint venture, Queensland Nitrates Pty Ltd., initiated an antidumping action in June (GM June 29, p. 1).