Fresh off acquiring the majority stake in Burrup Holdings Ltd. (BHL), now Yara Pilbara, (GM Feb. 6, 2012) Yara International ASA told analysts Feb. 7 that it is eyeing the construction of a world-class plant at its existing Yara Belle Plaine nitrogen complex in Belle Plaine, Sask. Yara told Green Markets that this could mean an additional 1.3 million mt/y of urea and 800,000 mt/y of ammonia to accommodate the urea production.
Yara President and CEO Jørgen Ole Haslestad told analysts the expansion could be world-scale or smaller. He said the company has an excellent base infrastructure-wise, with the land and an existing plant. “We will be able to get gas and we have an area where we do have logistic advantages. So we are working on that full speed, and we will report on those expansions in the quarters to come.” The company said it already has the land, which would likely shave a year off the potential start-up time. Yara also noted the lucrative gas prices in the area, saying it has been traditionally partial to spot gas at Yara Belle Plaine, but would weigh other possible options, such as hedging.
Currently, Yara Belle Plaine capacity is 1 million mt/y urea, 700,000 mt/y ammonia, and 200,000 mt/y UAN.
In the meantime, Yara reported its best year so far for the year ending Dec. 31, 2011. Net income after non-controlling interest was up 38 percent to NOK 12,066 million on revenues of NOK 80,352 million, from the year-ago NOK 8,729 million on revenues of NOK 65,374 million. Earnings per share were NOK 41.99 versus the prior year NOK 30.24.
Fertilizer sales for the year were off 4 percent, to 19.52 million mt from 20.3 million, while industrial tons were up 7 percent, to 4.55 million mt from 4.25 million mt. Overall tons were down at 24.1 million from 24.53 million mt.
Fourth-quarter income more than doubled to NOK 3,386 million (NOK 11.84 per share) on revenues of NOK 20,730 million, up from the year-ago NOK 1,564 million (NOK 5.42 per share) and NOK 17,525 million. The company said the quarterly result was positively affected by the divestment of 16 percent of Yara Praxair that gave a net income of NOK 967 million. In addition, improved margins helped offset lower volumes.
Fertilizer sales were off 13.5 percent to 4.24 million mt from the year-ago 4.9 million mt, while industrial sales were up 5.5 percent to 1.15 million mt from 1.09 million mt.
Overall tonnage was down at 5.39 million mt from 6 million mt. Yara attributed the decline in volumes to concerns over the financial troubles of Greece and Italy, as well as a $150/mt drop in urea prices that caused buyers to sit on the fence.
Going forward, Yara says there is continued strong demand for is premium products, especially outside Europe. It noted good movement of urea to India and Brazil and cuts in exports from China and Egypt.
Yara expects the Lifeco nitrogen complex in Libya, which went down in February 2011 due to the Arab Spring, to start up in the third quarter, at marginal expense.
Yara expects Trinidad natural gas curtailments to continue in 2012, but supplies to improve gradually as the year progresses.
Shedding some more light on its recent purchase in Australia (GM Feb. 6, 2012), Yara said that Yara Pilbara’s natural gas price for many years to come will be significantly below a rumored $5.00/mmBtu. It said there was much more certainty with the new gas contract than with the former, and the company said it could not comment further, citing confidentiality agreements. A subsidiary of Apache Corp., Houston, both supplies the gas to Yara Pilbara and holds 49 percent of the company.
In addition, last week Yara released financial info regarding BHL showing a profit of NOK 310 million on revenues of NOK 1,171 million for the eight months ending Nov. 30, 2011. For the year ending March 31, 2011, BHL had a profit of NOK 88