Yara International ASA reported on May 21 that it has reached an agreement with Orica Limited and Apache Corp. to form joint ventures to build a 330,000 mt/y technical grade ammonium nitrate (TAN) plant on the Burrup peninsula in Western Australia, and to distribute ammonium nitrate and other explosives products to mining customers in the Pilbara region of Australia.
“This is an important and value creating project for Yara that confirms our dedication and ambition to be among the leading suppliers of TAN globally,” said Jørgen Ole Haslestad, president and CEO of Yara. “Together with our partners, we look forward to servicing the fast growing Pilbara iron ore market.”
The joint venture will be owned 45 percent by Yara, 45 percent by Orica, and 10 percent by Apache. Construction of the plant is expected to have a capital cost of approximately US$800 million excluding capitalized interest, and will be completed by the end of 2015. Tecnicas Reunidas will be appointed as the engineering, procurement, and construction contractor under a fixed price, turnkey contract. Yara will manage construction and ongoing operation of the plant.
The parties have also agreed to form a distribution and marketing joint venture to distribute all TAN and associated products and services to mining customers in the Pilbara region. This joint venture will be owned in the same proportions as the TAN plant joint venture, but will be managed by Orica.
“This is an extremely important project for Orica,” said Ian Smith, Orica’s managing director and CEO. “Together with our partners, we have a clear vision for servicing the fast growing Pilbara iron ore market, which is being strongly embraced by our customers in the region.”
Upon commencement of construction, Orica will pay approximately US$110 million for the 45 percent stake, to be split between Yara and Apache.
“This announcement is especially significant because it is essentially a manufacturing project based on the natural gas resource,” said Western Australian Premier Colin Barnett. “As well as creating at peak 600 construction jobs and 60 operational positions when it is commissioned in 2014, the Burrup nitrate plant will generate significant additional local business opportunities and employment over its expected 40-year life span.”
Earlier this month, Yara told analysts that it is considering significant TAN and DEF (diesel exhaust fluid) capacity at a new Belle Plaine, Sask., nitrogen plant (GM May 21, p. 11). Yara hopes to make a decision on its Belle Plaine expansion this summer. Yara told Green Markets back in February that the new world-class expansion could mean an additional 1.3 million mt/y of urea and 800,000 mt/y of ammonia (GM Feb. 13, p. 1).