Explosives and fertiliser supplier Incitec Pivot says it will build a $40 million ammonium nitrate emulsion plant at Port Hedland after booking a 25 per cent lift in first half profit.
Explosives and fertiliser supplier Incitec Pivot says it will build a $40 million ammonium nitrate emulsion plant at Port Hedland after booking a 25 per cent lift in first half profit.
The Melbourne-based company said it planned to develop a 100,000 tonne per annum ammonium nitrate plant in Port Hedland to supply its Australian mining customers, with a focus on iron ore.
The Port Hedland plant, which is expected to be operational in the fourth quarter of calendar 2012, would produce specialty explosives that enable blasting in water-filled holes, for example.
Incitec also announced a net profit of $165.6 million for the six months to March 31, up 25 per cent from $132.4 million a year earlier.
The company sold more explosives and fertiliser sales benefited from higher prices.
Shares in Incitec were five cents higher at $3.88 at 9:31(WST).
Incitec also said that a three-month delay to commercial production at its $935 million ammonium nitrate plant at Moranbah in central Queensland would not add to costs or affect expected financial returns.
Floods and a cyclone in Queensland earlier this year, engineering and construction challenges and disrupted transportation would delay production at Moranbah, the company said.
Managing director James Fazzino said beneficial operation of the Moranbah plant is now expected by the end of June 2012.
However, the project, which is 75 per cent complete, remained on budget.
"The good news, of course, is that we've been able to offset all of the costs of that delay through very tight management of the project," Mr Fazzino told reporters.
"That actually means that the returns that we see from the plant are unchanged."
Mr Fazzino said the Moranbah plant would transform Incitec Pivot.
"It'll increase our profit by about 20 per cent," he said.
"It'll actually double the earnings of our Asia-Pacific explosives business."
Mr Fazzino also said that Incitec was interested in ammonia producer Burrup Fertilisers, which was placed in receivership last December.
However, the sales process for the business had not started yet.
Burrup Fertilisers, which has a plant near Karratha in the Pilbara, produces around 800,000 tonnes of ammonia each year.
"It's natural that we would look at that asset because we're one of the largest producers of nitrogen in Australia, both for explosives and fertiliser," he said.
"Of course, the Burrup plant is a nitrogen plant, producing ammonia, which is one of the feedstocks into both fertiliser and also explosives."
Mr Fazzino said, however, that Incitec had not decided yet on whether it would submit a bid for Burrup.
Mr Fazzino described the first half result as "good", espcially given a $25 million negative impact from the floods and cyclone on Australia's east coast early in 2011.
He said fertiliser earnings rose 30 per cent to $138.6 million, driven by an increase in global fertiliser prices, which in turn reflected higher prices for wheat, corn and sugar.
The group's Dyno Nobel explosives business continued to benefit from demand for resources in Australia and a gradual upturn in the United States economy. The explosives business generated a 12 per cent lift in earnings to $146.9 million.
Incitec's revenue for the first half increased 15 per cent to $1.42 billion.
The company declared an interim dividend of 3.3 cents per share, unfranked, compared to 1.8 cents per share, unfranked, in the prior corresponding period.
