CSBP to lead petrochemical expansion

The petrochemical industry, which has long been targeted as a growth sector for Western Australia, seems likely to start realising some of its potential during the next year.

Wesfarmers subsidiary CSBP is close to making a final decision on a $150 million expansion of its ammonium nitrate plant at Kwinana.

The project would lift production from 235,000 tonnes per annum to about 580,000 tonnes, and better position CSBP to meet the growing demand from the resources sector.

It has already obtained environ-mental approval and is now awaiting completion of a feasibility study.

If CSBP proceeds, as expected, the expanded plant would be due to start operating in 2007 and would operate 24 hours a day, 365 days a year.

Indian company Deepak Fertilisers could join CSBP as a major ammonium nitrate producer.

Deepak has been assessing the merits of building an ammonium nitrate plant on the Burrup Peninsula since mid 2004, when it announced plans for a $300 million project.

Chief operating officer Dr Tapan Chaterji said high construction costs had threatened to make the project commercially unviable.

However, the design of the 300,000tpa project has since been reviewed by Clough subsidiary Clough Engineering and Integrated Solutions, and as a result costs have been reduced to between $300 million and $400 million.

“We are very interested and are pursuing the project,” Dr Chaterji told WA Business News.

Deepak has called tenders for an engineering and construction contract, with the bidders including Melbourne firm Shedden, which is jointly owned by Clough and German company Uhde.

The Deepak project would be located near Burrup Fertilisers’ $630 million ammonia plant, which is due to be commissioned before Christmas.

Burrup Fertilisers deputy managing director Vikas Rambal said the company was keen to develop an ammonia/urea plant on the Burrup Peninsula, but was concerned that high construction costs and high gas prices would force it overseas.

“We have shown that the downstream industry is competitive, despite the construction costs, if you get the gas at a competitive price,” Mr Rambal said.

Giant Norwegian company Dyno Nobel could also develop a project on the Burrup Peninsula, after effectively taking over what had been known as the Dampier Nitrogen project.

Dyno is currently funding a bankable feasibility study, due for completion at the end of this month, on a $650 million ammonia plant.

If it proceeds, its equity partners in the ammonia plant, Plenty River and Thiess, could separately develop a $450 million granular urea project, while Dyno Nobel could also build a $300 million ammonium nitrate plant on its own.

This process has been complicated because the private equity firm that owns Dyno Nobel has put the business up for sale.

One company that will not be building a project on the Burrup Peninsula is Canadian fertiliser manufacturer Agrium.

It had been a member of the Dampier Nitrogen consortium, then assessed building its own project, but a company spokeswoman said Agrium was looking at alternative sites in Egypt.