The problems besetting Burrup Holdings may add to the chances of Wesfarmers CSBP and Incitec Pivot pursuing circa-$500 million ammonium nitrate projects in Western Australia.
The problems besetting Burrup Holdings may add to the chances of Wesfarmers CSBP and Incitec Pivot pursuing circa-$500 million ammonium nitrate projects in Western Australia.
Incitec Pivot, through its wholly-owned subsidiary Dampier Nitrogen Pty Ltd, advertised today the start of a public environmental review of its 350,000 tonnes per year ammonium nitrate project, to be built on the Burrup Peninsula.
In addition, CSBP is in the midst of its own public environmental review, for a planned 260,000 tonnes pa expansion of its Kwinana ammonium nitrate plant, lifting total output to 780,000 tonnes pa.
A third group assessing an ammonium nitrate project is Burrup Nitrates Pty Ltd, a 50:50 joint venture between Burrup Holdings and Norwegian company Yara International.
However Burrup Holdings and Yara are mired in managerial and financial disputes, which culminated in the ANZ Bank appointing receivers late on Friday to Burrup Fertilisers and most of the shares in parent company Burrup Holdings.
The appointment flowed from disputes between Burrup Holdings' 65 per cent shareholders, Pankaj and Radhika Oswal, and minority shareholder, Yara.
The two groups are even disputing who was managing director of Burrup Fertilisers prior to the appointment of receivers and managers.
Yara said in a statement late on Friday that its CFO in Asia, Rao Narsimha, had been appointed interim managing director.
The Oswals issued a follow-up statement, which said "it is our understanding that a Yara representative has not been appointed acting managing director".
PPB Advisory, which has been appointed receivers and managers, was not commenting today, but the likely outcome is that Burrup Holdings and Burrup Fertilisers will be sold, with Yara the logical buyer.
The dispute over Burrup Holdings has put a big question mark over the Burrup Nitrates joint venture, which announced in May 2008 that it was planning a 350,000tpa plant costing between $500 and $600 million.
The competing Dampier Nitrogen proposal, originally owned by listed company Plenty River, has been on the drawing boards for more than a decade.
An Incitec spokesman said today the company's main focus was the expansion of its Moranbah ammonium nitrate plant currently underway in Queensland, but that it had stepped up work on the Dampier Nitrogen environmental review in recent months in order to meet required project milestones.
In its original form, Dampier Nitrogen was one of several gas processing projects earmarked for the Burrup Peninsula in the early 1990s. Of all those projects, Burrup Fertilisers was the only one to proceed.
If Burrup Nitrates or Incitec proceed with their projects, they will disrupt a market currently dominated by CSBP, which is effectively the sole supplier of explosive grade ammonium nitrate in WA.
CSBP chief executive (chemicals) Ian Hansen said the demand for ammonium nitrate was continuing to grow, driven by the mining sector.
The front-end engineering and design study for the Kwinana plant expansion is currently being finalised, and its results will be studied in the new year, along with the results of the environmental review, before the group makes a final decision on the project.
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