Norwegian fertiliser company Yara International has acquired a 30 per cent shareholding in the $630 million Burrup Fertilisers ammonia plant and confirmed work is proceeding on a second possible plant on the Burrup Peninsula.
Norwegian fertiliser company Yara International has acquired a 30 per cent shareholding in the $630 million Burrup Fertilisers ammonia plant and confirmed work is proceeding on a second possible plant on the Burrup Peninsula.
The Yara investment coincides with continued work on two other gas processing projects, backed by Indian company Deepak Fertilisers and giant Norwegian explosives producer Dyno Nobel.
The Burrup Peninsula in recent years has been the site of many potential projects but only one actual one.
Rising construction and gas costs continue to throw a big question mark over the prospect of further projects proceeding.
In particular, project proponents are concerned that gas suppliers are now seeking higher prices than was the case two to three years ago, when up to six gas processing projects proceeded to an advanced stage of assessment.
The shortage of skilled labour and rising global steel prices are other negatives for project proponents.
Despite all of this, Deepak Fertilisers has recently completed a feasibility study on a $300 million ammonium nitrate complex.
A spokesman for the company told WA Business News it was aiming to make a final decision by the end of the month.
Local engineering firm Calibre Projects and its partner Engineers India are jointly bidding for the Deepak project.
Separately, Dyno Nobel is proceeding with feasibility studies in conjunction with local firm Dampier Nitrogen.
Their studies could potentially lead to the development of three inter-related facilities collectively worth $900 million.
The two companies are conducting a bankable feasibility study on the joint construction of a 790,000 tonnes per annum ammonia plant.
Dampier Nitrogen is studying the possible construction of a 690,000 tonnes per annum urea plant adjacent to the ammonia plant and Dyno Nobel is assessing the construction of a 235,000 tonnes per annum ammonium nitrate plant.
This is the latest of many development options and partners for Dampier Nitrogen, which is owned by listed company Plenty River (90 per cent) and engineering construction group Thiess (10 per cent).
Macquarie Bank has been appointed financial adviser on the ammonia and urea projects while Dyno Nobel has appointed Sydney firm ASIR as its corporate adviser on the ammonia nitrate development.
Plenty River executive director Peter Streader said earlier this year the viability of the projects was extremely sensitive to the capital costs and to a lesser extent operating costs.
Meanwhile, Yara is understood to have invested in the order of US$100 million (A$130 million) to acquire a 30 per cent stake in Burrup Fertilisers from project proponent, India’s Oswal Group.
The plant has an annual capacity of 760,000 tonnes of ammonia and is due to start production later this year.
The investment adds to Yara’s role as the exclusive marketer of the plant’s entire output.
Yara has also taken an option to participate in a second, larger plant, which would produce urea and possibly ammonium nitrate. Burrup Fertilisers general manager (corporate) Wolfgang Jovanovic said the investment vindicates the development model utilised by Oswal.
“They can see that the model has worked on this plant, hence their confidence in buying 30 per cent,” Mr Jovanovic said.
He said financial modelling and engineering concepts had been completed for the second plant but the company was still assessing locations, which could be overseas or elsewhere in Australia.
Once a location was selected, Burrup would need to complete a bankable feasibility study, which could take 18 months.
He noted that the Yara transaction was subject to approval by Burrup’s banking syndicate and the Foreign Investment Review Board.
The state government has sought to facilitate industrial projects on the Burrup Peninsula by investing $183 million in common user infrastructure, including a desalination plant, expanded port facilities and transport corridors.
Burrup
- Norway's Yarra International has spent $130 million acquiring 30 per cent of Burrup ammonia plant.
- It has an option to invest in Burrup's second plant.
- Deepak Fertilisers has completed a feasibility study on an ammonium nitrate project.
- Norway's Dyno Nobel is working with Dampier Nitrogen on ammonia and urea projects.
