14 June 2013 13:20 [Source: ICIS news]
LONDON (ICIS)--Norwegian fertilizer giant Yara International has postponed the planned expansion of its Canadian production plant in Belle Plaine due to "a significant risk of future nitrogen oversupply in North America", the company said on Friday.
While Yara views the site as an "optimal location for a future North American nitrogen expansion", the Oslo-headquartered producer will spend more time evaluating construction cost development and other key project parameters.
"We are not ready to initiate a Belle Plaine expansion today, primarily due to recent increases in construction cost both in Canada and North America generally," Yara's president and CEO, Jorgen Ole Haslestad, said in a short statement.
"There is also a significant risk of future nitrogen over-supply in North America as new project initiatives are announced, despite deteriorating project profitability."
Almost a year ago to the day, Yara confirmed it planned to press ahead with the creation of integrated world scale ammonia and urea line at the Saskatchewan site with a urea capacity of approximately 1.3m tonnes/year.
The Belle Plaine facility has a current production capacity of 700,000 tonnes/year of ammonia and 1.2m tonnes/year urea and urea ammonium nitrate (UAN).
"Yara's growth options remain significant, including a number of opportunities for profitable investments in value-added product capacity, downstream facilities and plant de-bottlenecking projects," Haslestad added.
"We also expect to find profitable commodity nitrogen growth opportunities going forward, and a future Belle Plaine expansion remains an option for Yara when the construction cost situation improves."
Several new multi-billion dollar nitrogen fertilizer projects are due to be constructed in North America over the next few years as producers look to take advantage of low-cost shale gas and reduce the region's reliance on ammonia imports from the Black Sea and Trinidad and Tobago.
Earlier this week, Illinois-based CF Industries confirmed it is steadily moving forward with its $3.8bn (€2.85bn) nitrogen fertilizer expansion projects in Iowa and Louisiana.
In May, North Dakota officials announced that Northern Plains Nitrogen intends to build a $1.5bn nitrogen fertilizer plant on the eastern border of the state, with expectations that it could be online by spring 2017.
In April, Australian fertilizer producer Incitec Pivot announced its board of directors had given the green light to an $850m ammonia manufacturing plant on the banks of the Mississippi in Louisiana, US.
($1 = €0.75)
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