19 July 2013 23:31 [Source: ICIS news]
HOUSTON (ICIS)--Yara International on Friday said it has not reversed its decision to postpone the planned expansion of its Belle Plaine facility, adding that it has come down to cost rather than a worry over a future nitrogen oversupply in North America.
In June, the fertilizer producer announced that it was putting on hold the expansion of the Canadian production plant due to “a significant risk of future nitrogen oversupply in North America”. Although it considered the site as an “optimal location for a future North American nitrogen expansion”, Yara said it would be further evaluating construction costs and other key project parameters.
Speaking during a Q2 earnings conference call, the Norwegian producer said that while there is a market for fertilizer products in that region of Canada, the financial implications of such an investment would not be financially sound at this point.
“The main reason why we didn’t continue for the time being with the project is the fact that the costs of building the plant has increased considerably, and are actually now at the level where we have said at this level it doesn’t make sense to build the plant,” said CEO Jorgen Ole Haslestad.
“And it was not the main reason that the market as such would be oversupplied, because if you look at Belle Plaine, that area there has actually a need for products, but the prices for constructing are way too high," he added.
Haslestad said Yara has been negotiating with construction companies to see if there is a way to decrease the anticipated cost for the expansion, which had initial goals of creating an integrated world-scale ammonia and urea line at the Saskatchewan site that would have 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 of urea and urea ammonium nitrate (UAN).
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