Blaming the rising cost of construction work, Norwegian fertilizer producer Yara International has shelved its plans for expansion at its nitrogen plant in southern Saskatchewan.
The company in June 2012 approved expansion work which it said would more than double the urea production capacity of its facility at Belle Plaine, Sask., about 25 km east of Moose Jaw.
However, “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 CEO Jorgen Ole Haslestad said in a release Friday.
But he also warned of a “significant risk of future nitrogen oversupply in North America as new project initiatives are announced, despite deteriorating project profitability.”
Yara said Friday it still sees the Belle Plaine site as an “optimal location for a future North American nitrogen expansion,” but instead will “spend more time evaluating construction cost development and other key project parameters.”
Haslestad said the company still expects to find “profitable commodity nitrogen growth opportunities going forward.” Thus, he added, expansion at Belle Plaine “remains an option for Yara when the construction cost situation improves.”
Yara had said last year it would “fast-track” a Belle Plaine expansion for operation in the second half of 2016, creating an “integrated” ammonia and urea production line, able to produce about 1.3 million tonnes of urea per year.
The former Saskferco plant, which Mosaic Co. and the Saskatchewan government sold to Yara in 2008, now makes about 2,850 tonnes of urea, 1,860 tonnes of anhydrous ammonia and 670 tonnes of 28-0-0 UAN solution per day.
Even without the Belle Plain expansion, Haslestadsaid, 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.”
Yara proceeds with expansions, including Belle Plaine, June 13, 2012