PotashCorp to restart idled U.S. anhydrous plant

Fertilizer giant PotashCorp plans to launch an 18-month startup process for its idled anhydrous ammonia processing operations in southern Louisiana.

The Saskatoon company in 2003 suspended ammonia processing at Geismar, about 25 km south of Baton Rouge, citing prohibitively high prices for natural gas, a key raw material to make anhydrous.

The company had since continued making other fertilizers such as urea, UAN and nitric acid at Geismar, using imported ammonia.

The startup, due to begin “soon,” calls for investment by PotashCorp to the tune of $158 million (all figures US$). The process also calls for PotashCorp to hire 33 full-time employees and 13 contractors, the company said Monday.

The Geismar plant, which at shutdown had a production capacity of 1,500 short tonnes of ammonia per day, will restart in the midst of an upswing for PotashCorp’s margins on nitrogen.

The company on Jan. 27 reported total gross margin of US$509.8 million on its nitrogen operations in fiscal 2010, more than double its total in 2009, citing “improved demand and significantly higher prices for all nitrogen products.”

During its fourth fiscal quarter of 2010 (Q4) alone, PotashCorp reported a gross margin of $151.9 million on all nitrogen products, triple that of the year-earlier period.

PotashCorp’s total average cost for natural gas over that time, meanwhile, rose to $5.62 per million British thermal units (MMBtu) in its 2010 Q4, up 24 per cent from the year-earlier period.

PotashCorp in 2003 had also announced an indefinite shutdown for its Memphis, Tenn. ammonia operations, again citing high U.S. natural gas costs and low product margins.

Monday’s announcement has no effect on the Memphis shutdown, which combined with the Geismar suspension meant layoffs for 187 employees in 2003.

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