Incitec Pivot sells troubled Waggaman plant

Explosives and fertiliser group Incitec Pivot has sold its trouble-plagued Waggaman, Louisiana ammonia plant, securing a long term US supply of ammonia in the process.

The company has been forced to close the plant on numerous occasions due to equipment failures and hurricane damage – though it did not mention its demonstrable unreliability as an issue in its sale announcement.

Since its opening the plant has failed numerous times with lost production and repair costs exceeding $100 million.

Now Incitec Pivot has agreed to sell to CF Industries Holdings for a total value of $2.5 billion, a move which will reduce the company’s exposure to commodity production.

At the same time the company entered a 25 year plus two five year option supply agreement with CF to take up to 200,000 tonnes of ammonia per annum to support its Dyno Nobel Americas explosives business.

The ammonia will be supplied at ‘producer cost’ with the supply agreement having a value of $634 million which will be offset from the cash proceeds of the sale.

the sale is subject to US anti-trust regulatory clearance.

Incited Pivot said: “The Waggaman strategic review was undertaken with our previously articulated objective of monetising the value of the excess ammonia production from the facility while retaining the strategic value of the Waggaman site to the competitiveness of the DNA business.”

Commenting on the litany of failures and shutdowns in an earlier financial report, Incitec Pivot managing director Jeanne Johns has said: “…While the Waggaman plant has demonstrated it is capable of very good production runs, the recent issues at our plant are clearly disappointing.”

Further reading:
INCITEC PIVOT WAGGAMAN PLANT FACES NEW DOWNTIME

Picture: Incitec Pivot