Incitec Pivot weighs sale of troubled ammonia plant

Fertiliser and explosives group Incitec Pivot is weighing up the sale of its Waggaman, Louisana ammonia plant which has experienced a litany of breakdowns and outages caused by bad weather.

The Melbourne company told investors it had received a number of unsolicited approaches for the potential acquisition of the $850 million plant which it took over in 2016.

Incitec Pivot said: “Consistent with our long-term corporate strategy to optimise assets and manage commodity exposure, and in the interests of maximising shareholder value, IPL will undertake a review of the strategic options for (Waggaman).”

At the same time the company is continuing to prepare for the separation of its fertiliser and explosives businesses, creating two more focused businesses, with the intention to release demerger details to investors.

The 800,000 tonne a year plant plant has repeatedly broken down from causes including a dry gas seal failure, vibrations in the turbine on the induced draft fan, a failure of a vibration probe and a coupling failure on the refrigeration compressor, as well as being shut down for a hurricane.

However the plant remains important to IPL, with the company saying that whatever the future scenario for ownership, the company intended to maintain the strategic value of the long-term supply into its Dyno Nobel explosives business.

IPL Chairman Brian Kruger said the sale of Waggaman offered an attractive opportunity to unlock value for shareholders.

Kruger said: “Our investments through the turnaround to improve asset performance coupled with the strong ammonia market dynamics make (Waggaman) a very valuable asset and an attractive investment opportunity for high-quality counterparts.

“…Our long term Dyno Nobel strategy is to be a leader in explosives technology underpinned by ammonium nitrate manufacturing back to gas.”

At the same time Incitec Pivot reported improved results for FY22 with NPAT of $$1.03 billion, up 186 percent on the previous year.

Operating profit was $1.49 billion, up 162 percent on the previous year’s $566 million.

The improvement reflected doubled fertiliser earnings, and increased volumes in the company’s explosives businesses and rising uptake of premium technology solutions.

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Picture: Incitec Pivot/Waggaman plant

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