Incitec Pivot Limited (IPL) said the construction of an ammonium nitrate (AN) manufacturing complex at Moranbah, in Central Queensland, would recommence in May this year after being slowed following a revised outlook for AN demand during the Global Financial Crisis. The company said it is expected to be completed within the previously announced budget of $935 million.
Incitec said the project involves the construction of a 330,000 tonnes-a-year fully-integrated AN complex comprising ammonia, nitric acid and ammonium nitrate plants and associated infrastructure, with 35% of the project already completed.
Managing director and CEO, James Fazzino, said the project fits with the company’s strategy of aligning its business to the industrialisation of Asia and leverages its core nitrogen manufacturing capability.
“This will be a world scale manufacturing plant at the bottom of the cost curve in its market and meets our financial criteria, achieving 18% RONA (Return On Net Assets) in the third full year of operation,” Mr Fazzino said.
“The plant is located in the Bowen Basin, Australia’s largest metallurgical coal region, adjacent to some of the largest coal mines in the world which are operated by globally-significant mining companies.”
Mr Fazzino added that around 90% of the plant’s forecast production is committed.
The company said United Group Resources Pty Ltd, Bilfinger Berger Services (Australia) Pty Ltd and BGC Contracting Pty Ltd would continue to undertake engineering, procurement and construction on the project, while a 15-year coal seam methane supply agreement with Arrow Energy Limited (AOE) is also involved.
UGL Limited (UGL) said, in a separate statement, it would work with its partners alongside Incitec Pivot to complete construction activities by August 2011.
“UGL anticipates this completion phase of the project will generate income of $215 million, which is in line with previous estimates,” the company said.
UGL’s managing director and CEO Richard Leupen said significant work has already been undertaken on the project and that the company is well advanced and on track.
“Our engineering team has been mobilised, and we are now in the process of establishing the alliance project management team,” Mr Leupen said.
Mr Fazzino said the project would be funded by existing debt facilities and would not require equity funding.
At the close of trade Friday, Incitec Pivot shares were trading at $3.26, while UGL shares were trading at $13.01.
