Yara ‘doubling down’ on Sask. fertilizer operations

Michael Schlaug Plant Manager at Yara after announcing the expansion of the existing plant June 11, 2012 in Regina, SK.

Four years after acquiring the Saskferco nitrogen fertilizer plant at Belle Plaine for $1.6 billion, Yara International announced Monday plans to ‘double down’’ its investment to more than double its current production capacity of 1.1 million tonnes annually by 2016.

The 1.3-million-tonne-per-year expansion at Belle Plaine was approved by the board of Oslo, Norway-based Yara, which also approved a 300 kiloton a year NPK (nitrogen, phosphorous and potassium) expansion project at the company’s Porsgrunn facilities, in Norway.

Jørgen Ole Haslestad, president and CEO of Yara, said the Belle Plaine expansion will include an “integrated world-scale ammonia and urea line, with urea capacity of approximately 1.3 million tons per annum.” Part of the urea produced will be with sulphur, which will meet the increasing demand from canola producers in the Northern Plains region, the company said.

''Taking advantage of the excellent location of our existing Belle Plaine facility in Canada, we will increase our presence and scale in the North American market by more than doubling our capacity at the site,’’ Haslestad said in a press release.

Belle Plaine project is approved for a fast-track process, with expected startup in second half of 2016. The final decision to proceed with the project is contingent on signing an EPC (engineering procurement and construction) contract, and agreements with Saskatchewan authorities related to utilities, environmental impact and other key terms of the project.

Michael Schlaug, plant manager at Yara’s Belle Plaine site, said the project is described as an expansion, but effectively it’s like building a new plant. “It’s not an expansion in that we’re adding something. This is a brand new plant on our premises.’’

While the company hasn’t released any cost estimates as yet, Schlaug said it’s safe to assume the price would be comparable to the purchase cost of the Saskferco plant, which was built in the late 1980s by the Devine government.

''It’s basically doubling capacity,’’ Schlaug said in an interview from his Regina office. “It’s not only the production facilities, you need utilities, you need demineralized water to run your steam boilers, you need administration facilities, you need a control room, you need cooling towers,” Schlaug said.

''There will be synergies and we will be able to integrate it on the existing premises, but it will significantly change the footprint of our plant and the appearance of the plant.’’

Yara is confident that there will be sufficient demand for the production of 2.4 million tons a year of urea and related fertilizer products. “For a project of this size, you need a sound business case. There has been quite an intensive look into how much additional volume can be sold in that market.’’

Besides, the existing plant has reached its maximum capacity and cannot be expanded much further. “The existing ammonia-urea plant has been expanded and upgraded two to three times. These units are basically maxed out.’’

Assuming an EPC contract is signed and regulatory approvals are received, construction could begin in late 2013 or early 2014. “We want to have the plant built and ready to go in the second half of 2016,’’ Schlaug said. “That really is a fast-track project.’’

Schlaug said some of the major equipment pieces, like the urea reactor, take about 18 months to build at specialized manufacturing plants in far-flung corners of the world. And the EPC contractor would need time to develop an engineering, procurement and construction schedule.

''On a project like this, the first thing you would see done is on the infrastructure-utilities side. You’re starting to get your water, power grid, steam, additional buildings, workshops and admin buildings.’’

Schlaug said the project would employ “a couple of hundred people’’ working about two million person-hours in the construction phase, and up to 100 full-time operational employees when the plant is completed. He said Yara’s challenge will be to find and train employees to work in the new plant.

"It’s a real challenge,” Schlaug said. “We have to make sure that we’re building our own workforce to have people ready to run the plant. We’re willing to play an active role to grow our competence base and grow the number of power engineers, for example.’’