Orica, Yara to build ammonium nitrate plant

Date:05-22-2012

Mining services provider Orica has joined forces with mineral fertilizer producer Yara and explorer Apache to build a $800-million ammonium nitrate plant in Western Australia.

The 330 000 t/y plant would be completed by the end of 2015, and would be 45% owned by Orica, 45% by Yara with the remaining 10% held by Apache. Yara would manage the construction as well as the ongoing operation of the ammonium nitrate plant.

The project will take ammonia, produced from natural gas at the nearby Yara Pilbara fertilisers plant, to produce a base ingredient for explosives, used by the region’s iron-ore industry and other mining operations.

Orica reported on Monday that the parties had also agreed to form a distribution and marketing joint venture (JV) to distribute ammonium nitrate and associated products and services to mining customers in the Pilbara.

Orica would manage the JV, which would be owned in the same proportions as the plant.

In addition to its share of the construction costs, Orica would pay some $10-million, to be split between Yara and Apache, on the start of the construction.

"This is an extremely important project for Orica. Together with our partners, we have a clear vision for servicing the fast-growing Pilbara iron-ore market, which is being strongly embraced by our customers in the region,” said Orica MD and CEO Ian Smith.

He noted that strong demand for industrial grade nitrate in the Pilbara was expected to exceed 10% a year growth, over the medium term.

Western Australian Premier Colin Barnett on Monday welcomed the investment decision, saying that value addition to the Pilbara’s existing resources was an important factor in ensuring Karratha’s continuing growth as a major regional centre.

"This announcement is especially significant because it is essentially a manufacturing project based on the natural gas resource.

"As well as creating at peak 600 construction jobs, and 60 operational positions when it is commissioned in 2014, the Burrup nitrate plant will generate significant additional local business opportunities and employment over its expected 40-year life span,” Barnett said.

The project obtained state and Commonwealth environmental and Aboriginal Heritage approvals in 2011.