Norwegian fertilizer giant Yara takes full ownership of the giant Pilbara plant, its largest nitrate facility, in a $391m purchase.
Yara took over as its venture partners Apache Corporation packs up and leaves Australia.
The Pilbara fertilizer plant is one of the world’s largest ammonia production facilities, with a capacity of around 850,000 tonnes a year.
The Pilbara plant was shut down earlier this month, due to a rupture in its seawater system.
A Yara representative told Agrimoney.com that the plant was still offline, but was expected to be operational by early November.
Liquid ammonia from the plant is sold within Australia, and exporter to South East and East Asia.
Ammonia is produced from natural gas, and applied as a nitrogen fertilizer to crops, either directly or as a feedstock for other nitrates such as urea.
Yara International bought out Apache’s 49% stake in the companies’ joint venture, Yara Pilbara Holdings, for $391m.
In 2014 the Yara Pilbara ammonia plant delivered an earnings before interest, taxation, depreciation and amortisation of $218m.
The plant is already fully operated by Yara.
Farm economics supportive
The acquisition is evidence of Yara’s faith in its core nitrates business, despite falling global fertilizer sales, and following the group’s sale of the British nitrate business GrowHow UK.
This month Yara reported that its net profits had nearly tripled, thanks to rising earnings and the GrowHow sale.
The group took an upbeat view of fertilizer demand, saying that farm economics still supported nutrient application, despite lower crop prices.
Yara even hoped for rising purchases in Brazil, which has been a headache for many input sellers this year, due to a weak currency and the scarcity of credit for farmers.
The Pilbara sale completes Apache’s exit of its Australian interests, after a decision last year to focus on its US business, which has seen the company divest nearly $6bn of assets.
The acquisition of Yara Pilbara Holdings also gave Yara control of Apache’s stake in a new ammonium nitrate venture, which is due to come online early next year.
The new venture will has a capacity of 330,000 tonnes of technical nitrate, for use in explosives.