News
WA delays hold up $744m nitrate plant Monday 22nd June, 2009
West Australian - 22 June 2008 - Peter Klinger
WA's long-winded environmental approvals process is threatening to disrupt plans by Indian fertiliser tycoon Pankaj Oswal and his Norwegian partner Yara International to build a $US600 million ($744 million) ammonia nitrate plant on the Burrup Peninsula.
The partners had hoped to make a final investment decision on the project, to be built alongside their $1 billion Burrup Fertilisers ammonia plant, this week.
However, they have been told that it may take another year for environmental sign-off for the plant, which will convert ammonia from its sister operation into the key explosives ingredient.
Mr Oswal and Yara, who will own 32.5 percent and 67.5 percent respectively of the ammonia nitrate plant, submitted the environmental application in November and had hoped to receive approval by now.
The mining industry is concerned about WA's overloaded approvals process, with companies such as Gindalbie Metals and Sinosteel Midwest frustrated in their attempts to receive regulatory tick-off for projects worth billions of dollars.
The Burrup Peninsula is environmentally sensitive although Mr Oswal and Yara have argued their ammonia nitrate plant would no cause further significant pollution or disruption given its location on seven hectares alongside the existing plant.
It is understood Mr Oswal and Yara do not believe the delay reflects significant concern by the environmental Protection Authority about their proposal, but rather is a function of the departments stretched resources in dealing with a raft of projects before it.
Mr Oswal wants to start construction as soon as possible because the ammonia nitrate, as a value added product, should generate higher profit margins than the ammonia plant.
Yara, however, hard hit by the global financial crisis which has prompted it to scale back ammonia production at other sites around the world to reflect the fertiliser ingredients collapsed price, is said to be less concerned about the delay.
Mr Oswal said yesterday both parties remained committed to the project and wanted to begin construction "as soon as possible and thus provide some diversity in operations for Burrup Fertilisers".
Mr Oswal and senior Yara executives are due in Qatar this week for a Burrup Fertilisers board meeting and to discuss progress with the ammonia nitrate project.
The partners are also likely to discuss their luctrative gas supply contract with the Apache Corp-operated Harriet joint venture.
The venture has warned repeatedly it may run out of gas before the end of the 25-year supply agreement, in what is likely to spark a legal war.
In a pointed remark aimed at Apache's plan to develop its Julimar gasfield (not part of the Harriet JV but also off WA's North-West), Mr Oswal said: "It is pleasing to hear all of the recent, positive announcements by the various gas companies on their respective gas discoveries as this should give them confidence in their ability to fulfil their existing gas contract obligations before marketing any additional supplies."
Original News Story Here