Yara International ASA has decided to strengthen its position in technical ammonium nitrate (TAN) through an investment of NOK 125 million at the production plant in Köping, Sweden. Following the expansion, Yara Köping will be a world scale producer of TAN with an annual production capacity of 320,000 tonnes. The production of fertilizers will, as part of the repositioning of the plant, cease in the second quarter of 2007.
Construction is expected to start in the fourth quarter of 2006 and the new production line, including storage capacity and infrastructure, is expected to be completed in the second quarter of 2007. The new line will add 130,000 tonnes of production capacity, resulting in a total annual production capacity at the plant of 320,000 tonnes of TAN.
“The TAN market is expected to continue to grow strongly as a consequence of solid growth in international infrastructure and mining projects. As the world’s largest nitrogen chemical company, Yara intends to participate actively in this development and strengthen its position as one of the world’s largest producers of TAN,” says President and CEO of Yara International ASA, Thorleif Enger.
The Köping plant will become more competitive as operations are concentrated around industrial applications. Nitric acid will be diverted to produce TAN and consequently Yara Köping plans to cease the production of fertilizers in the second quarter of 2007. The asset write down in connection with the closure of the fertilizer plant is estimated at NOK 55 million and the EBITDA effect related to manning reductions and clean-up costs are estimated at NOK 40 million. These costs are expected to be accounted for in the second quarter of 2006. The asset write down will be charged to the Downstream segment, which currently owns the plant, while the Industrial segment, which takes over the plant in 2007 and will benefit from the additional TAN capacity, will be charged the cash costs.
“Scandinavia is an important fertilizer market for Yara. We will continue to serve our customers in the region through our global production and distribution network,” says Enger.
The repositioning of the plant is expected to result in a manning reduction of approximately 55 employees. At the end of 2005, Yara Köping had 145 employees.