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Incitec defers Australia mine explosives expansion
September 26, 2012 / 5:21 AM / 5 years ago

Incitec defers Australia mine explosives expansion

MELBOURNE, Sept 26 (Reuters) - Explosives producer Incitec Pivot has postponed until at least 2015 a decision on whether to expand its ammonium nitrate capacity in Australia, it said on Wednesday, marking the latest fallout from Australia’s faded mining boom.

Incitec had planned to make a final investment decision in the first quarter of 2013 on whether to build a new plant in Newcastle to supply explosives to coal producers in the Hunter Valley.

“The decision on whether to proceed with the development has been deferred for at least two years, reflecting the anticipated reduction in demand for ammonium nitrate and the high cost of construction in Australia,” Incitec Pivot said in a statement to the stock exchange.

It had initially expected the plant to cost around A$600 million ($625 million), but declined to comment on the final estimate.

The company had been looking to supply miners expanding in the Hunter Valley, competing against Orica Ltd, which has a lock on that area.

It could not justify going ahead with the project as the high construction cost was going to impact pricing of the product, while at the same time miners had grown more uncertain about the outlook, spokesman Stewart Murrihy said.

The company, which is also Australia’s top fertiliser producer, is considering building an ammonia plant in the United States, where natural gas, the key input for ammonia, is cheap.

It expected to make a decision on the U.S. plant in the first half of 2013, Murrihy said. ($1 = A$0.9595) (Reporting by Sonali Paul; Editing by Nick Macfie)

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