Burrup ammonium nitrate plant plan nudges ahead

Yara (OSE: YAR) has signed a heads-of agreement with multinational chemical products corporation Orica (ASX: ORI) and American oil and gas firm Apache Corporation (NYSE: APA) to build a 330,000 metric tons ammonium nitrate plant on the Burrup peninsula in Australia. The tentative agreement to form a joint venture is subject to board approvals as well as concluding contract negotiations for engineering, procurement and construction of the plant.

In the beginning of last month when Yara took control of the Burrup ammonia plant, the rationale for an investment in an ammonium nitrate plant in the vicinity was explained. At that point it seemed as though Yara would be taking a larger chunk before Orica, the world’s largest supplier of mining explosives, entered the picture.

Now the plan is for both Yara and Orica to have a 45% ownership interest and Apache to have the remaining 10%. Yara will be the operator where as Orica will manage sales and distribution. The companies are targeting mid-year for construction start-up. Yara retreated 1% in today’s trading.