IFFCO Canada’s off-again, on-again urea plant has been put “on hold” … again.

This project was first put on hold last year, when, in December 2014, they took a “strategic pause” because there was too much doubt about securing a long-term gas supply, and also because the engineering and construction costs had swollen to $2 billion, far above the original estimate of $1.2 billion.

But by June 2015, IFFCO Canada was moving ahead again, with progress on a natural gas supply agreement and a new and more affordable EPC partner. Within six months, a broader and less easily solved problem has wrecked the project’s financials anew: global urea prices.

The urea production plant project at Bécancour is being put on hold until favourable economic conditions prevail including an increase in urea pricing which is currently in a low pricing cycle worldwide. As in many other resource sectors, current market conditions are unfavourable for completing the financing required … Urea prices are at their lowest level in five years and as a consequence, investors are being prudent …

“We are halting the project; as a result of the current poor rates for urea that is blocking the promoters and investors from attaining the plant’s anticipated profitability. We are waiting for the cyclical low point in the price of urea to end, which we expect will allow resumption of the project. In the interim, we continue to work on developing the project and preparing for its relaunch,” declared IFFCO Canada Director General, Claude Lafleur.

IFFCO’s announcement makes it very clear that they hope to restart the project in the uncertain future, and want people to understand that this announcement is “Not the end of the project.”

But if the current market dynamics don’t make this project worthwhile, it’s hard to say when, or whether, economic conditions will conspire to make the project feasible.

Full details are in my Research Note for IFFCO Canada’s plant in Becancour, QB.