Phibro announces new ammonia plant in Indiana for 2018

This afternoon, the old-established, newly-purchased commodities trading firm, Phibro, announced plans to build a “world-scale” ammonia plant in West Terre Haute, Indiana.

The $450 million project is initially set to start up in mid-2018.

In February, when I discussed ammonia plants in the pipeline, I quoted a Bloomberg article saying that Phibro was “in discussions about a brownfield fertilizer plant in the U.S.” In that article, Bloomberg quoted Phibro’s new CEO, Simon Greenshields:

“Despite the fact that there’s cheap natural gas, the U.S. is a big net importer of fertilizer, which doesn’t make sense … You look at the price of European gas, and yet we’re importing fertilizer from the Black Sea. It seems contrary to fundamentals.”
Phibro CEO Simon Greenshields, quoted in a Bloomberg article, 01/26/2016

In retrospect, this was a nice corporate feint, because Phibro’s new ammonia plant will use a petroleum coke feedstock.

Phibro’s plan is to repurpose the gasification plant for the Wabash River IGCC, a 262MW, DOE-funded, “clean coal” power plant, which was scheduled to be decommissioned.

The existing gasifiers have a pet coke capacity of 2,000 metric tons per day (mtpd). Phibro does not specify the capacity of its new ammonia plant but, at first sight, I believe this rate of feedstock consumption would allow an ammonia capacity of roughly 1,750 mtpd, or something over 600,000 metric tons per year.

Phibro’s press release describes its thinking:

Petcoke is more economical than the natural gas many other ammonia plants use as a feedstock and will enable the plant to offer local farmers more affordable fertilizer. The gasification plant’s clean coal technology, which was first funded by the Department of Energy more than two decades ago, allows for repurposing it to a world-scale ammonia production plant …

“We are thrilled to be able to put this plant’s technology, which has outlived its viability in an era of reduced coal fired power generation, to a more productive economic use, manufacturing much needed ammonia fertilizer for the region. This transaction benefits numerous stakeholder groups as it will create and save manufacturing jobs, provide the most affordable fertilizer for farmers in the area and reduce our nation’s reliance on imported ammonia fertilizer …”

The Phibro Group plans to invest approximately $450 million into the plant to convert it to produce ammonia and is targeting a mid-2018 completion date.
Phibro press release, 05/17/2016

The Bloomberg article also talked about Phibro’s plan to “fill a void created by banks reducing their commodities risk exposure amid stricter regulations.”

“There’s a liquidity void and right now there are good opportunities for putting together a strong brand with a deep talent pool … There’s quite a lot of capital that’s interested in participating in the development of such a business.”
Phibro CEO Simon Greenshields, quoted in a Bloomberg article, 01/26/2016

You can find a few more details in Phibro’s press release. I’ll write up a full page for the Phibro project soon but, in the meantime, I’ll contemplate what this means for Cronus Chemicals and the financing for its world-scale greenfield in Tuscola, Illinois, which is only about 50 miles away.

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