Australian fertilizer company Incitec Pivot will close its manufacturing plant on Gibson Island in Brisbane, Queensland, citing high gas prices as the decision to close the 50-year-old infrastructure. The plant relies on gas as a raw material to produce products such as ammonia and urea.
The company has been unable to secure an affordable long-term gas supply contract from Australian gas producers. The operation will close in December 2022.
Incitec Pivot will search for opportunities to repurpose the site. The company is currently working with Fortescue Metals Group to explore the potential for manufacturing zero-emissions ammonia.
Analysts say gas supply contracts on Australia’s east coast, which historically traded down to $4 (Aus.) a gigajoule, began rising in 2017 to reach more than $10 a gigajoule at a time that coincided with Australia exporting LNG from the Gladstone region.
Prices moved down in 2020 and most offers for 2022 are $6-8 (Aus.) a gigajoule, according to the Australian Competition and Consumer Commission.
Incitec Pivot will continue to operate its other Queensland manufacturing facilities, including a fertilizer plant at Phosphate Hill and an explosive manufacturing plant at Moranbah.