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Hydro closure tips the fertiliser balance

- 08 March 2000
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By Roger Chesher


LAST year, Hydro announced an intention to reduce nitrate production capacity in Europe by 1 million tonnes.

Now, the company has now stated its proposals to cease nitrate fertiliser production in England, at Montoir in France and at Landskrona in Sweden.


The UK proposals centre on Immingham, near Grimsby where the closure of nitric acid and ammonium nitrate production of 600,000 tonnes capacity would take place later in the summer.


Included in the proposals is a plan to close two liquid fertiliser production units in Oxfordshire and Hampshire.


In all, over 200 jobs would be lost, with 170 from fertiliser production and nearly 50 from business support, sales, marketing and other commercial functions.


Closures would bring to an end a history of 50 years of fertiliser production at Immingham, which started when the plant was commissioned by Fisons in 1950.


Norsk Hydro acquired the business in 1982 and the nitric acid, ammonium nitrate and granular AN plant proposed for closure was built in 1987, making it one of the most modern plants in Europe.


This would not mean an end to the availability of Hydro fertiliser in the UK.


On the contrary, the closure of Immingham would give Hydro an opportunity to maximise production at their large plant at Sluiskil in Holland where economies of scale will bring cost benefits, enabling the company to better utilise the remaining packaging and distribution facilities in the UK.


The technology at Sluiskil is similar to that at Immingham, so products brought into the UK would be very similar to the current range.


Extran, the granular ammonium nitrate product would, however be 33.5%N compared to the UK standard of 34.5%.


The NPK and NPKS compounds currently used by UK Hydro customers will continue to be imported from Porsgrunn near Oslo to be bagged in the UK.


The Chafer brand of liquid fertilisers will also continue, but with liquor no longer available from Immingham, urea-ammonium nitrate wold have to be imported from Rostock or Sluiskil to Immingham and Scotland to meet demand.

Three Chafer sites would remain, at Elvington, Chedburgh and Perth.


With the big three nitrogen producers accounting for 1.5m of the 2.3m-tonne sales of nitrogen in Britain, it is likely that Hydro will retain a significant proportion, if not all of their market share.


But it most certainly will not be share at any cost as, if the economies of scale of Sluiskil are to be realised, UK sales must become profitable.


Kemira fertilisers have welcomed this proposed reduction of capacity on the European scale. Without it, the company says, the industry would bleed to death.


With the supply-and-demand equation returning to a more balanced level, nitrogen prices should, say Kemira, rise to a sustainable level. This means nitrogen consistently selling at 100 or more per tonne.


Such a price gives a reasonable return on capital employed in the order of 12-15%, covers fixed costs, depreciation and interest, and allows investment. The alternative, says Kemira, would be the loss of the UK industry.


Kemiras own future in terms of joint ventures and ownership agreements could be clearer by April, with no final arrangements made before the end of the year.

Terra Nitrogen has expressed similar sentiments, viewing the proposal as one which will aid not only Hydro but also the rest of the European fertiliser industry.

Terra continues to service the export markets developed by ICI, but would wish to service domestic markets before all others.

The last thing farmers should fear therefore, is a shortage of domestic ammonium nitrate.

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