Not enough gas in the tank

Ballance Agri-Nutrients is staying tight-lipped on plans for Kapuni after last month flagging a possible shutdown of the urea plant because of high gas prices.

The co-op’s current gas supply agreement expires at the end of this month, but as of late August no further details were available about progress finding ways to avert the shutdown.

Asked when a definite decision was expected to be made, Ballance would only say it continues to actively explore a range of options, and remains optimistic about securing a short-term gas supply.

“At the same time we are preparing for all possible outcomes, including a short-term shutdown.

We believe there are still potential longer-term gas supply options available, and will thoroughly explore these across the sector before making any long-term decision on the plant’s future.”

In his original announcement Ballance CEO Kelvin Wickham said Kapuni could shut for up four months.

“While New Zealand’s gas market is dynamic, the increasing pace of declining gas supply and the impact of this on price will continue to pose challenges for the energy sector and for New Zealand.

Although we remain optimistic about securing short-term supply, we’re also pragmatic and planning for other outcomes. Right now, it’s prudent to plan for a short-term shutdown.

We recognise the significant impact even a short-term shutdown would have on our employees, shareholders, the wider agricultural sector and the Taranaki regional economy,” he says.

“Like many businesses we’re impacted by dwindling NZ gas supplies.

We’ve been working hard to secure a reliable gas supply agreement at a price that is affordable for the business and our shareholders as NZ farmers and growers,” he said.

With spring here, the focus has been on ensuring enough nitrogen fertiliser is available for farmers and growers in the weeks ahead.

“We’ve secured contingency supplies of nitrogen for spring and our industrial customers have sourced alternative supplies for their GoClear customers, keeping NZ’s trucking fleet on the road.”

Kapuni supplies about one third of NZ’s total urea, so the company already imports a large proportion of what it sells farmers.

To buffer a potential shutdown, it has increased urea imports, and will continue to bring in higher volumes and other products containing nitrogen like sulphate of ammonia and di-ammonium phosphate to meet demand.

Kelvin Wickham says soil nutrients are important in driving NZ’s economic prosperity through food and fibre exports, and about 41 per cent of the country’s agricultural exports are enabled by Ballance fertiliser.

“While this situation is disappointing, we’re fortunate our business is in a strong underlying position and we’ve factored various scenarios into our forward planning.”

The Kapuni urea plant in Taranaki, operational since 1982 and employing around 120 people, manufactures approximately 260,000 tonnes of NZ’s urea annually, specifically for use as fertiliser.