CF Industries Plans $3.8 Billion Nitrogen Fertilizer Expansion

CF Industries Holdings, Inc. has announced it will construct new ammonia and urea/UAN production units at its complex in Donaldsonville, LA, and new ammonia and urea units at its complex in Port Neal, IA. CF Industries’ board of directors has authorized expenditure of $3.8 billion for the projects and the company has retained engineering and procurement services from ThyssenKrupp Uhde through their affiliate Uhde Corporation of America. In combination, these projects will be able to produce annually 2.1 million tons of gross ammonia and upgraded products ranging from 2.0 to 2.6 million tons of granular urea and up to 1.8 million tons of UAN solutions, depending on product mix.

“We are pleased to announce definitive, large-scale nitrogen capacity expansion plans at our North American operations focused on substantially increasing our ability to serve our customers,” said Stephen R. Wilson, chairman and CEO, CF Industries Holdings, Inc. “We believe that our projects will be among the first in North America to be in production. We already own suitable sites, have retained a world-class engineering partner and have completed the front end engineering and design study for key components of the projects.”

The capital cost estimate of $3.8 billion includes: engineering and design; equipment procurement; construction; associated infrastructure including natural gas connections, power supply, and product storage and handling systems; and related start-up expenses.

Expenditures for the projects have begun and will continue into 2016. The Donaldsonville project budget is $2.1 billion, with the new urea and UAN plants scheduled to come on stream in the second half of 2015 and the new ammonia plant in 2016. The Port Neal project budget is $1.7 billion with the new ammonia and urea plants scheduled to come on stream in 2016. 

“Increasing both our ammonia and upgraded product capacities and our product mix flexibility at Donaldsonville takes advantage of a location that already has access to multiple modes of transportation. When the new units are complete, the Donaldsonville complex in total will be able to vary use of its urea streams to produce between 2.4 million and 3.3 million tons of granular urea and between 1.2 million and 4.2 million tons of UAN solution,” commented Wilson. “The Port Neal facility will allow us to serve upper-Midwest urea customers from a cost-advantaged location.”

The expansion of CF Industries’ capacity, at these locations in particular, allows the company to take further advantage of the global cost advantage of North American natural gas. Donaldsonville is served by five natural gas pipelines at essentially Henry Hub economics and Port Neal is well positioned to access existing gas supply from the Rockies, Mid-Continent U.S. and Canada, and the increasing supply expected to come from the Williston Basin.

CF Industries has executed engineering and procurement services contracts with ThyssenKrupp Uhde, which was selected based on the quality and integrity of the nitrogen plants they have built around the world. Front end engineering design studies for the Donaldsonville urea/UAN plants and the Port Neal urea plant have been completed. All of the major production units are of recent designs that have been installed successfully at other sites around the world. Permit applications for the Donaldsonville project and orders for some of the major equipment for both projects will be submitted by the end of this month. Permit applications for the Port Neal project will be submitted as soon as possible.

“We are pleased to have ThyssenKrupp Uhde as our technical partner in executing these projects,” stated W. Anthony Will, senior vice president of manufacturing and distribution. “We have completed a significant amount of engineering and design work with them, and the rigor of that work along with bids we have received from several construction firms give us confidence in our project cost estimates and timelines. Based upon detailed project cost analyses and price quotes from equipment providers and construction firms, we concluded that brownfield construction of new ammonia and upgraded product plants is a cost-effective means to expand CF Industries’ production capacity, yielding attractive returns for our shareholders.”

CF Industries noted that it has expectations for continued solid cash flow, a strong balance sheet, investment grade credit ratings and ready access to the debt financing markets that will allow it to fund these projects and its other long-term initiatives.

The state of Louisiana and Ascension Parish have provided a package of incentives to support the $2.1 billion investment at Donaldsonville, which is expected to create 93 direct jobs and approximately 700 indirect jobs. The state of Iowa and Woodbury County are taking action to provide a package of incentives to support the $1.7 billion investment at Port Neal, estimated to create 100 direct jobs and approximately 700 indirect jobs. The direct jobs will be at an average starting annual salary of $55,000, increasing to $85,000 per year when employees become fully certified. The company expects that as many as 3,400 construction jobs will be filled as these projects progress. These incentive packages recognize the long-term employment and tax revenue benefits that these projects will generate. CF Industries is grateful for the enthusiastic support of both states.  

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