Incitec Pivot facing fresh troubles at Phosphate Hill fertiliser plant

Incitec Pivot is experiencing more problems at its Phosphate Hill facility as the company presses on with plans to sell its fertiliser division.

Incitec Pivot’s ammonium phosphate plant at Phosphate Hill.

Incitec Pivot has been hit by fresh troubles at its Phosphate Hill fertiliser facility in north Queensland, with the company again cutting output forecasts on the back of another significant plant failure.

In a late release to the market on Monday, Incitec said Phosphate Hill’s annual output would be hit by a shortfall in sulphuric acid from the company’s Mt Isa operations, where a drying plant had “degraded faster than previously forecast”.

The sulphuric acid plant collects and cleans sulphur dioxide from Glencore’s copper smelter in Mt Isa before converting it to sulphuric acid, and is capable of producing up to 3700 tonnes of the acid a day, the company says.

But the failure of the drying plant at the facility has triggered safety concerns, with Incitec bringing forward a major maintenance campaign initially planned for next financial year.

“In line with the company’s number one priority of ‘zero harm’, Incitec has decided to

prioritise the maintenance work in FY2023. This work is expected to take approximately three weeks to complete,” the company said.

Phosphate Hill has a nameplate capacity of close to a million tonnes a year of ammonium

phosphate fertilisers, but has already been hit by a shortfall in gas supplied from an ENI-operated gas field in the Northern Territory, which is running dry.

In June the company cut Phosphate Hill’s expected output for the 12 months to the end of September to 900,000 to 930,000 tonnes, and said the gas shortfall was expected to wipe $75m to $90m from the plant’s earnings.

While Incitec said on Monday it now expects the impact of the gas shortfall to come in at the lower end of that range, the fresh problems at the sulphuric acid plant have wiped another 30,000 tonnes from Phosphate Hill’s expected output – now tipped at 870,000 to 880,000 tonnes, which will likely strip $13m to $15m from the plant’s expected earnings for the year.

Shareholder disquiet over the ongoing troubles at the plant have been linked to the sudden departure of managing director Jeanne Johns in early June, over concerns the company had failed to take best advantage of strong fertiliser pricing due to ongoing maintenance and other issues at its manufacturing centres.

Incitec also confirmed it is still in discussions over the potential sale of its fertilisers business. Indonesian state-owned company Pupuk Kaltim, one of the biggest fertiliser producers in the Asia Pacific, has been heavily tipped as a leading bidder in the sale process, but the prospect has caused disquiet among local grain producers.

Incitec shares closed up 6c to $3.07 on Monday.

Originally published as Incitec Pivot facing fresh troubles at Phosphate Hill fertiliser plant