Like Incitec,CF Industries is a major manufacturer and distributor of agricultural fertilisers,including ammonia,urea,and ammonium nitrate products.
Incitec’s supply agreement gives its US explosives business a secure feedstock of at least 200,000 tonnes of ammonia a year,at a producer cost,from the plant in Waggaman,Louisiana. Only about 20 per cent of Waggaman’s production is used by Dyna Nobel to manufacturer explosives for the US market,the rest is sold to other customers.
“With the decision to sell this world-class asset,we will reduce our excess exposure to commodity and operating risks while maintaining Waggaman’s strategic value,” Incitec chief executive Jeanne Johns said.
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Johns firstmooted the sale in November last year when the company pivoted from a planned spin-off of its fertilisers business and focused instead on offloading its ammonia plant, which was built in 2016 at a cost $US850 million ($1.3 billion).
Johns said the company had undertaken a “robust competitive sales process” to seek full value. The $2.5 billion deal includes tax costs of $616 million. About $634 million of the cash proceeds is offset against the ammonia supply agreement.
The Waggaman sale,which is subject to US anti-trust regulatory approval,is expected to be sealed within 24 months of being signed,but Incitec chief financial officer Paul Victor said he was confident the transaction would be finalised earlier.