High demand and cheap natural gas prompt plan for giant nitrogen plant in Quebec

winnipeg / reuters The Indian Farmers Fertiliser Co-operative (IFFCO), one of India’s largest fertilizer makers, plans to build a $1.2-billion nitrogen plant in Becancour, Que., with a Canadian partner to cash in on strong North American demand.

IFFCO and La Coop federée plan to begin construction in two years, provided they can raise the remaining 45 per cent of the capital cost and pending a feasibility study, and start producing urea in 2017.

The project is the latest in a series of announced plans for additional nitrogen capacity in North America, as high crop prices support demand and with new technology unlocking the key ingredient natural gas from shale rock.

IFFCO and La Coop will face stiff competition from Norway’s Yara International ASA and Agrium, both of which plan to expand their nitrogen output.

In the near term, a surplus of nitrogen production is unlikely, considering that the United States is a net importer of the fertilizer, said Claude Lafleur, CEO of La Coop.

“The (crop) production in North America is increasing also, and corn needs a lot of nitrogen,” he said. “At the end of the day, if everybody goes and builds new facilities, it could lead to a glut, but we don’t see that in the next 10 years.”

The U.S. imports more than two-thirds of its urea production, but still, if all the rumoured projects became reality North America would quickly have a surplus, said David Asbridge, president of NPK Fertilizer Advisory Services.

“Even if we have three, possibly four new plants in North America in the next five years, that’s going to be a little price depressing,” Asbridge said.

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