) Board has cleared an expansion at its Borger, TX-based nitrogen
facility. The expansion will enable the company to cut its
dependence on existing ammonia distribution channels and offer it
greater flexibility to address changes in demand by product and
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The expansion involves addition of a new urea production unit
with a capacity of roughly 610,000 tons, of which, around 100,000
tons will be Diesel Emission Fuel (DEF) grade urea. DEF, which is
used to mitigate nitrogen oxide emissions in diesel vehicles, is
expected to help diversify Agrium's end-use markets.
Agrium, which is among the prominent fertilizer companies along
), expects capital spending for the project to be around $720
million. The expansion will boost annual ammonia capacity for the
Borger facility by roughly 145,000 tons, bringing the aggregate
annual gross ammonia capacity to around 635,000 tons.
Construction work for the expansion will commence next month with
completion expected in second-half 2015. During the construction
phase, the Borger facility is expected to operate at normal
Agrium's nitrogen business is a part of its Wholesale segment. It
is among the largest and lowest cost producers of nitrogen
globally. The expansion at the Borger facility will help the
company to expand its nitrogen footprint in North America.
Profit from Agrium's nitrogen business tumbled roughly 56% year
over year in the most recent quarter on lower pricing for
nitrogen products and reduced sales volumes due to plant outages
during the quarter and a shorter fall application season in the
While Agrium expects global nitrogen demand to rise year over
year in 2014, it sees a decline in demand in North America due to
reduced corn acreage. Nevertheless, Agrium and other nitrogen
producers in North America should benefit from relatively lower
natural gas prices driven by shale gas production.
Agrium stands to gain from favorable crop prices and overall
strong fundamentals for the agriculture and crop input market.
The company is expected to see healthy demand for crop protection
products in 2014.
However, Agrium's Wholesale division remains under pressure with
declining sales and profits, partly due to lower pricing. The
pricing environment is expected to remain soft in the wholesale
business in the near future.