) has cut long-term ammonium nitrate supply deals with Orica
International Pte. Ltd. and Nelson Brothers, LLC. Orica is a
leading provider of commercial explosives and blasting systems
for the mining and infrastructure markets. Nelson Brothers makes
mining explosives products.
Under the terms of the deals, CF Industries will supply between
700,000 and 800,000 tons of industrial grade ammonium nitrate and
ammonium nitrate solution annually for at least a decade starting
Jan 1, 2017.
The volumes to be supplied under the deals will require CF
Industries to bump up ammonium nitrate solution loading capacity
and industrial grade ammonium nitrate production capacity at its
Yazoo City nitrogen complex in Mississippi. Reconfiguration of
the plant will start this year at an estimated total cost of $65
million. The agreements are expected to account for around 70% of
ammonium nitrate production capacity at the plant.
The agreements will offer CF Industries a steady demand for most
of the production capacity from its Yazoo City plant. The deals
offer Orica and Nelson Brothers access to long-term supply of
industrial grade ammonium nitrate and ammonium nitrate solution.
CF Industries will emerge as the primary supplier of these
products for Orica and Nelson Brothers for the U.S. and Canadian
markets. Pricing of products under the deals will be tied to the
cost of natural gas.
CF Industries, which is one of the leading fertilizer makers
), should benefit from declining natural gas costs in North
America and a solid start to the domestic planting season. Its
Nitrogen segment is enjoying the benefit of abundant natural gas
CF Industries' acquisition of Viterra Inc's 34% interest in the
Medicine Hat nitrogen facility significantly increased its annual
marketable nitrogen volumes. The company is also progressing with
its capacity expansion projects in Louisiana and Iowa.
CF Industries, a Zacks Rank #3 (Hold) stock, will report its
fourth-quarter 2013 results after the close on Feb 18.
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