The new plant was already expected to cost hundreds of millions of dollars to build. He wouldn’t give details on the new estimate but said the project still offered attractive returns.
Ballance had initially wanted to build it on its own and now with a partner, or partners, would be looking to keep majority control.
The board has requested staff to pursue the partnership option. Potential partners spoken to so far include two New Zealand groups and two from overseas, Wynne said.
He had no comment when asked if fertiliser industry competitor Ravensdown was a potential partner.
Wynne expects to have detailed information for the board to make a recommendation to shareholders in late June, with a shareholder vote later in the year.
Ballance hopes to have the new plant operating in 2019.
It would provide sufficient urea for Ballance’s needs plus some to sell on the market.
Wynne expects foreign exchange savings of about $150 million a year from not having to buy about half of its needs from overseas, as it does now.
The new plant would replace the existing Kapuni urea plant, which is about 40 years old and that Ballance has operated for the past 22 or so years.
This plant could continue to operate for many years yet, but was expensive to maintain and did not have the operating and environmental efficiencies that came with new technology, Wynne said.
Annual running costs of the new plant would be about 20% cheaper, as well as more than doubling production.
Ballance started planning for the new plant a couple of years ago when the NZ dollar was at above US$0.80 in value – it is now in the mid-60 cent range.
With a big overseas content – with fabrication work planned in the United States, Europe and China – the higher the NZ dollar the better for the capital costs.
Ballance was confident of its long-term natural gas supply in Taranaki to power the new plant.
