The Australian reported that the head of Wesfarmers’ chemicalsdivision Mr Tom O’Leary has cast strong doubts on forecasts used byrival Orica to justify an USD 800 million investment in a newammonium nitrate plant in the Pilbara, declaring that miningindustry demand for the key explosives ingredient would be fullysatisfied from 2014. Mr O’Leary said that Orica’s entry into the Pilbara could lead tothe market for explosives grade ammonium nitrate being oversuppliedwell beyond 2020. He warned this could affect pricing and returns,leading Wesfarmers’ CSBP to possibly examine selling its product inNSW’s Hunter Valley or overseas. Mr Orica said last week that it believed Pilbara iron oreproduction would grow at a compound annual rate of 10% until 2020.The prediction underpins its move, along with partners ApacheEnergy and Yara International, to build a 330,000 tonnes a yearammonium nitrate plant on the Burrup Peninsula by 2015. The investment came just months after the Wesfarmers board approvedan AUD 550 million expansion of its own ammonium nitrate plant atKwinana, south of Perth. Hydroponic Led Grow Lights
The expansion, due to be completed by mid2014, will boost production by 260,000 tonnes a year. Orica’s entry into the Pilbara market is seen as significantbecause it may be able to lure customers away from Wesfarmers dueto a freight advantage it will gain from producing ammonium nitrateso close to the Pilbara’s mines. Wesfarmers currently supplies Rio Tinto, BHP Billiton and someFortescue Metals Group mines in the Pilbara region. Speaking at Wesfarmers’ strategy briefing day, Mr O’Leary dismissedOrica’s projections, saying he expected annual compound growth inPilbara iron ore production of about 6% until 2020. He said Orica’sforecasts were based on assumptions that nearly all iron oreprojects, including BHP’s outer harbor project at Port Hedland,would go ahead. Led Tube Lights T8
He said that “We don’t expect all of those projectsto proceed and neither do any of the market forecasters. If Oricaproceeds there will be significant oversupply in the market untilwell beyond 2020.” Orica’s main local rival, Incitec Pivot, has questioned theeconomics of building a plant in the Pilbara, saying the excessivecosts of building there made it more competitive to produceexplosives elsewhere and transport them to the region. Mr O’Leary said Wesfarmers had considered both the Pilbara andKwinana for its capacity expansion but had decided the Pilbara wastoo expensive. Its analysis included detailed freight studies but the company hadconcluded it would be able to service customers in the Pilbara, theGoldfields and the emerging Mid West region more efficiently fromKwinana. Underwater LED Lamp Manufacturer
Source – The Australian.