‘Big economic contribution’ by urea plant

Press, 13 December 1982, Page 1

‘Big economic contribution’ by urea plant

PA Kapuni The first of the Government’s growth strategy projects based on natural gas, the ammonia-urea plant at Kapuni, was formally opened by the strategy's architect, the Prime Minister. Mr Muldoon at the week-end. The project would make a great contribution to New Zealand's economy in the coming years and was a combination of Government and private enterprise effort, Mr Muldoon said. The plant turned natural gas into a vital ingredient for primary industry, he said. It is not big by world standards - planned production is 155.000 tonnes which probably puts it behind three plants in Indonesia — but the New Zealand product is competitive, according to Petrochem’s general manager. Mr Joe Pope.

“We have undoubtedly the best urea in the world at this time,” Mr Pope said. "The quality of those granules is totally up to date. Granular urea is beginning to com-

mand a premium on the international market." New Zealand will be the only exporter in South East Asia of granular urea. In appearance, the finished product looks like a small white ball-bearing. The granules are 100 per cent soluble in water and at 46 per cent, are said to have the highest nitrogen content of all dry nitrogen materials. It is produced synthetically from anhydrous’ ammonia and carbon dioxide under controlled heat and pressure. About 93 per cent of production will be used as fertiliser and the other 7 per cent for industry. Urea is an important component in the bonding agency for particle board as well as being able to be used as resin in plastics and in the compounding of many cosmetics. The price of urea on the world market is low but this is not worrying Petrocorp. It sees the export price improving and points to the closing down to naphtha plants, urea's only real product competitor. The Petrocorp group gen-

eral manager. Mr Jim Hogg, said urea could be sold profitably. “At the present time the prices world wide are depressed. We have no indication that they are going to be depressed further so that is why we speak with a certain degree of confidence at this stage as to the future profitability.” Petrocorp says it will earn 535 million in exports in the first full year of operation and believes that after the second full year the operation will make a profit. The public will get a chance to invest in the project which is in line with previously stated company policy. “We believe that the public should have an interest in the equity of this plant," Mr Hogg said. However, the timing and the number of shares to be issued had yet to be decided. “We have been talking with the sharebrokers now for the last 12 months and they have been discussing with us exactly how and when we should approach the markets. One of the milestones, of course, was to bring the plant into production and that is what we are doing right now," he said. Of the total production of 155,000 tonnes, 35,000 has been marked for the domestic market and this will be priced favourably for the New Zealand farmer. “To sell urea in increasing quantities in this market we have to price our urea competitively with the imported product," said Mr Hogg. At a cost of about $lOO million, the plant sounds a bargain when already the replacement cost is put at double this amount. "We have a very good plant at a very, very reasonable price," Mr Pope said. P.M.’s speech, Page 37