Yara International ASA and BASF have broken ground on a new world-scale ammonia plant at the BASF site in Freeport, Texas.
The two companies confirmed their intention to build the joint venture plant in May 2014.
Now with ground broken on the site, the plant – which will have a capacity of around 750,000 metric tons per year – is expected to come online in 2017.
Total capital investment for the plant is estimated at $600m, with the plant to be owned 68% by Yara and 32% by BASF. Yara will manage construction of the plant, while BASF will operate the plant.
As part of the project, Yara will build an ammonia tank at the BASF terminal and BASF will upgrade its current terminal and pipeline assets for the export of ammonia from the new plant.
“I am very pleased to be here today, initiating the construction of an important investment for Yara – alongside our partners at BASF. The building of the Freeport Ammonia plant is a firm demonstration of how we deliver on our growth strategy,” said Torgeir Kvidal, President and CEO of Yara (pictured).
The new plant will be based on a hydrogen-synthesis process, significantly reducing capital expenditures and maintenance compared to a traditional natural gas-based ammonia plant.
A long-term supply agreement for nitrogen and hydrogen has been signed with Praxair, Inc, linking the feedstock variable cost to the advantageous natural gas prices available at the US Gulf coast.
In terms of the ammonia product, each party (BASF and Yara) will off-take ammonia from the plant in accordance with its equity share. BASF will use its share of ammonia from the plant to produce caprolactam, a key ingredient in the manufacture of nylons for carpet, textiles, film, monofilaments, and wire and cable.
Yara will market the remainder mostly to industrial customers in North America, in addition to supplying the agricultural sector.
“BASF is in a period of significant investment in North America,” explained Wayne T. Smith, Chairman and CEO of BASF Corporation and member of the Board of Executive Directors of BASF SE. “Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the US; strengthening our operations in Freeport and the competitiveness of our customer value chain in the region.”