CF Industries Holdings, Inc. has entered into long-term ammonium nitrate (AN) supply agreements with Orica International Pte. Ltd. and Nelson Brothers, LLC, a joint venture between an Orica affiliate and Nelson Brothers, Inc.
Under the terms of the related agreements, CF Industries has committed to supply between 700,000 to 800,000 tons of industrial grade ammonium nitrate and ammonium nitrate solution on an annual basis for a period of at least 10 years beginning January 1, 2017.
"These agreements represent another in a series of moves that enhance long-term value for CF Industries' shareholders and customers," said Tony Will, president and chief executive officer, CF Industries Holdings, Inc.
"The agreements will provide CF Industries a steady base demand for a majority of the production capacity from our Yazoo City Nitrogen Complex at very attractive economics. They also show the value we bring to customers as they assure Orica and Nelson Brothers access to a reliable, long-term supply of industrial grade ammonium nitrate and ammonium nitrate solution."
Outside of Orica's existing production facilities in Carseland, Alberta, and Geneva, Utah, CF Industries will become the companies' primary supplier of industrial grade ammonium nitrate and ammonium nitrate solution for the U.S. and Canada markets. Product pricing under the related agreements will be tied to the cost of natural gas, providing CF Industries a defined margin.
The volumes specified under the supply agreements will require CF Industries to increase ammonium nitrate solution loading capacity and industrial grade ammonium nitrate production capacity at Yazoo City. The plant reconfiguration will begin in 2014 at an estimated total cost of $65 million.