Incitec Pivot has lined up affordable gas supply that will allow it to keep its Gibson Island fertiliser plant in Queensland through 2022.
Australia’s top fertiliser producer had warned it might have to shut the plant due to soaring gas prices, but said Tuesday it has now lined up supply through a deal with Australia Pacific LNG and pipeline group APA.
The extension of operations at the plant is expected to increase its FY2020 operating profit by about $5 million over its forecast for the current financial year, the company said in a statement.
The company said in May it expects full-year earnings before interest and tax of between $370 million and $415 million.
Incitec Pivot added that the new arrangements are subject to Australia Pacific LNG (APLNG) obtaining regulatory approval from the Foreign Investment Review Board.
The supply from APLNG will meet the facility’s needs from April 1, 2020 through to December 31, 2022.
Gibson Island comprises about half of Incitec’s Brisbane operations and sends about 550,000 tonnes of fertilisers each year to the company’s customers.
Incitec Pivot shares were priced at $3.32 before the start of trade on Tuesday, up 1.2 per cent this calendar year.