Agrium stops work on new U.S. nitrogen project, looking for strategic partner

CALGARY – Agrium Inc. said Monday it is putting the brakes on a pair of nitrogen projects.

The fertilizer giant (TSX:AGU) is suspending engineering work on a new $3-billion, 1.8-million-tonne plant in the U.S. Midwest, instead focusing on finding a partner and securing a supply of natural gas.

It is also shelving an $150 million project to expand its nitrogen plant in Redwater Alberta by about 160,000 tonnes.

The U.S. plant would have been one of the biggest projects Agrium has undertaken, said spokesman Todd Coakwell.

“That’s quite significant in one area, so our leadership felt it would be prudent, it would make sense to really mitigate the financial risk side by bringing in a strategic partner on that project as well as still striving to find a long term gas contract,” he said.

Coakwell added that the project is far from “dead” and the company is looking for a financially strong partner that has expertise in the nitrogen segment.

At Redwater, Agrium would have had to take the entire plant down for such a long time that adding the new capacity didn’t make sense from an economic perspective.

Meanwhile, Agrium is still looking at expanding its nitrogen plant in Borger, Texas, by 640,000 tonnes at a cost of between $500 million and $600 million.

Coakwell said that still “looks like a great project” and the company aims to make a final go-ahead decision later this year.

The Calgary-based company’s stock dropped as much as 2.6 per cent Monday on the Toronto Stock Exchange to $93.33, but regained some ground to close at $94.14, or down 1.8 per cent.

Agrium produces three main types of fertilizer: nitrogen, phosphate and potash.

It also sells farm products at retail outlets across North America, with a growing presence in South America and Australia.

Activist hedge fund Jana Partners LLC launched a campaign last year to split up Agrium’s wholesale and retail businesses, among other proposals, but its slate of board nominees was defeated at the company’s annual general meeting in April.