Agrium fertilizer plant to shut down

Kenai company will lay off 100 employees

Posted: Thursday, September 27, 2007

NEW YORK - Fertilizer maker Agrium Inc. said it will close its Kenai nitrogen fertilizer operations, laying off 100 employees.

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The company cited a shortage of natural gas supply. Agrium said it offered "competitive prices and incentives" to encourage development of natural gas supplies in Alaska's Cook Inlet, but was unable to do so. It purchased 53 billion cubic feet of natural gas in 2001, but this year could only purchase 10 billion cubic feet.

Agrium estimates the facility will account for $6 million, or less than one percent, of its 2007 earnings before interest, taxes, depreciation and amortization. The plant produced 325,000 metric tons of urea and ammonia this year during its five months of operations.

Agrium expects incremental costs of the closure to be less than 5 cents per share this year. It will not face impairment charges since it wrote down the book value of Kenai operations in 2003 and accrued shutdown costs then, Agrium said.

Agrium is performing feasibility studies of using coal instead of natural gas at Kenai, and a decision is expected later this year. The earliest the facility could be operational using coal gasification is 2012.

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