Australia’s IPL to Acquire Indonesian Fertilizer Plant

Australia’s Incitec Pivot Limited’s (IPL) coal gasification plan, the construction of a refinery to turn coal into gas, is seen as lucrative. And IPL’s plans have led to speculation that the company intends to acquire the Aceh fertilizer plant.

Incitec Pivot is a leading global explosives company. It has operations in Australia, Asia and the Americas. We estimate its share of the global commercial explosives market to be about 15%. Explosives contribute 80% of EBITDA.

Inciec Pivot is also a major Australian fertilizer producer and distributor. It is also the only manufacturer of ammonium phosphate and urea in Australia. Ammonium phosphate is sold in the domestic market and exported.

Indonesian Industry Minister Fahmy Idris noted that IPL may acquire the Aceh ASEAN Fertilizer Plant. IPL and Pusli Fertilizer Plant and Transformation Industries Ltd (Rekin) have joined forces to explore building a plant to supply three local fertilizer plants. namely the Iskandar Muda I and II plants, and the gas required for the Aceh ASEAN Fertilizer Plant (AAF).

Fahmy welcomed the coal gasification plan. As it will enable the Aceh fertilizer plant to increase its production to its maximum capacity. “IPL is a fertilizer industry, but in addition to producing fertilizer, it also imports and exports fertilizer, and that is its business base.”

He noted that the three fertilizer plants in Aceh lack gas interest where there are only two drilled wells. One of the wells has not yet produced gas, and the well in Area A has produced gas, but it is expensive.

He said that the demand for fertilizer in the agricultural sector amounts to 700,000 to 800,000 tons. Many plants cannot operate as well as they should because of the lack of gas. Iskandar Plant No. 1, for example, has to bring in gas from Tonga. There is no gas source in the vicinity.

“This is the market IPL is looking at. They are proposing to build a gas plant with raw material from coal, and less than 5,000 calories of coal is enough to produce gas. Then, it will be used to supply three local fertilizer plants.”

He said that once the gas supply is sufficient, the Aceh plant will produce 1.8 million tons of fertilizer. And the domestic demand is only 800,000 tons. Therefore, there is still a balance of 1 million tons of urea fertilizer in the 3 plants.

He said the party will match the domestic demand and export the remaining abroad. Such as the current export permit to Pursley and Donga fertilizer plant. As for the IPL recommendation, it will be handled by the Ministry of State for State Enterprises later.

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