Jun 26, 2006
The plant in Le Havre transforms natural gas into ammonia and urea, which are the main components in the production of nitrogen fertilizers and chemicals. The plant has an annual production capacity of 400,000 tonnes of ammonia and 350,000 tonnes of urea.
The decision to stop production temporarily is related to the current situation in the European gas market, where the impact of high oil prices and thus high gas prices, has weakened the competitive position of smaller European plants like Le Havre. Natural gas costs represent up to 80 percent of the total production costs.
Producers of energy intensive products are adversely affected by high gas prices in Europe. The existing contract structure in Europe, with natural gas prices linked to oil product prices, has recently resulted in gas prices significantly above the North American level.
"For Yara it is important to increase awareness of the consequences of higher energy prices for the European industrial sector in general. The current situation represents a challenge for the entire European energy intensive industrial sector," says President and CEO of Yara International ASA, Thorleif Enger.
A continuous and reliable supply of competitively priced energy is paramount for the long-term viability of the European energy intensive industrial sector. The long-term situation could be positively influenced by a greater supply of gas into Europe together with a more liberalized and competitive gas market.
The Le Havre plant will be mothballed and conserved for a possible start-up when market conditions improve. During the months of July and August, Le Havre employees will attend to mothballing, logistics, plant safety and other tasks within the group. Management is examining different alternatives for the future. In the meantime, Yara will continue to fulfil customer contracts from built-up stock and alternative product sourcing.
Torgeir Kvidal, Investor Relations
Telephone (+47) 24 15 72 95
Cellular (+47) 91 339 832
Hamed Brodersen, Media Relations
Cellular (+47) 40 468 110
Yara International ASA is a leading chemical company that converts energy and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilizers and agronomic solutions, we help provide food for a growing world population. Our industrial product portfolio includes environmental protection agents that safeguard air and water purity and preserve food quality. Yara's global workforce of 6800 employees represents great diversity and talent enabling Yara to remain a leading performer in its industry.