Gas woes see IPL to pull the pin at Gibson Island

Incitec Pivot says it will cease manufacturing operations at Gibson Island at the end of 2022, in a move expected to impact up to 170 employees. It comes just weeks after IPL and Fortescue Future Industries announced a feasibility study into converting the ammonia production facility to run on green, renewable hydrogen rather than natural gas. The company said that despite extensive efforts it had been unable to secure an economically viable long-term gas supply to its Gibson Island, Brisbane, fertiliser plant beyond its current contract. However the feasibility study into industrial-scale production of green ammonia at the site will be progressed to potentially re-purpose the facility. IPL managing director and chief executive officer Jeanne Johns said it was disappointing for IPL's people and Australian manufacturing that he company could not reach a suitable commercial gas supply agreement to continue the operation of the Gibson Island facility from processing natural gas. "However we look to create new opportunities aligned to the company’s forward strategy,” she said. "IPL’s commitment to the Brisbane area remains strong as we continue to invest in our import distribution centre at Gibson Island and look for opportunities to re-purpose the site for the future," she said. "We will continue to support our agricultural and industrial customers and suppliers who have supported our manufacturing operations at Gibson Island through to the end of 2022, as we transition our business." IPL said estimated one-off pre-tax financial impact of the closure of the manufacturing operations would be:• Cash costs of closure: circa $83.5 million, including employee redundancies and costs associated with plant decommissioning.• Non-cash write down of assets: circa $102.5 million, representing the cost of the last turnaround and other maintenance, spares and site infrastructure expenditure.• Proceeds from land sales: circa $0m – $45m - noting that proceeds from land sales are dependent on final decisions related to future use opportunities, including the potential use of the site for a green ammonia project. IPL recently signed a memorandum of understanding with Keppel Infrastructure Holdings and Temasek to investigate the feasibility of producing green ammonia in Queensland and New South Wales for export. The green ammonia may be used as a direct feedstock in green energy generation, or as a hydrogen carrier to provide green hydrogen solutions. Ms Johns said IPL's Kooragang Island site in Newcastle and potential greenfield site in Gladstone had the advantage of being nominated by the Australian Government as locations for hydrogen hub development.

Gas woes see IPL to pull the pin at Gibson Island

Industry Queensland

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