The FEED study cost estimate for Illinois-based fertilizer manufacturer and distributor CF Industries’ (NYSE: CF) proposed nitrogen complex in Peru was higher than expected due to a number of factors, including the weak dollar, company chairman and CEO, Stephen Wilson, said during a webcast on Q4 and full year 2009 results.
“We’re working on getting the capital cost number into a range that we’re comfortable with and I’d just assume not go beyond that,” Wilson added. The project cost had been previously estimated in the range of US$1.5bn-2bn.
The company is considering a number of options that may improve the expected returns on the project.
“We certainly would not eliminate any course of action in our effort to make this economic, including sitting down with the government and seeing if we have a mutual problem, a mutual opportunity, to work on it together to try solve it,” added the CEO.
DEVELOPMENT COSTS
Development costs for the project totaled US$10mn in Q4 and US$36mn for the full year, senior VP and CFO Anthony Nocchiero said during the webcast.
The major costs last year related to the FEED study, which was completed near year-end.
“The costs we are incurring right now relate primarily to legal, consulting and internal costs, which at the moment range from US$3mn-$5mn,” Nocchiero said.
“If we decide to initiate the project later in the year, that could change,” he explained.
The project involves the construction of two world-scale plants to produce 2,100t/d of ammonia and 3,300t/d of granulated urea, and are scheduled to start operations in October 2013, although the final date depends on when the project breaks ground. Construction is expected to take 3-4 years.
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