Fertile solution to market in process of rapid change

Incitec Pivot would still operate distribution centres in the region and these would need to be supplied.
“If, in the long-term, there was a decision to supplement superphosphate supply – that is assuming the market comes back – with imports either from other plants in Australia or overseas, that would change the logistics in Geelong,” the spokesman said.
“We have exported from Geelong in the past but the superphosphate market overseas has died as well.”
The fertiliser and explosives company said last week that the Geelong SSP and Cockle Creek plants would close due to a drought-induced collapse of the eastern Australian market. The problem was made worse by plummeting prices in the dairy market.
“We are committed to maintaining supplies of our quality SSP products in the long-term,” the company’s Australian fertilisers general manager, Gary Brinkworth, said.
“SSP has been part of our offering for close to 90 years and will remain one of the key products in our comprehensive range of Australian-manufactured fertilisers.”
The firm would continue to supply the Geelong area with SSP from its distribution centres at North Shore, Oyster Cove and Lara to meet farmers’ requirements. It would also maintain production at its SSP plant at Portland to meet seasonal demand from the pasture market.
Incitec Pivot had about 300,000 tonnes of SSP in storage for the pasture market, which covers dairy, sheep and beef farming.
“These are very testing times for farmers and it is clear many have decided to defer fertiliser purchases until there is an improvement in commodity markets and rainfall patterns,” Mr Brinkworth said.
The company’s SSP sales year to date were 55%-60% down on the five-year average and the company had lost $64.5m in asset write-downs and one-off costs as a result.
“Our current stocks, together with the continued operation of our Portland facility, will ensure we can meet market demand,” acting chief executive James Fazzino told corporatefile.com.au.
Incitec Pivot was also in the process of digesting last year’s Dyno Nobel purchase.
The world recession had caused a halt to construction of its $300m Moranbah ammonium nitrate facility in Queensland.
The company had been rolling out its “Velocity” business efficiency program aimed at overhead reduction, plant efficiency, cost to serve, global supply chain and asset optimisation.
Though this had been aimed at its North American business, Australia has been affected as well.
“To date we have delivered US$11.5m in benefits, with key initiatives being improving transport utilisation and replacing third party carriers for specific routes in the USA; utilisation of rail versus truck movement (optimising using low-cost models like barges versus truck movements); and negotiation of freight contracts in Australia and selected routes in the USA,” Mr Fazzino said.
“To date, 32 of the 46 retail operating sites have been optimised resulting in a reduction of 64 positions.
“A total of 64 bulk trucks plus 137 other vehicles have been identified as excess to requirement.
“Global supply chain optimisation is focused on the sales and operations process (S&OP) across Dyno Nobel. To date US$2m has been delivered.
“The global planning team has been formed and the S&OP process has been initiated across Dyno Nobel.
“A success to date has been the movement of 26,000 tonnes of ammonium nitrate from the USA to Australia to service local demand which would otherwise have been sourced from third parties.”