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Omnia announces review of unprofitable phosphoric acid plant

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Published: Friday, 05 February 2010 04:00

OMNIA ANNOUNCES REVIEW OF UNPROFITABLE PHOSPHORIC ACID PLANT

Omnia Fertilizer, a division of the Omnia Group, today announced that it will start a process to evaluate the possible mothballing of its phosphoric acid plant located outside of Rustenburg. The aim is to complete the evaluation by 30 April 2010 which will include engagement with key stakeholders and communities.

The plant, through its 36 year history, has produced phosphate based products, mainly phosphoric acid, has been a safe disposal facility for waste sulphuric acid emanating from a number of platinum mines in the vicinity. Omnia Fertilizer is committed to entering into discussions with its long standing sulphuric acid suppliers to evaluate possible alternative disposal options.

Omnia Fertilizer is committed to engagement with unions, employees and other stakeholders during this evaluation process. Omnia Fertilizer estimates that approximately 160 people may be affected.

Omnia Group MD, Rod Humphris, said, “over the past 5 years, two unprofitable phosphoric acid plants in South Africa have had to be closed by various companies. We want to ensure that our evaluation process is absolutely thorough and comprehensive before we make any decisions. Should it be necessary to mothball the plant, we want to do it effectively, and with minimal impact on stakeholders”.

“Omnia Fertilizer has in fact subsidised the plant for several years in an attempt to keep it operating due to the fact that there is an abundance of raw materials in South Africa. The plant is currently in need of reinvestment and a combination of factors such as the current lack of sulphuric acid, escalating prices of raw materials and rail transport has impacted the viability of the plant.”

“Omnia Fertilizer has the ability to source or alternatively produce any shortfall in phosphate utilising alternative phosphate technology. If the plant had to be mothballed, there would be no negative financial impact on the Omnia Group”, added Humphris.

The Group will keep shareholders informed once the evaluation is complete.