Australian chemicals and fertilizer producer Incitec Pivot (IPL) said the sale of its fertilizer business, first proposed last year, is now in "advanced negotiations".
The potential sale of Incitec Pivot Fertilizers (IPF) to Indonesian producer Pupuk Kalimantan Timur (PKT) is subject to agreeing and executing final binding transaction documents, although there is no certainty that any deal will be reached or that any sale will occur, IPL said its financial report for its October 2023-March 2024 half year on 16 May.
While IPL considering the sale of its fertilizer unit first emerged in July 2023, it was unclear who the interested buyers were. PKT is a subsidiary of state-owned fertilizer group Pupuk Indonesia Holdings and has production capacity of 2.74mn t/yr of ammonia, 3.43mn t/yr of urea and 300,000 t/yr of NPKs. Should the deal eventuate, the Indonesian producer intends to continue supplying fertilizers to Australia, support the retention of IPF's workforce and grow IPF's business in Australia, PKT confirmed to IPL.
IPL reported a 77pc year-on-year fall in its first-half earnings before interest and tax (ebit) to A$10mn ($6.7mn). This was mainly attributed to the closure of Gibson Island that was producing ammonia, urea, granular ammonium sulphate and diesel exhaust fluid AdBlue, as well as reduced manufacturing performance at Phosphate Hill in Queensland with a capacity of 1mn t/yr of DAP, MAP and specialty products. But its distribution business was supported by firm demand and a well-managed fertilizer supply chain with its first-half ebit more than doubling from a year earlier to A$27mn, which partially offset a weaker manufacturing performance.
