A NEW urea development in South Australia is perfectly positioned to help meet Australian farmers' growing demand for locally sourced fertiliser according to its chief executive.
Leigh Creek Energy's Phil Staveley said the project had been mapped out well before this year's rapid rise in global fertiliser prices and Australian difficulties with getting product into the country but added both factors further strengthened the business case.
"We're anticipating we're going to be the cheapest source of urea for many parts of Australia, there will be virtually no transport delays so we definitely think Australian farmers will welcome the project," Mr Staveley said.
The Leigh Creek facility will tap into local gas reserves, with initial plans to scale up to a million tonnes of production per annum and the potential to add a second facility to take total production to 2m tonnes a year.
Australian urea consumption is generally around the 1.9 million tonne per annum mark.
Along with this, Leigh Creek has signed a heads of agreement deal with South Korean business Daelim for the offtake of 500,000 tonnes of urea fertiliser a year.
"We've got solid demand for product both locally and internationally," Mr Staveley said.
He said logistically the plant was self-sufficient, with energy and water needs provided onsite and a rail line direct into Port Augusta.
"It's all going to allow us to be very competitive," he said.
The project is set to start manufacturing by around 2025.
In terms of capabilities, Mr Staveley said Leigh Creek Energy would be able to produce the high purity urea required to make diesel exhaust fluid, better known in Australia under the trade name Adblue and currently in very short supply.
"It is actually easier to make high purity urea than fertiliser, as you take the pure product and then dilute it to be granulised to make fertiliser," Mr Staveley said.
"It would not take a lot to be able to convert the facility to be able to do this, but we would need a clear signal from the market they were going to support us on an ongoing basis, we can't just set this up and have everyone flock back to their original sources when it comes back online."
Taking this into account he said the business would continue to focus on fertiliser, although he said it would consider alternate products should the market want it.
Mr Staveley was confident the company would be able to compete with other origins in the long term when the current heat drops out of the fertiliser market.
"You put yourself in the shoes of those big Gulf State exporters, are they going to look to push into markets where there is strong local production, such as will be the case here, or will they look to go to places that rely on imports?"
As an energy-dense business, working out carbon management strategies has been important in the development of the Leigh Creek urea business.
Mr Staveley said the project was on track to be carbon neutral next year, eight years earlier than previously planned.
He also said the business had been accepted as a signatory to the United Nations Global Compact (UNGC) in 2020 and more recently joined the Climate Market Institute.
"We're committed to providing transparent, reliable, verifiable, and more importantly auditable reporting on climate related financial matters," he said.
"This is all part of a push to lead the industry on ESG (environmental, social and governance) principles and will provide the business with a big strategic advantage," he said.
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.