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Ammonia Maker Cites Lofty Gas Prices as Reason for Mothballing LA Plant

Terra Industries Inc. last Monday said it has mothballed its Donaldsonville, LA, ammonia manufacturing plant indefinitely due to the lofty prices for natural gas, which is used as a feedstock in the production process. The facility, which had an annual production capacity of 500,000 tons, has been out of service since last December.

The mothballing of the ammonia production plant completes the transition from an integrated manufacturing facility to a plant used solely as a storage and distribution terminal, the Sioux City, IA-based company said.

The major use of ammonia is fertilizer in the farming industry. The Donaldsonville facility is the latest casualty in a string of chemical plants that have been forced to close over the past couple of years due to the high price of natural gas.

"High, volatile natural gas prices make it uneconomical to keep the Donaldsonville ammonia plant on standby," said Terra CEO Michael L. Bennett. "We...have secured a competitive ammonia supply contract to replace the manufactured ammonia and believe the Donaldsonville facility's storage and distribution capabilities will enable Terra to seamlessly supply our customers, as well as provide future strategic opportunities."

Terra Industries has entered into a three-year agreement to buy ammonia for delivery to Donaldsonville with Yara, a major international ammonia manufacturer. The agreement calls for the purchased quantities to be about the same as the mothballed plant's manufacturing capacity, the company said.

Terra Industries, which had $1.9 billion in revenues in 2004, is considered a top international producer of nitrogen products. In addition to Louisiana, the company also has production facilities in Texas, Oklahoma, Iowa, Canada and the United Kingdom.

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