Incitec Pivot Limited has decided to retain its fertiliser business after concluding a strategic review.
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IPL commenced the strategic review in September to look at three possible outcomes - sale, demerger, or retain and invest.
On Wednesday IPL told the ASX it had ceased discussion with potential buyers under the sale option, following a formal process to explore market interest.
"A careful assessment of a potential demerger was also undertaken. IPL has concluded, given the extraordinary market uncertainty and travel restrictions caused by the COVID-19 pandemic, that the right outcome for its shareholders is for the company to retain Incitec Pivot Fertilisers and focus on its core operations, as an industry leader in the supply of fertilisers and services to Australian agriculture," IPL said.
The company said COVID-19 has not had a significant impact on its business operations but Jeanne Johns, IPL Managing Director and CEO, said the impact of the pandemic on market conditions has created extraordinary uncertainty.
"The IPL Board has concluded that it is in our shareholders' best interests that we continue to capture the synergies in global nitrogen manufacturing and run the industry leading businesses of Incitec Pivot Fertilisers and Dyno Nobel to deliver quality products and services for our customers in the agricultural and resources sectors," Ms Johns said.
"During this period of disruption, we have worked closely with our customers, farmers, and Federal and State governments to ensure the fertiliser supply chain remains robust, to provide essential nutrients for farmers to provide food for Australians.
"Recent widespread rainfall across eastern Australia has created significant demand by farmers for fertiliser. The business is also well-placed to benefit from any future improvement in global fertiliser prices."
IPL owns the Phosphate Hill in Cloncurry Shire and the fertiliser plant at Mount Isa Mines.
Cloncurry Mayor Greg Campbell said IPL not selling the fertiliser business was good news for the region.
"I think a business has good bones, but the fact it was seeking to split the business created uncertainty," Cr Campbell said.
"IPL taking that option off the table has a twofold benefit: it takes away the uncertainty and is a vote of confidence in IPL as a global fertiliser business."
Cr Campbell said the North West mining industry was intricately linked and Phosphate Hill, the sulphuric acid plant, Mount Isa Mines and Ernest Henry Mining all depended on each other.
"Incitec Pivot is a major ratepayer and it hope it continue long into the future," he said.
Mount Isa mayor Danielle Slade agreed.
Incitec Pivot Fertilisers is a crucial aspect of the mining industry in Mount Isa and to hear that Incitec Pivot will continue its operations, both locally and across Australia, is terrific news," Cr Slade said.
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Derek Barry
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
Editor of the North West Star Mount Isa since January 2016. Prior to that, an editor at several regional southern Queensland newspapers. Passionate about telling local stories. Comes with a strange accent to due an Irish accident of birth.
