Outback fertiliser plant’s future shored up by $160m government loan

An outback phosphate company has received a $160 million loan as the federal and Queensland governments move to shore up Australia's fertiliser supply.

The combined loan to Brisbane-based energy and resources company Ryowa, led Nationals leader Matt Canavan's brother, would ensure continued operations at Phosphate Hill and Mount Isa's acid plant, while staying competitive with recent sulphur price hikes.

Ryowa, a subsidiary of resources company Mayfair Corporations group, purchased the phosphate operations from Dyno Nobel for a final price of $150 million this week.

Federal Minister for Industry and Innovation Tim Ayres said the loan was about reducing Australia's reliance on international markets.

"Having sovereign ammonia fertiliser capability is absolutely crucial for our farmers, for our agricultural sector more broadly, for Australian food security," he said.

"What it does is provide capital … the war in the Strait of Hormuz has meant that sulphur prices have climbed steeply just at the very moment that this facility has been going through its sale process.

"This is the moment where supply chain security, our future industrial capability, really matters for our future."

Australia's agricultural base relies on vast quantities of urea and phosphate-based fertilisers.

About 60 per cent of its urea imported directly from the Middle East and most phosphate fertilisers purchased from international markets.

When the Strait of Hormuz closed this year, farmers across the country pleaded for help as urea prices doubled and sulphur futures surged.

Phosphate Hill, 140 kilometres south-east of Mount Isa, employs more than 500 workers, including staff at its acid plant next to Glencore's Mount Isa copper smelter.

Operations were essential to the continuation of the copper smelter, which relied on the nearby acid plant to process the sulphur it produced.

The smelter employs more than 500 people, including Mount Isa residents and fly-in, fly-out workers.

Queensland Minister for Mines Dale Last said solidifying the future of operations at Phosphate Hill provided more certainty for north-west Queensland's industry.

"[Phosphate Hill] is the only Australian-owned fertiliser-producing facility in the country and, as a consequence, that fertiliser they're producing is pivotal," he said.

"We thought there's some real value in keeping that [Phosphate Hill] going … and [it] follows on from the copper smelter bailout last year."

'Internationally uncompetitive'

Ryowa chief executive John Canavan said the Phosphate Hill facility would not be viable without government support.

"[This loan] allows us to undertake significant capital expenditure," he said.

"Phosphate Hill is a complex process that requires, approximately every five years, a capital works program to be undertaken.

"This loan allows that program to be undertaken and the site's very excited to get stuck into the planning and get that work done."

Mr Canavan said Phosphate Hill was uncompetitive on a global scale because of soaring production costs.

"Given the war in Iran, we are faced with high input costs, which unfortunately has not made us internationally competitive at this point in the cycle," he said.

"We believe the sulphur increase is short-term. It's very temporary in nature, given the conflict in the Middle East."

Mr Canavan said intense demand for phosphate-based fertiliser would continue to grow as Australia's population rose.

"We think fertiliser is one of the key commodities going forward … and Phosphate Hill has a huge role to play in that," he said.