Cloud over 170 jobs in Brisbane as Incitec Pivot announces Gibson Island manufacturing plant to close in 2022

A sizeable chunk of the workforce at Incitec Pivot’s Brisbane site has been plunged into uncertainty after the $6bn fertiliser giant said it was shutting its Gibson Island manufacturing operations next year.

Monday’s shock announcement comes less than a month after a high-profile tour of the Gibson Island site by Premier Annastacia Palaszczuk and mining magnate turned green entrepreneur Andrew “Twiggy” Forrest, whose Fortescue Future Industries (FFI) is exploring whether Incitec’s operations can both run on and produce hydrogen.

That study will continue to progress and could be key to whether the Gibson Island manufacturing operations can be repurposed.

Incitec on Monday announced the closure after failing to secure a viable long-term gas supply deal, with 170 employees expected to be “impacted”.

The ASX-listed ammonia and urea producer has been contacted to confirm what “impacted” means, including whether these will be redundancies, redeployments or something else.

Incitec has, however, already factored in an $83.5m cost for redundancies and plant decommissioning for the 50-year-old site.

“It is disappointing for our people and Australian manufacturing that we could not reach a suitable commercial gas supply agreement,” managing director and chief executive Jeanne Johns said in a note to shareholders.

The Australian Petroleum Production and Exploration Association said the closure of Incitec Pivot’s Gibson Island manufacturing operations was a “matter entirely for them and their shareholders”, particularly when the announcement comes at a time when they are managing more than $100m in announced impairments on their plants since February.

“APPEA would also like to note that in nine consecutive reports from the Australian Competition and Consumer Commission it has been made very clear that there is no shortfall in gas for the domestic market,” chief executive Andrew McConville said in a statement.

“Indeed, there have been more than 111 new gas supply and commercial agreements signed in the past nine years, including 15 (nine in Queensland) in 2021 that include Australia Pacific LNG, Senex Energy, Blue Energy, Westside and others.”

Incitec insists that its commitment to Brisbane remains “strong” and said it would continue to invest in its import distribution centre at Gibson Island and look for opportunities to repurpose the site for the future.

Gibson Island makes up one half of the company’s Brisbane operations, the other being its nearby Pinkenba site.

There are 400 employees across both sites.

Shares in Incitec Pivot fell more than 4 per cent at Monday’s ASX open and were last trading 3.2 per cent lower at $3.05.

It will continue to operate other major Queensland manufacturing facilities including a fertiliser plant at Phosphate Hill near Mount Isa, an explosive manufacturing plant at Moranbah near Mackay.

Despite the decision to cease manufacturing with natural gas at the end of 2022, Incitec said the feasibility study with FFI into industrial-scale production of green ammonia would be progressed to potentially repurpose the facility.

Nonetheless, it is a blow to a local agricultural sector that is already dealing with high fertiliser prices, while Monday’s development also contrasts starkly to the confidence expressed by politicians visiting the plant in October.

In addressing the hydrogen study partnership between Incitec and FFI last month, Treasurer and Trade and Investment Minister Cameron Dick spoke of the state’s ability to strike major deals.

“Today it’s Incitec Pivot and FFI in Brisbane – last month it was Boeing and the Wagner Corporation at Wellcamp,” the Treasurer said.

“The common thread here is the confidence that businesses have in Queensland to get the deal done.

Energy, Renewables and Hydrogen Minister Mick de Brenni also reminded Queenslanders of the work the government had done to secure Incitec Pivot’s previous gas deal in 2019.

“Three years ago we stepped in to support 400 ongoing jobs at this facility by securing local gas supply and now this partnership to work towards making ammonia from renewable hydrogen positions these industrial manufacturing jobs for the long term,” he said.

Incitec recently completed an $80n capital upgrade of the Gibson Island plant in early 2020 on the back of Queensland government facilitation.

Meanwhile, on Monday the state government also announced a $300m high purity alumina industrial plant for Gladstone was a step closer with Alpha HPA purchasing a 9.2ha site in the Queensland government’s state development area.

Ms Palaszczuk said supporting “more jobs in more industries” was an important part of Queensland’s plan for economic recovery.