Kelvin Wickham: Ballance CEO on the company's Kapuni plant facing temporary shutdown

A temporary shutdown may be on the cards for fertiliser manufacturer Ballance as it struggles to secure affordable gas.

The farmer and grower co-op says it may close its Kapuni plant for up to four months as a contingency.

The company manufactures about a third of New Zealand’s urea fertiliser each year.

Chief executive Kelvin Wickham says they aren't able to secure gas on a long-term basis. 

"We are hunting for short-term gas - and if we can find some short-term gas, we'll use that. But if we can't, then we'll be forced into a short-term shutdown."

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.

Speaker 2 (00:16):
One of the biggest names in New Zealand agriculture, Balance
is going to close its factory for four months because
of the price of gas. Balance produces one third of
New Zealand's nitrogen fertilizer. Its current gas contract runs out
in September and it hasn't secured a new deal yet.
Calvin Wickham is the CEO at Balance.

Speaker 3 (00:32):
Hee, Calvin, Hi, how are you going?

Speaker 2 (00:35):
I'm well, thank you mate? Listen? Can you not get
a deal at all? Or can you just not get
a good deal now?

Speaker 3 (00:40):
We just couldn't get a deal at affordable price that
we could make work.

Speaker 2 (00:44):
How much more were they charging you than what is affordable?

Speaker 3 (00:48):
We're within charges because we actually never got to reach
an agreement. But the bigger issue probably now is there's
just no supply available to Gas is gone elsewhere, So.

Speaker 2 (00:57):
Even if you wanted to take a deal, you cannot
because there is none.

Speaker 3 (01:01):
There's no supply that we can secure for long term basis.
Today we are hunting for short term gas and if
we can find some short term gas we'll use that,
but if we can't, then we'll be forced into a
short term shut Now give.

Speaker 2 (01:14):
Me an idea of what we're talking about here in
terms of like what you were paying and what you
are looking at having to potentially pay now if you
do get gas.

Speaker 3 (01:22):
I suppose it's pretty commercially sense this. But you can
see the gas prices in the market have gone up
considerably for all players and our challenges. We can't pass
those on easily. We have to meet an international input
price pairing.

Speaker 2 (01:37):
Okay, what happens after four months?

Speaker 3 (01:40):
So say we go some short term gas, it takes
us for a period, we go for a short term
shut we need to have a long term supply agreement
in place at the end of that to give us
some certainty to start up basically, and what if you can't,
then we'll be forced to either make a decision. Are
we going to wait longer because we can see a
line of sight to some gas, or otherwise we forced
them to potentially permanent shut down or at least a

(02:03):
moth ball in the plant for a period. That was
not on the cards at the moment. But we have to.

Speaker 2 (02:07):
We have to how high are the chances of that happening.

Speaker 3 (02:11):
That's a difficult one to say. We think we can
get to see a line of sight to get through
the next year, and they make a decision, and the
market is so dynamic at the moment it's hard to
know what the supply all the demand side is going
to look like in twelve months from today.

Speaker 2 (02:24):
Okay, if you shut down in New Zealand, where do
you go?

Speaker 3 (02:27):
We have to import fully, so at the moment, we
produce one third of New Zealand's nights n you rear.
We can import the balance, but the New Zealand news
is all that resilience in local manufacturer, for our for
our agriculture industry.

Speaker 2 (02:40):
You can't replace gas with anything else.

Speaker 3 (02:42):
No, you need gas. It's the energy source and the
feedstocks sort the way your rear is produced today. Yeah,
long term you can do full of entrification, but that's
that's sort of a ten year play, a lot of
expense and your a whole lot more renewable energy at
the front end as well.

Speaker 2 (02:57):
Tell them we can't go on like this as an economy.
What do we do?

Speaker 3 (03:01):
Yeah, that's one big challenge for New Zealand is if
we want to support our local manufacturing, our export industry,
we're going to need reliable, affordable energy. So yeah, welcome
to how we can encourage solutions and get some systems
in place to build that resilience. Yeah.

Speaker 2 (03:16):
I mean, look, as you say, some things are commercially sensitive,
but what does what does four months mean in terms
of lost lost income for you guys, lost jobs.

Speaker 3 (03:25):
We're going to keep all the people on for that
four month period and that's the balance here, keeping the
staff and gaze being able to afford for that period
and then to look for a long term gas. Much
longer than that, it starts to become financially pretty straining
for us.

Speaker 2 (03:39):
All right, Kelvin, Thanks very much. Kelvin Wickham, CEO of
Balance Agri Nutrients.

Speaker 1 (03:43):
For more from News Talks b listen live on air
or online, and keep our shows with you wherever you
go with our podcast on iHeartRadio