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."

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Episode Transcript

Speaker 1 (00:00):
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 2 (00:16):
Hae, Calvin, Hi, how are you going?

Speaker 1 (00:18):
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 2 (00:23):
We just couldn't get a deal at affordable price that
we could make work.

Speaker 1 (00:27):
How much more were they charging you than what is affordable?

Speaker 2 (00:32):
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 1 (00:41):
Even if you wanted to take a deal, you cannot
because there is none.

Speaker 2 (00:45):
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 tam shut.

Speaker 1 (00:56):
Yeah, give me an idea of what we're talking about
here in terms of what you were paying and what
you are looking at having to potentially pay now if
you do get gas.

Speaker 2 (01:05):
I suppose it's pretty commercially sensed this. But you can
see the gas prices in the market have gone up
considerably for all players, and our challenge is we can't
pass those on easily. We have to meet an international
input price powering.

Speaker 1 (01:20):
Okay, what happens after four months?

Speaker 2 (01:24):
So say we go from short term gas to take
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.

Speaker 1 (01:33):
And what if you can't, then we'll be forced.

Speaker 2 (01:37):
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've forced them to potentially permanent
shut down or at least a moth pull and the
plant for a period. That was not on the cards
at the moment, but we have to.

Speaker 1 (01:50):
We have to, Yeah, how high are the chances of
that happening.

Speaker 2 (01:55):
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 1 (02:07):
Okay, if you shut down in New Zealand, where do
you go?

Speaker 2 (02:11):
We have to import fully, So at the moment we
produce one third of New Zealand's nights JUNI rear. We
can import the balance. But then New Zealand newses all
that resilience in local manufacturer for our for our agriculture industry.

Speaker 1 (02:23):
You can't replace gas with anything else.

Speaker 2 (02:26):
No, you need gas. It's the energy source and the
feedstot sort the way you 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
experience and near a whole lot more renewable energy at
the front end as well.

Speaker 1 (02:40):
Tell them we can't go on like this as an economy.
What do we do?

Speaker 2 (02:44):
Yeah, that's one big challenge for New Zealands is if
we want to support our local manufacturing and our export industry,
we're going to need reliable, affordable energy. So yeah, we're
welcome to how we can encourage solutions and get some
systems in place to build that resilience.

Speaker 1 (02:59):
Yeah, 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 2 (03:08):
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 1 (03:22):
All right, Kelvin, thanks very much. Kelvin Wickham, CEO of
Balance Agri Nutrients. For more from Heather Duplessy, Allen Drive,
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