One of Norway’s largest companies, fertilizer producer Yara International, could finally report some good news on Wednesday after being caught up in a corruption scandal and, most recently, top executive drama. Yara announced that it was preparing to greatly expand production capacity at one of its major plants in Norway and could also report strong quarterly earnings.
Yara said it would invest NOK 2.25 billion (USD 350 million) in its large production facility at Herøya, a sprawling industrial complex outside Porsgrunn, southwest of Oslo. Yara’s facility in Porgrunn is already one of the largest fertilizer plants in the world, and now it will expand its annual production of calcium nitrate by 200,000 tons and its production of fertilizer by 50,000 tons.
Yara’s board approved construction to allow the expanded capacity, which is expected to be completed by 2017. The increase in production will also allow Yara to optimize production at its plants in Glomfjord in Northern Norway and at Uusikaupunki in Finland.
Torgeir Kvidal, who just took over as president and chief executive at Yara after his predecessor was fired earlier this month, claimed the investment in Porsgrunn “confirms Yara’s ambition to create value through brownfield expansions and debottlenecking projects.” He said it also will strengthen Yara’s position as the global leader in its field and its commitment “to increase agricultural productivity.”
Moving on alone
The project was announced just days after merger talks with Yara’s main rival, CF Industries of the US, fell through late last week. The two companies were viewed as “a good match” and Yara executives and analysts were disappointed when CF Industries suddenly pulled out of the pending merger, leaving each company to move on alone.
The merger talks had, however, already cost Yara its hand-picked top boss meant to succeed 62-year-old Jørgen Ole Haslestad as CEO. Svein Richard Brandtzæg, currently the CEO of Norsk Hydro, had accepted the top job Yara and was due to take over in February when Haslestad would move into retirement phase. Then the merger talks came up, though, and Brandtzæg wasn’t involved in them, leaving him with uncertainty over what his position in a merged company would be and ultimately prompting him to stay at Hydro.
Haslestad ‘had double agenda’
Haslestad, who was heavily involved in the merger talks, ended up being abruptly fired by Yara’s board and told to leave immediately. Newspaper Dagens Næringsliv (DN) reported over the weekend that Yara Chairman Leif Teksum and the board suspected Haslestad had a “double agenda” in his negotiations with CF Industries and was aiming to become either chairman or chief executive of the merged firm himself.
Yara’s employee representative on the board also came out against Haslestad, claiming he had personal goals in the merger for which he had no backing in the company. Haslestad, who will also need to testify at the corruption trials of Yara’s former top executives early next year, declined comment.
Haslestad’s firing put Kvidal in charge. Kvidal was also disappointed that CF Industries pulled out of the merger 10 days after Haslestad was fired, but on Wednesday he could soften the blows Yara has been taking with the investment in Porsgrunn plus a strong earnings report for the third quarter (external link). Profit growth at Yara was augmented by record deliveries, with Kvidal saying they reflected both “organic growth” and an acquisition in Brazil. Oslo-based Yara has nearly 10,000 employees working in around 50 countries around the world.