Latest / Best of Business / Kelvin Wickham: Ballance CEO on the company's Kapuni plant facing temporary shutdown

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Kelvin Wickham: Ballance CEO on the company's Kapuni plant facing temporary shutdown · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: One of the biggest names in New Zealand agriculture, Balance
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  Speaker 2: is going to close its factory for four months because
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  Speaker 2: of the price of gas. Balance produces one third of
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  Speaker 2: New Zealand's nitrogen fertilizer. Its current gas contract runs out
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  Speaker 2: in September and it hasn't secured a new deal yet.
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  Speaker 2: Calvin Wickham is the CEO at Balance.
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  Speaker 3: Hee, Calvin, Hi, how are you going?
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  Speaker 2: I'm well, thank you mate? Listen? Can you not get
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  Speaker 2: a deal at all? Or can you just not get
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  Speaker 2: a good deal now?
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  Speaker 3: We just couldn't get a deal at affordable price that
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  Speaker 3: we could make work.
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  Speaker 2: How much more were they charging you than what is affordable?
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  Speaker 3: We're within charges because we actually never got to reach
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  Speaker 3: an agreement. But the bigger issue probably now is there's
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  Speaker 3: just no supply available to Gas is gone elsewhere, So.
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  Speaker 2: Even if you wanted to take a deal, you cannot
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  Speaker 2: because there is none.
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  Speaker 3: There's no supply that we can secure for long term basis.
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  Speaker 3: Today we are hunting for short term gas and if
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  Speaker 3: we can find some short term gas we'll use that,
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  Speaker 3: but if we can't, then we'll be forced into a
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  Speaker 3: short term shut Now give.
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  Speaker 2: Me an idea of what we're talking about here in
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  Speaker 2: terms of like what you were paying and what you
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  Speaker 2: are looking at having to potentially pay now if you
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  Speaker 2: do get gas.
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  Speaker 3: I suppose it's pretty commercially sense this. But you can
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  Speaker 3: see the gas prices in the market have gone up
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  Speaker 3: considerably for all players and our challenges. We can't pass
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  Speaker 3: those on easily. We have to meet an international input
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  Speaker 3: price pairing.
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  Speaker 2: Okay, what happens after four months?
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  Speaker 3: So say we go some short term gas, it takes
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  Speaker 3: us for a period, we go for a short term
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  Speaker 3: shut we need to have a long term supply agreement
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  Speaker 3: in place at the end of that to give us
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  Speaker 3: some certainty to start up basically, and what if you can't,
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  Speaker 3: then we'll be forced to either make a decision. Are
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  Speaker 3: we going to wait longer because we can see a
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  Speaker 3: line of sight to some gas, or otherwise we forced
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  Speaker 3: them to potentially permanent shut down or at least a
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  Speaker 3: moth ball in the plant for a period. That was
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  Speaker 3: not on the cards at the moment. But we have to.
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  Speaker 2: We have to how high are the chances of that happening.
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  Speaker 3: That's a difficult one to say. We think we can
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  Speaker 3: get to see a line of sight to get through
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  Speaker 3: the next year, and they make a decision, and the
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  Speaker 3: market is so dynamic at the moment it's hard to
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  Speaker 3: know what the supply all the demand side is going
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  Speaker 3: to look like in twelve months from today.
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  Speaker 2: Okay, if you shut down in New Zealand, where do
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  Speaker 2: you go?
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  Speaker 3: We have to import fully, so at the moment, we
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  Speaker 3: produce one third of New Zealand's nights n you rear.
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  Speaker 3: We can import the balance, but the New Zealand news
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  Speaker 3: is all that resilience in local manufacturer, for our for
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  Speaker 3: our agriculture industry.
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  Speaker 2: You can't replace gas with anything else.
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  Speaker 3: No, you need gas. It's the energy source and the
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  Speaker 3: feedstocks sort the way your rear is produced today. Yeah,
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  Speaker 3: long term you can do full of entrification, but that's
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  Speaker 3: that's sort of a ten year play, a lot of
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  Speaker 3: expense and your a whole lot more renewable energy at
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  Speaker 3: the front end as well.
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  Speaker 2: Tell them we can't go on like this as an economy.
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  Speaker 2: What do we do?
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  Speaker 3: Yeah, that's one big challenge for New Zealand is if
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  Speaker 3: we want to support our local manufacturing, our export industry,
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  Speaker 3: we're going to need reliable, affordable energy. So yeah, welcome
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  Speaker 3: to how we can encourage solutions and get some systems
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  Speaker 3: in place to build that resilience. Yeah.
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  Speaker 2: I mean, look, as you say, some things are commercially sensitive,
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  Speaker 2: but what does what does four months mean in terms
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  Speaker 2: of lost lost income for you guys, lost jobs.
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  Speaker 3: We're going to keep all the people on for that
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  Speaker 3: four month period and that's the balance here, keeping the
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  Speaker 3: staff and gaze being able to afford for that period
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  Speaker 3: and then to look for a long term gas. Much
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  Speaker 3: longer than that, it starts to become financially pretty straining
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  Speaker 3: for us.
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  Speaker 2: All right, Kelvin, Thanks very much. Kelvin Wickham, CEO of
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  Speaker 2: Balance Agri Nutrients.
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