The decision to withdraw comes after lead partner, Norwegian explosives giant Dyno Nobel, told Plentex and partner Thiess it was not prepared to fund their share of any stage two extra costs.
Plentex – which changed its name from Plenty River Corp last month – said the decision left the company with no option but to quit the project.
Dyno Nobel will take full control of the project, agreeing to pay Plentex around $200,000 for its share of the proposed 800,000 tonnes a year development, and Thiess $22,000 for its stake.
Dyno Nobel, acquired last year for $2.2 billion by Macquarie Bank and Orica, will proceed with a feasibility study into the potential development of an ammonium nitrate plant.
If the project secures financial close within two years of a project finalisation agreement Plentex stands to receive up to $2.5 million in success fees. Thiess could make just over $200,000 in success fees.
Plentex chairman Peter Streader said in a statement that several large resource projects have been put on hold due to rapidly rising equipment, construction and other costs, and Plentex’s Burrup Peninsula aspirations had been a “casualty of factors over which it had no control”.
“The situation is exacerbated by the joint venturer’s inability to secure new gas supply arrangements at the required annual volume and an internationally competitive price,” Streader said.
“There appears little likelihood that there will be any positive change in these adverse conditions in the foreseeable future.”
Compounding the problems, the current project site allocation has expired and may not be extended by the WA Department of Industry and Resources unless a positive commitment to proceed is demonstrated, he said.
Streader said Plentex had been monitoring several potential alternative locations within Australia and would now accelerate these investigations.
It was actively progressing another opportunity in the fertiliser sector in Australia, he said.
