Even before IFI was formed in 1987, the omens for the company were notgood, writes Conor Lally.
The recommendation from the board of Irish Fertilizer Industries (IFI) that it be put into liquidation comes after more than a decade of problems for the group.
It follows attempts in recent months to come up with a viability plan, involving a sale of the company. When these efforts failed, its owners, the Government and British company ICI (Imperial Chemical Industries), decided they could not continue to fund the operation in the absence of such a plan.
At least €20 million would have been required to keep the plant going for a further period and the owners decided this could not be justified, mainly because falling fertiliser prices could necessitate further substantial funding.
Now it is up to the liquidator to decide how best to sell the assets, but the prospect of saving any significant number of jobs appears bleak.
IFI was formed in October, 1987 when the operating assets of State-owned Nitrigin Éireann Teoranta (NET) - which itself had a troubled history and had run up substantial debts - were merged with the Irish operations of British group ICI.
At first it enjoyed success, but as the 1990s began the trading environment became difficult. However, throughout the mid- 1990s the company continued to turn profits and invested heavily in its three plants in Arklow, Cork and Belfast.
In 1998, ICI changed its strategy and decided it wanted to leave the industrial chemicals sector and indicated it wanted to sell its 49 per cent stake in IFI.
The Irish government was not interested in acquiring ICI's stake and moves were made to sell the entire IFI group. But fertiliser prices around Europe fell and IFI lost £10.7 million in 1999. A number of would-be buyers expressed an interest in buying IFI but they were unwilling to pay the asking price of £50 million.
Sales fell further in 2000 and 2001 as the foot-and-mouth crisis developed and gas prices rose. A blueprint for savings was worked out but it was not enough.
The board faced a situation of falling international fertiliser prices and the possibility that continued subsidies from its owners would be needed to keep it afloat. With gas prices rising due to seasonal factors, it was decided to pull the plug now rather than invest further in the hope that the market might improve.
Currently, fertiliser can be imported at $40 to $50 a tonne cheaper than IFI can manufacture it.
A key issue was the cost of converting natural gas into ammonia at the Marino Point plant. Ammonia can now be bought much more cheaply on international markets. Recent efforts to save the company had centred on abandoning this practice and concentrating instead on manufacturing fertiliser in Arklow and Belfast, using imported ammonia.
However, efforts to come up with a rescue plan were unsuccessful. It is understood that the company had discussions with Finnish giant Kemira, but these were hampered because Kemira itself was restructuring.
Now international groups will look at buying the business of IFI in terms of taking on its customer relationships. The liquidator will also assess whether they would have any interest in continuing to manufacture fertiliser at Arklow and/or Belfast, using imported ammonia. However, given the state of the international market, the prospect of either of the plants being sold as a going concern appears fairly slim.