Methanex to cease production at Waitara

Methanex is ceasing production at its methanol plant in the Waitara Valley in Taranaki from today.

The future of the plant, which employs 80 staff, had been uncertain for some time as Methanex struggled to secure new gas supplies, with the Maui gas field dwindling.

Vancouver-based Methanex said the Waitara plant, which produces 500,000 tonnes of methanol per year, was a "flexible asset" and production could resume in future if it secures more economically priced gas.

"We remain focused on meeting our customers' growing needs for reliable and timely supply in the Asia Pacific region," chief executive Bruce Aitkin said.

Methanex said it has a 140,000 tonne storage terminal in Yeosu, Korea and a fleet of vessels from which to supply customers in Asia.

"Unfavourable economics" had made the Waitara plant unviable, Mr Aitkin said.

The firm also announced plans today to permanently close its methanol and ammonia plant at Kitimat, British Columbia.

Methanex was the largest single user of gas from Maui, which is expected to run out in two or three years.

It had a solid supply agreement with the gas field, but that came unstuck when the life expectancy of the field was dramatically reduced in 2003.

Methanex's methanol production declined from 2.3 million tonnes in 2002 to the current 500,000 tonnes.

It closed its Motunui plant in Taranaki late last year with the loss of 40 jobs.

At full production, Methanex injected $200 million a year into the national economy and $40 million annually into Taranaki.

- NZPA