Norwegian fertilizer giant Yara International and BASF, world’s largest chemical producer, have broken ground for a world-scale ammonia plant at BASF’s Freeport, Texas, site.

Engineering contractor KBR has been awarded thr fixed price turnkey contract for engineering, procurement and construction of the facility expected to come on stream in 2017 with capacity of about 750,000 t/y.

The $600 million plant will be owned by a 68:32 joint venture of Yara and BASF. It will be operated by BASF, while Yara will manage construction. Each company will off-take ammonia in accordance with its equity share.

As part of the project, Yara will build an ammonia tank at the BASF terminal, and BASF will upgrade its current terminal and pipeline assets for the export of ammonia from the new plant.

The German group plans to use its share of ammonia output to produce caprolactam as a feedstock for polyamide. Yara will market the remainder mostly to industrial customers in North America, in addition to supplying the agricultural sector.

The two companies said the hydrogen based process to be used in the new plant significantly reduces capital expenditures and maintenance compared to a traditional natural gas-based ammonia plant.

A long-term supply agreement for nitrogen and hydrogen has been signed with North America’s largest industrial gases producer Praxair, linking the feedstock variable cost to the advantageous natural gas prices available at the US Gulf coast.

Torgeir Kvidal, president and CEO of Yara, said construction of the Freeport Ammonia plant is “a firm demonstration of how we deliver on our growth strategy.”

Wayne T. Smith, CEO of BASF Corporation and a member of the group’s managing board, said “BASF is in a period of significant investment in North America. Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the US.