Kapuni urea plant shutdown concerns continue in New Zealand even after Ballance Agri-Nutrients secured a short-term gas supply to keep the plant operating until 31 December 2025. The company has confirmed that while operations can continue in the near term, no long-term affordable gas supply has yet been secured, leaving the future of the Kapuni facility uncertain.
The Kapuni urea plant relies entirely on natural gas as a feedstock for urea production. Ballance’s earlier gas supply contract expired at the end of September 2025, raising the risk of an immediate shutdown. The newly arranged short-term gas supply has provided temporary relief, but it does not remove the Kapuni urea plant shutdown risk beyond the end of the year.
Gas supply uncertainty raises shutdown risk after December 2025
Ballance has stated that if a reliable and affordable gas supply agreement is not finalised after 31 December 2025, the Kapuni urea plant may face a temporary shutdown, which could last for several months. The company has already prepared contingency plans for such a scenario.
New Zealand’s domestic gas supply has been declining, pushing prices higher and making it difficult for energy-intensive industries like fertiliser manufacturing to operate economically. This ongoing gas shortage remains the key reason behind the potential Kapuni urea plant shutdown.
Impact on fertiliser supply and contingency measures
To protect farmers and growers, Ballance has secured alternative nitrogen fertiliser supplies for the upcoming agricultural season. Industrial customers have also arranged alternate sourcing to avoid supply disruptions. These measures aim to reduce the impact if the Kapuni plant is forced to shut down temporarily.
Ballance has also taken a financial write-down on the Kapuni plant, reflecting the uncertainty around long-term gas availability and pricing.
Importance of the Kapuni urea plant
The Kapuni urea plant has been in operation since 1982 and employs around 120 people. It produces approximately 260,000 tonnes of urea annually, accounting for nearly one-third of New Zealand’s total urea production. The fertiliser produced at Kapuni plays a vital role in supporting the country’s agricultural sector and food exports.
Current status summary
Plant status: Operational
Gas supply secured until: 31 December 2025
Long-term gas supply: Not secured
Kapuni urea plant shutdown risk: Remains after December 2025
Outlook
While the short-term gas supply allows continued operations through the end of 2025, the Kapuni urea plant shutdown risk remains high unless Ballance secures a long-term, affordable gas agreement. Without such a deal, New Zealand’s domestic urea production could face a temporary halt, impacting fertiliser supply and the wider agricultural sector.
