Explosive chemical sales are down at the Cheyenne-based Dyno Nobel plant because of declines in coal production in the Powder River Basin in northeastern Wyoming, according to recent regulatory filings made by the factory’s parent firm in Australia.
The filings, along with others made with the Laramie County Clerk’s Office, also reveal that the parent firm, Australian-based industrial chemicals giant Incitec Pivot Ltd., sold off a chunk of Dyno Nobel’s property in western Cheyenne to Microsoft Corp. for a data center.
The extra $12 million pocketed by Dyno Nobel in the real estate transaction was used to help offset the falling cash flow at the local operation, according to the filings.
"From time to time we make adjustments in our real estate holdings to better serve our company's needs,” said Mary Holloman, a Dyno Nobel spokeswoman with public relations agency FleishmanHillard in St. Louis. “We have done that over the years in ways that do not impact operations or the workforce at our facility.”
She also noted that the Cheyenne facility continues to play an important role in the future of Incitec Pivot.
“While we don’t comment publicly on individual real estate adjustments, our business remains strong and our Cheyenne facility is an important part of that."
The explosive chemical used in mining is called ammonium nitrate fuel oil, which is widely used as an explosive in mining, quarrying and tunneling construction.
Explosives are essential in breaking rock and uncovering mineral deposits, especially in the open pit operations in the PRB. The mining industry considers blasting an essential component for the success of its operations.
Meanwhile, the Federal Railroad Administration is still investigating where and how 30 tons of ammonium nitrate went missing on a 1,000-mile train ride from Cheyenne to an old salt mining town in California.
While ammonium nitrate is primarily used as a fertilizer and for explosives in Wyoming’s coal mines, it also was a key chemical used in the bomb that terrorist Timothy McVeigh built to blow up a federal building in Oklahoma City in 1995.
Tough times may be in the forecast for Dyno Nobel given some of the PRB’s struggles.
Campbell County, located in the heart of the coal-rich Powder River Basin, could be short at least $50 million in anticipation of a prolonged coal bust. The state of Wyoming could be short at least $50 million
In April, the Wyoming State Geological Survey reported that first quarter data revealed coal production slipped nearly 21% from the first quarter of 2023 when the Cowboy State dug up more than 58 million tons of coal out of the PRB.
In the first three months of 2024, more than 46 million tons of coal was mined, according to the state data, a drop of more than a fifth.
Challenges Ahead
In the fiscal year that ended Sept 30, 2023, Dyno Nobel Americas saw its profitably fall 23%, according to the Incitec filings.
While the business has improved during the six months ended March 31, there was little to thank coal for.
The combined profits for Dyno Nobel’s explosives and fertilizer businesses in Cheyenne hit $56 million in the six months ended March 31, $6 million higher than the same period a year ago.
The higher profits were driven by sales to metals and quarry and construction markets.
The company said that Dyno Nobel experienced “lower coal volumes and lower contributions from overseas joint ventures.”
About $86 million, or 18%, of Dyno Nobel’s explosives revenue of $478.2 million in the six months ended March 31 was generated from the coal sector, according to the filings.
Sales to coal markets fell 19% in the 2024 half-year period versus the $474.8 million generated in the first half of 2023, mainly due to power units switching to natural gas from coal, the filings said.
Selling Out To Microsoft
The Dyno Nobel unit in Cheyenne also made a $2.7 million gain on profits from the $12 million sale of “excess land” at the Cheyenne facility.
It’s difficult to assess how much land Dyno Nobel sold in Cheyenne. The filing by Incitec Pivot revealed the sale price of land for $18 million while the Laramie County real estate filing revealed that Microsoft bought 418.2 acres of land.
The chunk of land sold falls in an area located 3 miles west of Cheyenne, with Corlett Creek running along the southern border of the 100-acre chemical plant and Clear Creek on the east end of the facility.
Before the sale to Microsoft, Dyno Nobel had owned 2,484 acres of adjoining vacant land zoned for industrial, agricultural and commercial, according to the filings.
A filing in November 2023 revealed that a “special warranty deed” was signed over to Microsoft Corp. for industrial purposes. Such a deed makes guarantees about the title during a certain period-of-time.
The Redmond, Washington-based software giant has been building data centers throughout the Cheyenne area in business parks run by the Cheyenne-Laramie County Corp. for Economic Development.
Cheyenne recently annexed 418.8 acres of land bought by Microsoft near the Dyno Nobel fertilizer plant on the city’s western edge, located just south of Interstate-80.
Microsoft has plans to build data centers in this eastern outskirt of Cheyenne.
