Chemical revenue for the fourth quarter of $139.1 million was $0.7 million or 1% higher than in the prior year quarter primarily due to higher sales volumes for sodium chlorate offset in part by lower chloralkali/potassium sales volumes and pricing. Fourth quarter gross profit of $63.0 million was $4.0 million lower than in the prior year quarter due to decreased chloralkali/potassium gross profits offset in part by sodium chlorate gross profits. Sodium chlorate gross profits were slightly higher than the prior year quarter due to increased technology gross profits as result of project activity offset in part by lower gross margins as the prior year included a $3.2 million gain from the receipt of an insurance settlement in connection with a Buckingham, Quebec claim. Sodium chlorate sales volumes increased by 12,000 tonnes or 10% compared to the prior year quarter due to higher North American demand as markets remain balanced. Chloralkali/potassium products gross profits were lower than in the prior year quarter as weaker average prices, particularly for chlorine, and lower sales volumes related to a temporary production curtailment associated with the completion of a mandatory bromine upgrade project at Specialty Chemicals Port Edwards facility.
Cash operating and administrative costs of $33.9 million were $1.4 million or 4% higher than in the prior year quarter due to additional maintenance expenditures incurred and general inflationary pressures.
Major Capital Projects
As announced in the first quarter of 2012, Superior has approved an $18 million expansion of hydrochloric acid production capacity at the Port Edwards, Wisconsin chloralkali facility. The existing capacity of 110,000 wet metric tonnes (WMT), or 36,000 dry metric tonnes, will be increased to approximately 220,000 WMT. The project will be carried out through 2012 and 2013, with commercial production expected in the second quarter of 2014. As of this date, a total of $1.4 million has been spent on the project.
As announced in the third quarter of 2012, Superior has approved a $25 million expansion of the hydrochloric acid production capacity at the Saskatoon, Saskatchewan chloralkali facility. The existing capacity of 70,000 WMT, or 22,000 dry metric tonnes, will be increased to approximately 140,000 WMT. The project will be carried out through 2013 and 2014 with commercial production expected in the fourth quarter of 2014.
Upon completion of both projects, Superior will have total hydrochloric acid production capacity of approximately 360,000 WMT. The two expansions will allow Superior to optimize overall returns at both facilities by converting a larger portion of its chlorine into higher-value hydrochloric acid.
Superior expects that business conditions in 2013 for its Specialty Chemicals business will be similar to 2012. EBITDA from operations, excluding the impact of the $12.5 million one-time payment from TransCanada, is anticipated to be modestly higher in 2013, due to improved performance of the chloralkali product segment driven by higher gross profits from hydrochloric acid and modestly higher selling prices for caustic soda, which will more than offset anticipated reduced pricing for chlorine. Superior continues to see a stable market for sodium chlorate as a result of the current market for pulp. Superior also expects a stable market for chloralkali sales volumes and pricing as North American supply-demand fundamentals continue to be balanced. The market for chloralkali continues to be supported by low natural gas prices.
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