Iofina’s brine supply partner for its number 8 plant is a saltwater disposal (SWD) operator that sources brine from multiple hydrocarbon producers. On May 1, the SWD operator informed Iofina that oil and gas operators have shut-in or intend to shut-in wells due to reduced operating margins at current oil prices; this is likely to materially affect the volumes of brine available for iodine isolation at IO#8.
IO#8 remains in production but the continued output is dependent on the supply of brine, which in turn is dependent on oil prices, oil demand, oil storage capacity, and the rate of USA economic recovery from the coronavirus (COVID-19).
Iofina said it is now unlikely that the company will meet its iodine production goals for the first half of the year.
Options to provide IO#8 with other brine sources are being investigated but it is unclear if a viable solution will be found. Brine supplies to four other plants in north-west Oklahoma have not been affected.
On the plus side, in India, where the company has previously seen a slowdown in its sourcing and sales channels as a result of the fall-out from the COVID-19 pandemic, things are returning to normal.
"While the news of a likely significant reduction of brine supply to IO#8 resulting from oil well shut-ins during this time of extreme low oil prices and demand in the USA, is disappointing, we are otherwise pleased with the performance of the rest of the business during the COVID-19 pandemic,” Tom Becker, the president and chief executive officer of Iofina said in a statement.
“Iofina's other four iodine plants are fully operating and the company expects this to continue. We are diligently working on possible solutions for IO#8 and will update the market as appropriate," he added.