Fertiliser firm Yara considers big U.S. investment


* Adjusted EBITDA NOK 3.22 bln

* Earnings in line with expectations

* Plans big investment with BASF

OSLO, Oct 18 (Reuters) - Norwegian fertiliser firm Yara posted a 23 percent drop in third-quarter core earningsas Chinese overproduction dragged prices lower, and said it wasconsidering a major investment in the United States to increaseits presence there.

Yara, the world's biggest nitrate fertiliser maker, said onFriday earnings before interest, tax, depreciation andamortisation (EBITDA) excluding one-off items fell to 3.22billion crowns ($542.75 million) from 4.18 billion a yearearlier, in line with expectations.

Its realized prices for urea, a key fertiliser component,fell 24 percent while ammonia prices were down 30 percent,primarily as a Chinese tax credit stoked production and otherlow cost markets also stepped up output, the firm said.

"The increased supply from China turned the marketsupply-driven, as the highest cost producers needed to curtailproduction to balance the market," Yara said.

Banking on its size, a relative advantage, Yara said it wasin talks with chemicals giant BASF to jointly investin a "world scale" ammonia plant around the U.S. Gulf of Mexicocoast, supporting the German firm's expansion plans.

Yara's earnings have suffered this year as global fertiliserprices fell, but analysts say prices may have bottomed out.

Increasing consumer demand and the ending of a low taxwindow in China could support prices, though analysts said anyrecovery would be very slow.

Yara shares, trading at 8.7 times expected 2013 earnings,are among the cheapest in the sector, trading well below peers'average of 13.6 times, according to Thomson Reuters data.

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