Photo copyright LSB Industries, Inc.

LSB Industries Inc. has announced an agreement on a settlement of $113 million in damages to be paid by its insurance company for the 2012 explosion at its chemical plant in Arkansas.

The facility, located in El Dorado, was a concentrated nitric acid plant but it was practically destroyed in an explosion in May last year. Fortunately there were no injuries caused by the blast or the subsequent fire, the company said.

Some $60 million of the settlement has already been paid out and the remaining $53 million is due to be received within the next 30 days, LSB announced. The money will be used to build a new and upgraded nitric acid plant, which will produce a less concentrated form of the substance, since the majority of customers preferred the less-concentrated form, explained Tony Shelby, chief financial officer of LSB. However, the needs of the customers who still want the more concentrated form of the chemical will also be met by installing a concentrator, he added.

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Currently, LSB is awaiting its permit from the U.S. Environmental Protection Agency and works will start as soon as the permit has been granted. Shelby estimated that the new plant would be operational by late 2015.

Nitric acid is used in a number of industries, with its blends featuring in the production of semiconductors, herbicides, pesticides and metal treatment.