Fertiliser maker Incitec Pivot has put off plans for a new plant in Newcastle, NSW because of rising construction costs.

The company announced plans for an ammonium nitrate manufacturing plant at Incitec Pivot’s site at Kooragang Island in 2011, but on Wednesday said it had suspended the project.

“The decision on whether to proceed with the development has been deferred for at least two years, reflecting the anticipated reduction in demand for ammonium nitrate and the high cost of construction in Australia,” the company said in a statement.

“At this time, the project has not met (Incitec Pivot’s) strict financial hurdles.”

The company had so far spent $17 million on a feasability study for the plant, which will be included in its 2012 fiscal year accounts.