CHEMICAL company Terra Nitrogen has bought the Mississippi Chemical Corporation for £145m, making it the biggest producer of ammonia in the UK and US.

Terra, which employs 400 people at its UK base in Stockton, hopes the acquisition will mean it will be able to significantly lower its gas costs.

Mississippi has nitrogen plants and distribution terminals in the US, plus a 50 per cent stakes in two ammonia facilities in Trinidad and Texas.

It is Terra's first acquistion since buying the UK Billingham and Severnside production facilities, formerly ICI, in 1998.

Carol Devlin, administration manager at Terra UK, said: "We do not know exactly how it will affect the workforce in Stockton and Billingham at the moment.

"As we are going through the process it will become more apparent.

"The acquisition will help us serve our customer base better, and it may leave us with more options for exporting and importing our products.

"We will also have access to a lower cost gas service. At the moment, our gas is a huge cost to our business, so it will help there.

"In the main, it will help our operation be more efficient."

Terra manufactures chemicals at its Billingham site, which used to be the fertiliser division of ICI.

Michael L Bennett, Terra president and chief executive officer, said: "This is an important step in our efforts to strengthen Terra's asset base and position the company for the long-term.

"I also expect it to yield significant annual cost savings through lowering production costs in a high natural gas price-environment and provide Terra with access to new markets."

Paul Thompson, managing director of Terra Nitrogen (UK) Limited, said: "This transaction is great news for all our employees and customers in the UK as it further strengthens the position of Terra as a leading supplier of chemicals and fertilizers."