8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 2, 2005

TERRA INDUSTRIES INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Maryland (State or other jurisdiction of incorporation) 1-8520 (Commission File Number) 52-1145429 (IRS Employer Identification No.)

Terra Centre

600 Fourth Street, P.O. Box 6000

Sioux City, Iowa 51102-6000

(712) 277-1340

(Address of Principal Executive Offices, including Zip Code)

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01  Other Events.

On May 2, 2005, Terra announced that it has mothballed the remaining operations at its Donaldsonville, Louisiana manufacturing facility indefinitely. All other operations at the Donaldsonville facility had previously been mothballed. The operations being mothballed consist of an ammonia plant with aggregate annual production capacity of approximately 500,000 tons. The ammonia supply agreement described below will replace the manufactured ammonia produced at the mothballed facility. The plant last operated on Dec. 23, 2004.

As the Donaldsonville facility’s other manufacturing plants were previously shut down, this action completes Donaldsonville’s transition from an integrated manufacturing facility to solely a storage and distribution terminal.

On May 2, 2005, Terra entered into an ammonia supply agreement to purchase ammonia for delivery to its ammonia terminal at Donaldsonville, Louisiana from Yara Asia Trade Pte. Ltd., a major international ammonia manufacturer. The agreement is for an initial term of three years, with automatic renewal periods beginning every two years thereafter. The agreement’s required purchase quantities are approximately 500,000 tons per year, subject to some fluctuation, or about the same as Terra’s Donaldsonville ammonia plant, which is being mothballed as described above.

On May 2, 2005, Terra issued a press release reporting the closure of Donaldsonville’s remaining manufacturing operations and its signing of the ammonia supply agreement. A copy of the press release is attached as Exhibit 99.1.

Item 9.01  Financial Statements and Exhibits.

              (c) Exhibits

99.1       Press Release dated May 2, 2005

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TERRA INDUSTRIES INC.
By:	/s/    Mark A. Kalafut
	Mark A. Kalafut Vice President, General Counsel and Corporate Secretary

Date: May 4, 2005

3

EX-99.1

		Terra Industries Inc. 600 Fourth Street
	Exhibit 99.1	P.O. Box 6000 Sioux City, IA 51102-6000
		Phone: (712) 277-1340 Fax: (712) 277-7383 www.terraindustries.com

NEWS

For immediate release	Contact: Joe A. Ewing
	(712) 277-7305

Terra mothballs Donaldsonville ammonia plant,

enters into ammonia purchase agreement

Sioux City, Iowa (May 2, 2005)—Terra Industries Inc. (NYSE symbol: TRA) announced today that it has mothballed its Donaldsonville, La., ammonia plant indefinitely. The ammonia plant, which has an annual production capacity of approximately 500,000 tons, last operated on Dec. 23, 2004.

As the Donaldsonville facility’s other manufacturing plants were previously shut down, the mothballing of the ammonia plant completes the transition from an integrated manufacturing facility to a facility used solely as a storage and distribution terminal.

Terra also announced that it has entered into an agreement to purchase ammonia for delivery to Donaldsonville from Yara, a major international ammonia manufacturer. The agreement’s required purchase quantities are about the same as the mothballed plant’s manufacturing capacity. The agreement is for an initial three-year term, with automatic renewal periods beginning every two years thereafter.

“High, volatile natural gas prices make it uneconomical to keep the Donaldsonville ammonia plant on standby, said Michael L. Bennett, Terra’s President and CEO. “We are pleased to have secured a competitive ammonia supply contract to replace the manufactured ammonia and believe the Donaldsonville facility’s storage and distribution capabilities will enable Terra to seamlessly supply our customers, as well as provide future strategic opportunities.”

Terra Industries Inc., with 2004 revenues of $1.9 billion pro forma the Mississippi Chemical acquisition, is a leading international producer of nitrogen products.

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This news release may contain forward-looking statements, which involve inherent risks and uncertainties. Statements that are not historical facts, including statements about Terra Industries Inc.’s beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements is set forth in Terra Industries Inc.’s most recent report on Form 10-K and Terra Industries Inc.’s other documents on file with the Securities and Exchange Commission. Terra Industries Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

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Note: Terra Industries’ news announcements are also available on its web site, www.terraindustries.com.