At the end of 2006 The Mosaic Co. made several new contracts with Cargill Inc., which owns 65.2 percent of the company. The deals were at the approval of the special transactions committee of the board of directors, which oversees Mosaic/Cargill transactions.
Many of the agreements appear to be simple housekeeping, though some are fertilizer market related. The two have entered into a master services agreement in which Cargill will provide certain services to Mosaic after the expiration of an existing master transition services agreement. Cargill from time to time may enter into work orders for services in various countries where Mosaic conducts business. The agreement expires Oct. 22, 2009.
Cargill’s human resources department will provide various administrative services, including benefits administration, compensation administration, payroll, etc., and will continue indefinitely, though it can be terminated with 90 days notice.
Cargill, through its financial services center, will provide accounts receivable and payable processing, as well as travel and expense report processing, for Mosaic. This agreement expires Sept. 30, 2009. It will also provide competitive funding via supplier credit financing to Mosaic Fertilizantes do Brasil S.A. and Mosaic Fertilizantes Ltda., both of which are fertilizer entities in Brazil, through May 31, 2007.
Also in Brazil, Cargill Agricola will provide certain administrative services to Mosaic Fertilizantes Ltda., Mosaic Fertilizantes do Brasil S.A., and Fospar S.A., through May 31, 2007. In addition, Mosaic Fertilizantes do Brasil and Banco Cargill have struck a deal whereby the Cargill entity will provide credit financing to Mosaic customers in Brazil.
Mosaic has entered into an agreement with Crop Uruguay S.A., a unit of Cargill, for spot sales of MAP and DAP, with no requirement to purchase a minimum amount. Sales will be at market prices; the agreement is through August 2007.
Mosaic will supply Cargill Sociedad Anomina Commercial e Industrial with MAP, DAP, and MicroEssentialsTM S-15 at market prices, with no minimum quantity required. The agreement is in effect until May 31, 2007.
Mosaic Fertilizantes do Brasil and Mosaic de Argentina S.A. have entered into a product supply agreement with Cargill Agropecuaria S.A.C.I. in which the Mosaic units will make spot fertilizer sales to the Cargill unit in the Republic of Paraguay. There is no minimum purchase requirement, and the deal runs through Dec. 22, 2007.
Cargill has contracted with Mosaic to store deicing salt and to perform certain transfer services for Cargill at Mosaic’s Pekin, Ill., warehouse. In addition, Cargill has leased two inside storage bins for salt at Pekin from Mosaic through April 30, 2007.
Mosaic will also sell citrus from its South Ft. Meade Land Management Inc., from groves on reclaimed and unmined land, to Cargill Juice North America. It expects to deliver 625,000 boxes of oranges during each growing season. The deal is in effect for the 2006/2007 and 2007/2008 growing seasons and at competitive prices.