Toronto-based Sherritt International Corp. reported that a prolonged third-quarter outage due to compressor issues at its Fort Saskatchewan ammonia plant required an advancement of significant maintenance funds and resulted in lower fertilizer volumes.
Sherritt had to buy ammonia during the period to meet its needs. Fertilizer prices also declined, and the company took a third-quarter $8.9 million writedown on its fertilizer inventory. Fourth-quarter fertilizer production returned to normal levels. Sherritt said it does not expect a recurrence of the ammonia problem.
In addition to the unplanned maintenance at the ammonia plant, Fort Saskatchewan experienced higher-than-normal maintenance costs, in part due to the planned biannual acid plant shutdown, which identified a larger-than-anticipated remedial scope of work.
Sherritt’s 2023 losses were attributed to lower fertilizer sales; lower fertilizer, nickel and cobalt prices; higher maintenance costs; inventory writedowns; delayed nickel sales; and an increase in rehabilitation and closure costs related to legacy Oil and Gas assets.
The company said fertilizer prices stayed low due to an ample supply of nitrogen. It expects 2024 prices to remain relatively unchanged from 2023.
Fourth-quarter
fertilizer production was off only 2%, to 61,092 mt from the year-ago 62,254
mt, while sales volumes were down 10%, to 55,509 mt from 61,664 mt. Average
prices were down 36%, to $414.80/mt from $647.03/mt. Revenue fell 42%, to $23.1
million from $39.9 million.
Full-year fertilizer production was off 12%, to 219,707 mt from 250,147 mt.
However, sales volumes were level with the prior year at 170,161 mt versus
170,427 mt. Prices were down 28%, to $548.16/mt from $759.91/mt, while
full-year revenue was off 28%, to $93.3 million from $129.5 million.
Sherritt reported a fourth-quarter net loss on earnings from continuing operations of $53.4 million on revenue of $34.8 million, down from the year-ago loss of $7.3 million and $48.6 million, respectively. Adjusted EBITDA was a negative $7 million down from a year-ago positive $35.5 million.
Sherritt had a full-year loss from continuing operations of $64.3 million on revenue of $223.3 million, down from the year-ago net income of $63.7 million and $178.8 million. Adjusted EBITDA was $46.1 million versus the year-ago $233.1 million.
As reported last month (GM Jan. 19, p. 24), Sherritt is reducing its workforce across Canada by 10% and is making changes to executive management as it seeks to improve Metals segment operations following a disappointing 2023. Fertilizer is within the Metals segment. Metals will be streamlined, while Technologies will be restructured.Elvin Saruk was named Chief Operating Officer, responsible for leading both Sherritt’s Metals and its Power and Oil and Gas divisions.