BHP Billiton Ltd. is continuing to look at the possibility of “some form of sell down or joint venture” for its Jansen potash project in Saskatchewan, according to CEO Andrew Mackenzie this week. “It has been our experience to date that without a clear route to sanction, which we are unwilling at this stage to provide until we really understand the economics and the market. … it is difficult to attract a large number of potential buyers. [But] we certainly remain open for business,” Mackenzie told investors and analysts on the company’s half-year earnings call Feb. 21.

BHP said it is mindful of the impact of the proposed Potash Corp. of Saskatchewan Inc. and Agrium merger and “some of the other alliances that are emerging in the marketplace,” and “what that does for supply,” but Jansen remains one of the company’s “important growth options” the CEO said, on a more optimistic note than in recent earnings’ reports.

As recently as last summer, Mackenzie said the company could “mothball” Jansen after completing the production and service shafts, currently under construction, if things weren’t looking more optimistic for the potash market (GM Aug.19, 2016).

“Our preference long term is to grow in oil and copper, then possibly potash,” said Mackenzie.

“We are going well in the construction of our shafts,” he added. “So, we’re now through the difficult part, the Blairmore aquifer, and so on. And we’re very close to coming through into the bottom part of the shaft construction where we’re beyond the free zone, so we’re into really hard and consolidated rock. The technology is working well in both the two shafts that we’re sinking. And in line – and parallel with that, we continued to work on what kind of investment we would make, obviously, at the bottom and the top of the shafts, when they’re completed, in order to start to develop a mining operation.

“We are trying to find ways of breaking up [the Jansen project expenditures] into the smallest possible modules, but also with the most respectable forms of capital productivity,” he said. “But it’s going well.”

BHP has so far committed US$3.8 billion to Jansen, of which US$2.6 billion currently is being spent on sinking and lining the two production and service shafts, and building essential surface infrastructure and utilities at the site. This work was 64 percent complete as of Dec. 31, 2016, and is anticipated to be finished around 2018/19 (GM Feb. 3, p. 14). The production shaft is about 60 percent complete, and in fourth-quarter 2016, BHP awarded the engineering contract for feasibility studies for Stage 1 of the project (GM Feb. 3, p. 14).

Still, BHP has yet to take a final investment decision on Jansen, which would produce upwards of 8 million mt/y of potash. Analysts have said it could cost as much as $14 billion to bring the mine to production.

An early spring and very tight supplies of a few products caused a good bit of market volatility during the week. Sources cited an early ammonia run, particularly in the Southern Plains and parts of the Cornbelt, including Missouri, Nebraska, and southern Illinois.

Ammonia was reportedly running hard in preplant applications in the Southern Plains. Product was in very tight supply due to plant outages and supply allocations. Agrium Inc.’s ammonia plant at Borger, Texas, remained down for maintenance and final tie-ins on the urea expansion, but the company said a restart was planned for later in the week. As of Feb. 10, Agrium told analysts that its Wholesale ammonia business was 100 percent committed for the first quarter and 70 percent for the second quarter. Urea commitments were 100 percent and 25-35 percent, respectively.

Koch’s ammonia plant at Enid, Okla., was also down early in the week, but sources said a restart was underway at midweek. Rumors were also circulating of an outage at Dodge City, Kan., while no new orders were reportedly being taken at Pryor, Okla., and Coffeyville, Kan.

Sources reported long truck lines at terminals in Missouri and Nebraska as demand for ammonia picked up rapidly in parts of the Midwest and Southern Plains during the prior week (GM Feb. 17, p. 2), and predicted heavier demand for this week. “This was expected if we had an early run,” said one source.

In the meantime, the Iowa Fertilizer Co. plant in Wever, Iowa, hopes to reach production in the first quarter. As of Dec. 26, 2016, the company said the plant was 98 percent complete (GM Jan. 6, p. 1). In preparation for eventual production, the company held a meeting Feb. 16 at the Wever Fire Department to update local residents on the plant and to hand out shelter-in-place kits.

Mark Pytosh, CEO of CVR Partners LP, an Iowa Fertilizer competitor, said while Iowa Fertilizer had sold into the second quarter, “they’re not active in the spring application, the immediate short-term. I don’t think they have any real scalable production at this stage,” he said, speaking to analysts Feb. 16. “April is a big month up at East Dubuque, so I don’t see them participating in any significant degree there. They might catch the tail end of it, but they’d have to pretty much run at a full production data to produce enough volume to sell it there.”

Pytosh said a lot of customers were betting on the Wever plant being up in time for the spring season, but that not much is likely to be available.

CVR bought its East Dubuque, Ill., nitrogen plant from Rentech Inc. in 2016. He added that the plant was expecting a big spring as the immediate area had a weak fall ammonia season due to warm and wet temperatures.

In the meantime, some new ammonia plants were up to meet the demand, most recently CF Industries Holdings Inc.’s Port Neal, Iowa, expansion (GM Feb. 17, p. 1), with the company putting ammonia capacity at 110 percent on Feb. 16. Two other plants, CF at Donaldsonville, La., and the Incitec Pivot Ltd./Dyno Nobel plant in Waggaman, La., came up in 2016.

As for MAP, as with last week, prices continued to be strong, with sources saying players were caught short on product, and NOLA continuing to post firm prices.

While ammonia and MAP prices have been going up, urea at NOLA was shaky, falling to as low as $219/st FOB for prompt granular barges before rebounding somewhat. This is despite a 1.1 million st fall-off in imports fertilizer year-to-date. Some argued that a big ammonia run would mean less demand for urea and UAN later in the season. While UAN prices appear to have topped out at some major price points, they have not shown the weakness evidenced by urea in recent weeks.

Sources last week were also noting a tepid international urea market, with stalled buying in India and Brazil.

The boards of directors of three Minnesota cooperatives – Central Farm Service (CFS) in Owatonna and Truman, River Region Cooperative (RRC) in Sleepy Eye, and South Central Grain and Energy (SCGE) in Fairfax – announced on Dec. 21 that they will bring a merger proposal to members for a vote in February.

“Agriculture continues to dramatically change,” said Eric Schrader, board chairman of CFS. “The global collapse of prices, volatility of markets, increased regulatory mandates, and overall increase in operating expenses have created an opportunity for three strong cooperatives to create a stronger supply partner for our members.”

If approved, the combined organization would have annual sales of more than $1 billion and span a large geographic area stretching across central and southern Minnesota down to northern Iowa. The co-ops entered into a merger study in September 2016, which identified potential savings of $3-5 million through synergies in purchasing power, logistics, back office administration, and growth.

“This merger will create new opportunities in services and innovations for our members, while providing advanced opportunities for our employee base,” said Bruce Kuelbs, board president of RRC. “This merger allows us to control the change we want to see in our organization, rather than having to react to changes out of our control,” added Larry Dean, board president pf SCGE.

A number of informational meetings for members are planned at different locations from Jan. 30 to Feb. 3, with voting packets going out on Feb. 3. Membership voting will close on Feb. 20, and the votes will be tallied at a special meeting on Feb. 21. If approved, the merged company will operate under the CFS name and be headquartered in Mankato, and will have a potential effective date on or before Aug. 1, 2017.

Todd Ludwig, current CEO of CFS, has been tapped to lead the merged company as CEO, with RCC General Manager Kevin Subart and SCGE General Manager David Peters serving in leadership positions. The board of directors of the combined organization will be based on the amount of equity of each cooperative, and will consist of 12 CFS members, three RRC members, and three SCGE members.

According to an FAQ provided by the co-ops, the consolidated company will be able to leverage its size to receive better prices and services in agronomy, feed, and energy products; improve logistics across an expanded geography by taking advantage of arbitrage opportunities and better fleet utilization, as well as access to all major railroads; negotiate better interest rates and insurance premiums while eliminating duplicate costs in systems and processes; and offer new merchandising, precision agriculture, and grain pricing programs to members. Also included on the list of objectives is the construction of an agronomy plant north of the Minnesota River to expand the business’s northern territory.

The co-ops also highlighted new employment opportunities with the merger, noting that more than 100 employees – or 20 percent – of the consolidated company’s workforce will be over the age of 60. “One of the reasons the boards explored this merger was to create a company for employees that would be a ‘destination employer’ in our geography” that offers more benefits at a better rate, the companies said.

CFS was formed less than a year ago by the merger of Watonwan Farm Service Co. in Truman and Central Valley Cooperative in Owatonna (GM Jan. 1, 2016). The company provides grain, agronomy, feed, and energy products and services from 28 locations stretching from Randolph, Minn., down to northern Iowa.

SCGE operates agronomy, grain, feed, propane, and refined fuels businesses from nine Minnesota locations at Buffalo Lake, Cosmos, Darwin, Eden Valley, Fairfax, Gibbon, Hector, and Stewart. The co-op’s agronomy facilities in Buffalo Lake, Cosmos, Fairfax, and Gibbon offer dry and liquid fertilizers, ammonia, crop protection products, seed, and precision ag services.

RRC is a full-service co-op offering grain, energy, agronomy, and feed products and services from multiple locations in Sleepy Eye.