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Iowa Fertilizer ratchets up construction; subcontractor sues

February 26, 2016Featured, News2192

OCI NV’s Iowa Fertilizer Co.’s $1.9 billion nitrogen plant remains on track, according to the company, despite a lawsuit by a subcontractor and a dust-up from a couple of local politicians.

“Iowa Fertilizer Co. continues to make tremendous progress in the construction of the new plant in Wever,” said company spokesman Jesse Harris last week. “In fact, the company plans to increase construction from its current level of approximately 2,000 personnel to approximately 2,500 in both March and April, taking advantage of improved weather conditions as we enter the final months of the project. Right now, the project is concluding the pre-commissioning phase for utilities and nearing the pre-commissioning phase for ammonia to the project, so variances in the number of people working will occur.”

Maintenance Enterprises LLC, a subcontractor, brought suit against Iowa Fertilizer and contractor Orascom E&C USA Inc. in U.S. District Court for the Southern District of Iowa, Davenport Division, on Feb. 19. The plaintiff said that on Dec. 22, 2015, it warned Orascom that it would halt work until Orascom paid overdue invoices. Thereafter, the plaintiff said it was told to prepare to hand over its work to Orascom, and the last work the subcontractor performed was Jan. 31, 2016. The plaintiff says it is owed some $53 million.

The plaintiff, which is owned by MEI Group, a unit of Crown Enterprise LLC, all of White Castle, La., says it was initially hired in September 2014 to work on the ammonia primary reformer furnace, and was retained to work on the urea unit in first-quarter 2015 after another subcontractor was terminated.

In the meantime, at least two Iowa politicians have been making hay over any perceived labor woes at the plant, including Democrat State Senator Tom Courtney of Burlington and Democrat Robert Krause, who is running for the seat of U.S. Senator Charles Grassley. Both have criticized the amount of federal and state aid to the project, and Courtney has called on the legislature to investigate.

There were major concerns at the plant in May 2015, when local union officials told the Des Moines Register that more than 3,000 workers were onsite in mid-April when Iowa Fertilizer changed contractors (GM April 27, 2015), and that about 1,500 workers were laid off, with only about 300 of those rehired (GM May 11, 2015). They cited reports that contractors were looking to hire non-union workers from elsewhere (GM May18, 2015). State officials eventually facilitated a meeting between labor and the company.

Without naming the plaintiff in the lawsuit, Courtney told the local press a new company had to be contracted to remedy subpar work from a Louisiana company. Neither side of the lawsuit commented on the issue last week.

Harris said that the plant is 94 percent complete and is slated to come up later this year. However, the plant is behind schedule, according to its expectations ten months ago. As of April 29, 2015, Iowa Fertilizer told analysts the plant would be in production in fourth-quarter 2015 (GM May 18, 2015).

In addition to any construction issues, one intervening factor is CF Industries Holdings Inc.’s agreement to buy select major assets of OCI NV, including the Wever plant, back in August 2015 (GM Aug. 10, 2015). The deal is expected to close in mid-2016. With a new owner on the horizon and a weak nitrogen market, the rush to production may have waned.

Landowners mull Florida phosphate rock mine

February 26, 2016Featured, News2192

Four large Florida landowners are looking at combining their acreage for a new phosphate rock mine in two small counties – Union and Bradford, in northeast Florida. According to the Union Times, the acreage consists of 7,400 acres: 3,600 in southeastern Union County, and 3,300 in southwestern Bradford County.

While landowners, known as HHPS Enterprises LLC (HHPS) for the Hazen, Howard, Pritchett, and Shadd families, have met with local commissioners individually, they have not filed for permits. An opposition group, the Coalition Against Phosphate Mining in Union and Bradford Counties, has already developed, and has been very vocal at county commission meetings held in both counties in mid-February.

The Union Commission has already asked its attorney to draft a moratorium of a yet-to-be determined length on accepting permit applications for a mine. According to The Gainesville Sun, land in Union County has an agricultural land-use designation that covers most of the county, but allows mining with a special-use permit.

Residents are reportedly asking commissioners to restrict where mining can occur, with opponents fearing run-off will go into the New River, which divides the counties and the property. HHPS has already had a pre-application conference with the Florida Department of Environmental Protection but has not yet filed for a permit, according to The Gainesville Sun.

HHPS has been relatively quiet about its plans, referring questions to Amanda Wettstein, their spokesperson. Wettstein told Green Markets that HHPS would have a press release and a website soon. She said it was a phosphate rock mine only, with the ore to be taken off property by rail once per day using a High Solids Ore Transportation System. Further details as to capacity, quality, and destination for the ore were not available. Wettstein told the local press that HHPS hopes to hold town-hall style meetings in late March and proceed in a transparent process. HHPS is reportedly eyeing a 2017 start for construction, with mining to begin in 2018.

PotashCorp cuts another 400k of potash production; Canpotex lowers estimates

February 26, 2016Featured, News2192

Potash Corp. of Saskatchewan Inc. said Feb. 25 that consistent with its practice of matching supply with market demand, both the Allan and Lanigan operations in Saskatchewan will curtail production for four weeks beginning March 20.

Just last month, PotashCorp indefinitely suspended its new $2.2 billion Picadilly, N.B., potash operations, with a workforce reduction of up to 430 people (GM Jan. 22, p. 1). The 1.2 million mt/y operation had been on inventory adjustment shutdown since the end of November, and as a result, the suspension was effective immediately.

Industry sources also reported this week that PotashCorp had cut U.S. river and inland warehouse pricing to $240-$245/st FOB, down approximately $20/st.

Canpotex Ltd., the export marketer for the Saskatchewan potash producers, on Feb. 22 announced a sharp cut in its potash export sales volumes. The company said it has reduced its export sales volumes by 1 million mt in the first quarter of this year, and by a minimum of 500,000 mt in the second quarter of 2016 due to the unsatisfactory demand and prices existing in current overseas export markets. It said it will continue to monitor overseas market conditions to determine if a further reduction in planned sales volumes will be implemented in the second half of 2016.

PotashCorp cuts production

February 25, 2016Breaking Industry News2192

Potash Corp. of Saskatchewan Inc. said Feb. 25 that consistent with its practice of matching supply with market demand, the Allan and Lanigan operations will take the following potash inventory adjustments:

Allan will curtail production for four weeks, beginning March 20, 2016
Lanigan will curtail production for four weeks, beginning March 20, 2016

PotashCorp said it is opting to achieve these curtailments through the use of maintenance shutdowns, which do not require temporary workforce layoffs. It estimates the curtailments will reduce 2016 production by approximately 400,000 mt.
Industry sources also reported this week that PotashCorp had cut river and inland warehouse pricing to $240-$245/st FOB, down approximately $20/st.

EuroChem EBITDA up, revs down; Ben-Trei contributes in 2015

February 22, 2016News2192

EuroChem Group AG reported a 4 percent rise in EBITDA, to $1.58 billion on revenues of $4.54 billion for the year 2015. EBITDA was up from $1.51 billion in 2014, but revenues were 11 percent lower on the prior year’s $5.09 billion. Cash from operations for 2015 increased 10 percent, to $1.06 billion from $964 million.

EuroChem attributed the decline in revenues primarily to the lower pricing environment across the group’s business, despite a slight increase in sales volumes. Favorable currency movements continued to mitigate the effects of lower prices and supported the 4 percent growth in EBITDA for the year, the group said.

Fourth-quarter EBITDA fell 15 percent, to $360 million on revenues of $1.05 billion, down from $422 million and $1.15 billion respectively, for the same prior-year period. Cash from operations for the final quarter of the year plummeted 80 percent, to $36 million from $176 million in fourth-quarter 2014.

EuroChem increased sales volumes of nitrogen and phosphate fertilizers by 2 percent to a full-year total of 10.81 million mt, up from 10.62 million mt in 2014. The additional 195,000 mt were primarily generated by higher nitrogen volumes, which benefited from additional ammonia production capacity. The start-up of Nevinnomysskiy Azot’s 1B ammonia unit last year boosted the plant’s annual ammonia production by 19 percent, to over 3 million mt for the first time.

EuroChem said its acquisition of the U.S.-based Ben-Trei distribution assets in the second half of the year supported a 35 percent year-on-year increase in sales of third-party products (GM Nov. 2, 2015). For the year, EuroChem sold 2.13 million mt of third-party products, including 1.27 million mt of ammonium sulfate. Ben-Trei supported a 5 percent increase in North American sales, with the region accounting for 12 percent of 2015 sales, compared with 10 percent in 2014.

	Q4 2015	Q4 2014	Change	Full year 2015	Full year 2014	Change
Nitrogen
Revenues ($m)	459	540	-15%	1,919	2,322	-17%
EBITDA ($m)	202	207	-3%	867	865	+0.2%
Sales volumes¹(‘000 mt)	1,818	1,641	+11%	6,914	6,751	+2%
Phosphates
Revenues ($m)	394	469	-16%	1,937	2,185	-11%
EBITDA ($m)	88	150	-42%	540	477	+13%
Sales volumes¹ (‘000 mt)	826	889	-7%	3,896	3,865	+1%
Potash
Revenues ($m)	–	–	n/a	–	–	n/a
EBITDA ($m)	-10	-15	n/a	-16	-32	n/a
¹ Includes some intra-group sales

PhosAgro to focus on expansion/modernization

February 22, 2016News, News Briefs2192

Moscow — PhosAgro on Feb. 16 said its top priority for 2016 is to move ahead with new production capacities and modernization plans for existing facilities. Investment projects include construction of a new, high-tech ammonia production facility with an annual capacity of 760,000 mt, a new 500,000 mt/y granulated urea line, and overhaul of existing urea and phosphate-based fertilizer capacities at PhosAgro-Cherepovets, all of which are due to be completed in 2017. The company will also focus on developing its upstream capacities at Apatit, including increases to mining capacities at the Kirovskiy and Rasumchorrskiy mines, as well as completing the modernization of ANOF-3, which will increase phosphate rock production capacity and add nepheline concentrate production capacity. These projects are due to be completed by 2017. PhosAgro said it was able to increase fertilizer production in 2015 by 630,000 mt, to 7 million mt. It expects to be able to grow production another five percent going forward. “We have increased sales volumes to premium markets, while in parallel strengthening our position as the top fertilizer supplier to Russian farmers,” said CEO Andrey Guryev. “Over the past three years our domestic sales have grown by more than one third, to 1.63 million mt of fertilizers and feed phosphates. We have increased quality and range of fertilizers we sell, and we have also expanded the selection of services we offer regarding proper application of mineral fertilizers, their storage and delivery to end customers.”

North Iowa Co-op details expansion

February 22, 2016News, News Briefs2192

Thornton, Iowa — North Iowa Cooperative’s new $5.5 million dry fertilizer facility is ready to come online in the next few weeks. “We’ll be using a Kahler Automation system, which automates the plant from the point of receiving the product and blending and delivering to our customers,” Agronomy Manager Creighton Nelson told Green Markets. “And all that can be controlled from a single computer console.” Nelson added that the new facility, constructed over the last several months, will operate eight fertilizer bins with a total capacity of 13,000 tons. Two anhydrous ammonia tanks with a total capacity of 62,000 gallons for filling nurse tanks will be located only a couple of blocks from the main facility. At the same time, the co-op is setting its sights on breaking ground this spring, at a cost of $635,000, for a two-million-gallon tank to store UAN. There are also plans to install a bulk chemical and package warehouse. Ten new employees were added recently, increasing the total number to about 50, with expectations to hire two more full-time employees and six-to-eight part-timers on a seasonal basis.

Simplot boosts CRF coating production

February 22, 2016News, News Briefs2192

Boise — The J. R. Simplot Co. said Feb. 17 that it has increased the availability of its controlled release fertilizer (CRF) coating Gal-Xeone™ in conjunction with newly expanded operations in Florida. All polymer-coated products contained within the Best and Apex product lines will be converted to Gal-Xeone coating in the next several months. Simplot first introduced Gal-Xeone polymer coating capabilities in 2013, and has now expanded product availability through its relationship with Florikan-ESA, Sarasota, Fla. Plans are also in place for Simplot to commission coating operations at its Lathrop, Calif., facility later this spring. Simplot says the Gal-Xeone polymer coating is a controlled-release technology that provides continuous nutrient delivery to match plant uptake needs for optimal plant health. This patented coating uses a technology developed with support from NASA to allow water to enter the prill, then carry the nutrient solution out through a precise, semi-permeable membrane. “Plants, including turf and ornamentals, are healthiest with constant nutrition over an extended period of time,” said Dr. Terry Tindall, Simplot director of agronomy. “Simplot Gal-Xeone polymer coating allows consistent, predictable delivery of plant nutrients using advanced technology not common with traditional fertilizers.” Simplot said today’s environment demands attention to sustainability, and Gal-Xeone is based upon that principle. It says with proven and controlled nutrient release from two-to-12-plus months, this sustained nutrient delivery improves plant health. At the same time, it reduces loss of nutrients due to volatilization and leaching while minimizing plant injury. Moreover, because of the precise release of nutrients, there is less labor and logistics expense in nutrient application. The company said the product is a 4R Nutrient Stewardship® best practice.

Hezbollah threatens Israeli NH3 tank

February 22, 2016News, News Briefs2192

Tel Aviv — The leader of the Lebanese Shiite Hezbollah organization has threatened to use missiles against the Haifa Chemicals ammonia storage facility and wreak havoc in northern Israel in the event of a war. Hassan Nasrallah said Feb. 16 that the impact of firing missiles at the ammonia tank in Haifa would be equivalent to a nuclear bomb. He cited an Israeli expert as saying that an attack on the ammonia plant could kill tens of thousands of people in the region. Nasrallah said that the residents of Haifa are worried about the plant with or without a war. The Israeli government approved plans to shut down the facility, which has a storage capacity of 12,000 mt of ammonia, back in 2013, and open an ammonia production plant in southern Israel that would use domestic natural gas (GM Jan. 29, p. 15). Israel’s Environmental Protection Ministry said in response to the Hezbollah threats that it would issue a final tender for the project by the end of March. Industry sources said that the tender has been delayed in recent months over concerns about the economic viability of the project, which would be based on domestic natural gas from the Tamar offshore field. The sources said that domestic gas prices are currently too high at a time when global ammonia prices are falling. Even if all of the outstanding issues are resolved in the coming weeks, the southern Israel project will not be up and running before 2019.

Anglo accelerates phosphate sale

February 22, 2016News, News Briefs2192

London — Anglo American plc has 16 bidders to date for its niobium and phosphates business, which it put up for sale late last year. The company expects to draw up a shortlist in the next two weeks. Anglo CEO Mark Cutifani, commenting on the sale in a television interview to Bloomberg this week, said the company may sell the Brazil-based unit within the next two-to-three months. A spokesperson for Anglo confirmed Cutifani’s comments and told Green Markets the company is still open to submissions from other bidders for the unit. Anglo put the niobium and phosphates unit on the block in December as part of an accelerated and more radical restructuring to redefine the focus of the group’s asset portfolio and cut debt (GM Dec. 14, 2015). Anglo said Feb. 16 it was accelerating its asset sales to raise a targeted $3-$4 billion this year, and is planning to focus its core portfolio on diamonds (De Beers), platinum group metals, and copper. The group reported a full-year 2015 loss of $5.62 billion and an end-year net debt of $12.9 billion.