All posts by hlancey@bloomberg.net

BHP Inks Tentative Potash Sales Agreements for Jansen

Canada, Featured, Potash

BHP Group Ltd. has signed non-binding sales agreements for potash production from both phases of the group’s mine under construction in Jansen, Sask., according to a Reuters report citing Chief Commercial Officer Ragnar Udd. He declined to name the companies.

According to Udd, BHP seeks to turn the agreements into binding contracts, typically lasting one year, as production comes online in late 2025 or early 2026. The mining group expects to ramp up to 4.35 million mt/y capacity in two years (GM Feb. 23, p. 30). The second phase, approved by BHP in late October last year (GM Nov. 3, 2023), will boost Jansen’s annual output capacity to some 8.5 million mt when fully ramped up.

BHP plans to sell potash to distributors rather than directly to retail companies that resell to farmers, Udd said. Selling to distributors reflects the fact that BHP does not own a potash distribution network, he said, and allows it to focus on what it does best, namely production.

BHP CEO Mike Henry told participants at the BMO 2024 Global Metals, Mining & Critical Minerals Conference in Miami on Feb. 27 that the group has seen strong market interest in Jansen potash and that its marketing team had secured “sufficient MOUs with buyers around the world to more than cover sales as the mine ramps up.”

Responding to a question about selling to the US market, Udd said he would not give specifics about BHP’s US plan but said the group is “quite comfortable” with its ability to compete there.

The group is spending an estimated $5.7 billion on Jansen Stage 1 and gave the go-ahead last October for a further $4.9 billion investment on Jansen Stage 2. This is on top of an initial capex spend of some $4.5 billion before the project’s first phase was even approved.

Longer-term, Jansen has the potential for two additional expansions to reach an ultimate production capacity of 16-17 million mt/y, subject to studies and approvals.

BHP hopes to expand its presence in Canada beyond the giant Jansen project. The “impressive” stability of the country’s fiscal and policy regime “allows us to continue to invest in Canada and hopefully beyond potash,” Udd told Bloomberg TV in Toronto on March 4.

SQM 4Q Income Drops on Lower Lithium Prices

Chile, Earnings, Lithium

SQM Inc.’s fourth-quarter net income sank to $203.2 million, off 82.3% from the year-ago $1.15 billion, with revenues off 58%, to $1.31 billion from $3.13 billion, after a sharp worldwide drop in lithium prices. Gross profit was $400.7 million, down from $1.64 billion, while adjusted EBITDA fell to $427.6 million from $1.67 billion.

SQM’s full-year net income was off 48.5%, to $2.01 billion on revenues of $7.47 billion, down from 2022’s $3.91 billion and $10.71 billion, respectively. Gross profit was $3.08 billion, down from $5.74 billion, while adjusted EBITDA was $3.18 billion, down from $5.84 billion.

“Our fourth quarter 2023 results reflected record-high sales volumes in lithium business and increased sales volumes in iodine and potassium business lines when compared to the previous quarter and the same period last year,” said Ricardo Ramos, SQM CEO. “Despite a downturn in lithium market prices when compared to the previous year, our focus on operational efficiency and ability to successfully execute capacity expansion projects have facilitated notable production growth in lithium and iodine businesses over the past year.”

Ramos said SQM is continuing with its expansions in Chile and expects lithium carbonate capacity to reach 210,000 mt during the first quarter of this year. He said the company also celebrated first production of spodumene concentrate at its Mt. Holland operation site during the fourth quarter of 2023.

“In the iodine business, as a result of successful start-up of Pampa Blanca operation, record-high production volumes were achieved during the year, reconfirming SQM´s position as industry leader with ability to deliver growth ahead of competition,” he said.

“As we enter into 2024, we anticipate another robust year of growth in lithium market, with global demand increasing by at least 20%, supported by electric vehicle sales growth globally and increasing demand for battery materials,” he added. “However, the excess in lithium and battery materials capacity seen during last year is expected to continue during this year, keeping pressure on lithium market prices.”

Ramos said SQM expects average lithium prices to remain relatively stable throughout the year and sales volumes to increase slightly during this year, subject to market conditions and any changes in the supply-demand balance.

Ramos noted the signing of a Memorandum of Understanding in December 2023 between SQM and Codelco (GM Jan 5, p.1) to jointly develop the Salar Futuro project and sustainably operate in the Salar de Atacama beyond 2030. “Together with the communities, we are working on the definitive documentation in the upcoming months and will inform the market once this process is concluded,” he said.

“Last year, SQM was included into both DJSI World and Emerging Markets indices, several years ahead of our internal goal,” he added. “This is the result of ongoing work and our commitments to increase the transparency and sustainability of our operations.”

Fourth-quarter Specialty Plant Nutrition revenues were off 18%, impacted by significantly lower prices versus year-ago levels, though volumes increased 13%.  The average price decreased almost 28% year-over-year, but SQM believes the market price may have reached its bottom and it should see less price volatility in 2024.

The company estimates potassium nitrate demand decreased about 8% in 2023, but it saw demand recovery in the fourth quarter and anticipates this momentum will continue into 2024, driving nearly a 10% increase in demand during the year.

Revenues were $223.7 million, down from $274.2 million, while volumes increased to 226,000 mt from 199,200 mt. Nitrate-based volumes were up 20%, to 127,000 mt from 106,300 mt, while Specialty Blends were up 24%, to 62,300 mt from 50,300 mt.

Full-year revenues were off 22%, to $913.9 million from 2022’s $1.17 billion, while volumes were off only 1%, to 840,200 mt from 847,800 mt. Specialty Blend volumes were strong for the year, up 12% to 243,500 mt from 217,900 mt, while nitrate-based volumes declined 7%, to 443,500 mt from 477,400 mt.

Fourth-quarter Potassium revenues dropped 37%, to $50.8 million from the year-ago $80.5 million due to significantly lower prices, while volumes increased 14%, to 112,500 mt from 98,600 mt. SQM believes that due to lower prices and increased supply, global potash demand grew about five million mt during 2023, reaching 65 million mt. It expects to see a similar demand growth during 2024 and said its sales for the year may top 600,000 mt.

Full-year revenues were off 36%, to $279.1 million from 2022’s $437.2 million, while volumes increased 13%, to 543,100 mt from 480,500 mt.

JPMC’s Profits Fall in FY2023; Touts New Projects

Earnings, Jordan, Phosphate

Jordan Phosphate Mines Co. (JPMC) reported a 38% decline in post-tax profit of JD454 million (approximately $640.3 million at current exchange rates) on sales of JD1.23 billion for the year ended Dec. 31, 2023, according to Jordan’s Petra news agency, citing a company statement.

The FY2023 results compare with JD733.3 million and JD1.75 billion, respectively, for the previous year (GM Feb. 24, 2023). Sales were down 30% year-over-year.

“Despite facing challenges such as a notable decrease in global product prices, leading to an increase in the cost of sales as a percentage of revenue, the company demonstrated resilience, managing to generate commendable returns on capital investments,” JPMC said.

JPMC Chairman Mohammad Thneibat highlighted the company’s efforts to diversify its products, transitioning to manufacturing industries while prioritizing environmental sustainability.

As previously reported, JPMC recently launched several new projects in Aqaba, in southern Jordan. These include a JD400 million project to build a phosphoric acid plant in partnership with Turkish oil company Transpet Petrolcülük ve Enerji AŞ (GM Oct.  27, 2023). The proposed facility will have production capacity of 165,000 mt/y P2O5.

JPMC has also partnered up with Arab Potash Co. (APC) to establish a plant to produce new fertilizers, although few details are available. Other proposed projects under consideration by the company include a plant to produce phosphate feed additives.

JPMC last month also launched the second phase of its Gypsum Mountain greening project at its industrial complex in Aqaba. According to Petra, this phase involves the planting of 20,000 trees. The wider project aims to plant 50,000 forest and fruit trees in stages, transforming the area into an attraction and public park for local communities and visitors.

OCP Starts 2024 on Positive Note

Earnings, Phosphate

OCP Group SA increased sales in January by 17%, reaching more than MAD6.2 billion (approximately $615 million at current exchange rates) compared with January 2023, according to a report by Morocco World News, citing the country’s Office des Changes.

OCP’s phosphate exports are bouncing back after a tough 2023, which saw declining sales reflecting lower global prices for phosphate-based products after an exceptional year in 2022 marked by record prices for phosphates.

OCP reported a 20% drop in revenues for the year ended Dec. 31, 2023, to MAD91.28 billion from MAD114.57 billion in 2022 (GM March 1, p. 27).

The Agricultural Retailers Association – Management Brief

Management Briefs, U.S.

The Agricultural Retailers Association (ARA) on March 6 named Rep. Jim Baird (R-Ind.) and Rep. Jimmy Panetta (D-Calif.) as its Legislators of the Year. The award is presented each year to lawmakers who ARA said have championed issues of importance to agriculture and agriculture suppliers.

Rep. Baird received this year’s award for his efforts to promote the Increased TSP Access Act of 2023 (HR 3036) and the Plant Biostimulant Act (HR 1472), said ARA President and CEO Daren Coppock, while Rep. Panetta was also awarded for sponsoring the Plant Biostimulant Act (HR 1472), which aims to establish a federal definition for plant biostimulants.

“Supporting American farmers means making sure they have access to affordable products and equipment to reduce their operating costs,” said Rep. Baird. “Since my first day in Congress, I’ve been committed to helping our farmers so they can continue doing what they do best – keep feeding our nation. I’m honored to be recognized with this award and will continue to be a relentless advocate for American agriculture.”

“Producers in California’s 19th Congressional District and across the country need access to the latest innovative tools in order to feed the world and better protect our environment,” said Rep. Panetta. “It’s an honor to receive the Legislator of the Year award from the ARA as we work to move forward impactful legislation, like my bipartisan Plant Biostimulant Act, to better encourage the adoption of these emerging agricultural products. I look forward to continuing to advance new technologies that will empower our farmers to usher in a new era of sustainable agriculture.”

The Agribusiness Association of Iowa – Management Brief

Management Briefs, U.S.

The Agribusiness Association of Iowa (AAI) Foundation announce on Feb. 26 that its building in Des Moines, Iowa, will be named after Bill Northey, who served as the Under Secretary for Farm Production and Conservation in the United States Department of Agriculture from 2018 to 2021 and as the Secretary of Agriculture of Iowa from 2007 to 2010.

Northey, who passed away on Feb. 5, 2024, also served as President and Chairman of the National Corn Growers Association from 1995 to 1997, and as CEO of AAI. Additionally, he was Co-founder and President of Innovative Growers LLC, an organization hatched from Iowa State University Extension Leadership to focus on the production of specialty grain products.

“Bill was a giant in agriculture. While he wanted to be known first as a farmer and conservationist, he was actively involved in many facets of public service to agriculture,” said Mark White, Board Chair of the AAI Foundation. “Just as another giant in Iowa agriculture, Henry Wallace, has a state ag building named after him, the Foundation board of directors felt that naming our building after Bill will ensure that he will never be forgotten.”

A Northey Memorial Fund has been established at the AAI Foundation. Memorials can be sent to the AAI Foundation, 900 Des Moines Street, Des Moines, IA 50309.

Rubymar Sinks; Fertilizer Pollution Feared

Africa, Iran, News Briefs, Philippines

The Rubymar, a vessel hit by missiles from Houthi rebels in the Red Sea on Feb. 18, sank on March 2, according to the US Central Command on X, formerly known as Twitter. The crew had abandoned ship soon after the attack.

The Command said the ship was carrying some 21,000 mt of ammonium phosphate sulfate fertilizer that presents an environmental risk to the Red Sea. The Command said the vessel also poses a subsurface impact risk to other ships. The vessel was the first to sink since the Houthi militants heightened their attacks.

In a separate attack, two crew members from the Philippines and another from Vietnam died on March 6 when the Yemen-based Houthis attacked the bulk commodities vessel True Confidence in the Gulf of Aden, according to Bloomberg. At least two other sailors were injured.

The carrier’s 20-person crew was forced to abandon ship due to the strike and were taken to Djibouti by an Indian navy vessel. The damaged ship, which was hauling a cargo of steel products, was drifting well away from land while salvage efforts were underway.

The incident marks the first deaths of crew members in the militants’ campaign against commercial shipping in one of the world’s busiest waterways. It also raises questions about how much risk shipowners are willing to accept while trying to keep their crews and cargoes safe. Most merchant vessels are avoiding the region by sailing around Africa’s Cape of Good Hope.

“It is time for those shipowners who are continuing to transit through the Red Sea to reassess the necessity of their decision considering recent events,” said David Appleton, Head of Professional and Technical at Nautilus, which represents more than 20,000 maritime workers. “The utmost priority should be the safeguarding of the lives of seafarers.”

“We call on the industry to divert ships around the Cape of Good Hope until safe transit through the Red Sea can be guaranteed,” the International Transport Workers’ Federation (ITF) said in a statement. “No delivery window is worth the loss of seafarers’ lives.” The ITF lobbies for seafarer rights by acting alongside more than 700 affiliate trade unions.

The Iran-backed Houthis escalated their attacks in November, first targeting vessels that they said had ties to Israel in protest against its military campaign in the Gaza Strip. More recently, the militants have widened the strikes following American and British military efforts to keep the shipping lanes open.

Texas Fires Blamed on Downed Power Lines

News Briefs, Texas

Utility Xcel Energy reported on March 7 that its equipment was likely “involved in an ignition” of the Smokehouse Creek Fire, the biggest in Texas history, which has burned more than 1,059,570 acres, Bloomberg reported. Two people have been killed in the blaze and authorities estimate that 500 structures have been destroyed.

Investigators for Texas A&M Forest Service have determined that the Smokehouse Creek and Windy Deuce fires in the state were ignited by downed power lines, according to a statement from the service. The forest service did not say whether the power lines that ignited the fires belonged to Xcel Energy.

Xcel said in its statement that it has been cooperating with investigators and conducting its own review but “disputes claims that it acted negligently in maintaining and operating its infrastructure; however, we encourage people who had property destroyed by or livestock lost in the Smokehouse Creek fire to submit a claim to Xcel Energy through our claims process.”

The fires have threatened a number of refineries and chemical production facilities, including Nutrien Ltd.’s nitrogen plant in Borger, Texas (GM March 1, p. 1). A Nutrien spokesperson told Green Markets on March 7 that “the Borger facility has remained in operation and the wildfires do not currently pose a threat to the site.”

While the Roughneck Fire in Hutchinson County is now 100% contained, four other fires continue to burn in Texas, including the Smokehouse Creek Fire, which was 44% contained as of March 7. The Windy Deuce Fire was 81% contained and slightly over 144,000 acres, while the Grapevine Creek Fire was 77% contained at 34,000 acres.

Officials surveying the damage said more than 3,600 cattle have died from the fires, and the number of dead cattle is expected to double or triple in the coming days as land is inspected and animals are euthanized because of burn injuries and trauma, USA Today reported, citing Sid Miller, Commissioner of the Texas Department of Agriculture.

Three Face Prison Sentences for Defrauding PCS

Canada, News Briefs, U.S.

A North Carolina man was the third person to plead guilty to devising and executing a scheme to defraud the Nutrien Ltd. legacy company, Potash Corp. of Saskatchewan (PCS), by conspiring to fraudulently obtain matching charitable contributions for the Boys and Girls Succeed (BAGS) organization, according to a March 5 announcement by Michael Easley, US Attorney for the Eastern District of North Carolina. The news came after US District Judge Terrence W. Boyle accepted the plea. 

Dwayne Moorer West, 60, faces up to 20 years in prison when sentenced later this year. Two of West’s co-conspirators pled guilty to the same charges on Jan. 23, 2024, and are also facing up to 20 years behind bars.

“Many companies encourage their employees to support local charities by matching their employees’ charitable contributions,” said Easley. “This defendant recruited PSC employees to make fake donations to his charity so he could fraudulently secure over a half-million dollars in matching funds from PSC. He then paid kickbacks to the employees. This defendant was driven by greed to take advantage of a charitable program meant to help those in need.”

According to documents and information presented in court, West owned BAGS, an organization that provided services to boys and girls in Wake County, N.C. Between 2010 and 2018, West conspired with Michael Lavern King, a PCS employee, and Martin Fareed Abdullah, a BAGS employee, to fraudulently obtain matched charitable contributions from PCS. To carry out this scheme, King and Abdullah solicited multiple PCS employees to aid and assist in the fraud.

West obtained bank checks that fraudulently showed large charitable donations from each PCS employee to the BAGS foundation. The fraudulent checks were then used as donation receipts for submission to PCS as part of their matching charitable program. The PCS employees never made charitable donations to BAGS. Instead, they received a quarterly kickback from West, Abdullah, and King for the use of their employee information. In total, PCS matched nearly $600,000 in fraudulently obtained contributions to BAGS.

The US Attorney’s office told Green Markets that some 13 PCS employees participated in the scheme. It said they all cooperated with the investigation. They were not prosecuted, except for King. All 13 were terminated by PCS, according to the office.

“We conducted an internal investigation into this matter and took all appropriate action, including cooperating with the US Attorney’s office,” a Nutrien spokesperson told Green Markets. “The details of that investigation and the actions taken by the company remain
confidential; however, we can confirm the individual named in the article is no longer employed with the company.”

Arizona Fertilizer Company Files Bankruptcy

News Briefs, U.S.

Harvest Gold Silica, a company that borrowed $22 million in the municipal bond market to build a plant that produced fertilizer from mine waste, filed bankruptcy on March 4, according to Bloomberg, citing a court filing. Harvest Gold listed assets of $1-$10 million and liabilities of $10-$50 million in a Chapter 11 filing in the US Bankruptcy Court of the Northern District of Texas. 

The Arizona Industrial Development Authority issued the unrated bonds on behalf of Harvest Gold in 2019. Harvest Gold processed waste from a mine in Congress, Ariz., which produced gold from 1890-1911 and was reopened for a short time in the 1990s. The project was expected to excavate and process about 10,000 tons of mine tailings into silica for use as a soil additive, according to an offering document.

However, the operator of the plant, Vast Mountain Development Inc., had only produced silica sand from mine tailings “for a short time and only on a pilot project basis,” the offering document said. The bonds were sold to Greenwich Investment Management, according to litigation related to the bond sale. Vast Mountain also filed for bankruptcy, listing assets and liabilities of $1-$10 million. 

Harvest Gold’s bankruptcy is the second this year for a project financed through the Arizona Industrial Development Authority. In January, an Arizona lumber company that borrowed almost $200 million through the agency filed Chapter 11.