All posts by hlancey@bloomberg.net

IPL Projects Lower Output from Phosphate Hill

Australia, DAP/MAP, Earnings, Phosphate

Southbank, Victoria-based Incitec Pivot Ltd. (IPL) on Feb. 15 confirmed that its overall group financial performance remains broadly in line with the FY2024 outlook that was previously provided at its 2023 AGM on Dec. 20, 2023.

The company said expectations have been supported by stronger DAP prices recently and solid performance from the global explosives business, but it flagged lower-than-guided production at Phosphate Hill in FY2024 due to the impact of Cyclone Kirrily and maintenance activities during the first fiscal half.

Following Cyclone Kirrily and associated flooding in parts of northwest Queensland, there have been interruptions to the rail transport service between Cloncurry and Julia Creek on the Mount Isa to Townsville rail line. IPL said no employees or contractors were injured and no damage was sustained to IPL’s assets, but the interruption to rail service has impacted the sulfuric acid supply chain, resulting in reduced production levels at the Phosphate Hill plant.

Phosphate Hill has been able to continue operating at reduced levels despite the rail disruption by utilizing temporary storage and road transport for finished fertilizer, IPL said. It expects normal rail service to resume late this month. As a result, IPL said it expects Phosphate Hill production levels to be lower in the first fiscal half, with full-year production levels in FY2024 now expected at 730,000-770,000 mt versus the previous guidance of 780,000-820,000 mt.

The company currently estimates that the financial impact of the lower production on earnings before interest and tax (EBIT) in FY2024 for the fertilizer business would be approximately A$8.5 million for every 10,000 mt of production lost, including associated costs incurred. IPL said it will provide a further update with its first-half FY2024 results announcement on May 16.

Incitec Pivot Ltd. – Management Brief

Management Briefs

Incitec Pivot Ltd. (IPL) on Feb. 8 announced that Dr. Xiaoling Liu has signaled her intention to resign as a Non-Executive Director, effective May 31, 2024. She has served since Nov. 25, 2019, and been on the Audit and Risk Management Committee and the Health, Safety, Environment and Community Committee since her appointment.

“On behalf of the Board I would like to acknowledge Xiaoling’s significant contribution to our company,” said Greg Robinson, IPL Chairman. “The Board has greatly benefited from Xiaoling’s experience and her leadership as Chairman of the Health, Safety, Environment and Community Committee since December 2020. We extend our sincere thanks to Xiaoling and wish her well in her future endeavors.”

IPL said the Board is currently assessing appropriate Board composition and will update the market with respect to any additional appointments following Xiaoling’s departure.

Judge Denies Freeze Request by Unigel Creditors

Brazil, News Briefs

A request made by holders of Unigel Participacoes’ local notes seeking to freeze the Brazilian fertilizer maker’s financial assets was denied by a Sao Paulo judge on Feb. 15, according to a document reviewed by Bloomberg. 

The creditors had requested a 30-day freeze of the company’s financial assets and some equity stakes as a temporary protection against creditors expires. Unigel said in a statement that talks with its creditors continue, and that it is confident it will reach an agreement soon.

Prior to the creditor filing, Unigel had pitched a last-minute deal to avoid filing for bankruptcy protection, according to people familiar with the matter. The company was trying to sell bondholders led by Pacific Investment Management Co. on a plan that would include an injection of $100 million in new money and allowing it to restructure debt out of court. Unigel reportedly needs the buy-in of about a third of its bondholders to kick off the restructuring, according to the people.

From there, the company would have 90 days to convince holders of more than 50% of the debt to sign off for the settlement to take effect. The plan under discussion gives bondholders an option to exchange 30% of their existing bonds into senior debt and 40% into subordinated debt, one source said. The remaining 30% of debt would be exchanged into 50% of Unigel’s equity for those creditors who inject new money.

Representatives for Unigel and Pimco declined to comment. 

An agreement would mark a turnaround for Unigel, which skipped coupon payments on its dollar and Brazilian real-denominated notes in the past few months as losses piled up due to a global downturn in fertilizer prices. It has failed to keep up with some of its covenants, including maintaining debt levels low enough relative to a measure of earnings. 

Late last year, holders of Unigel’s local bonds voted to declare the early maturity of the notes after a 90-day standstill agreement failed to yield a deal. The move triggered an acceleration of the company’s other obligations, and it sought temporary protection from creditors, which expires this week.

The chemical and fertilizer producer is one of the main fertilizer producers in Brazil. It was founded by Henri Slezynger, an 87-year-old Belgian naturalized Brazilian who studied chemical engineering at the Massachusetts Institute of Technology. The Slezynger family owns Unigel through a holding company and its fortune is valued at around $2 billion, according to calculations by the Bloomberg Billionaires Index.

Yara Updates on Porsgrunn, Blue NH3 Projects

Green Ammonia, Green Hydrogen, News Briefs, Norway, The Netherlands

Yara International ASA is commissioning its green hydrogen/green ammonia production pilot project at Herøya Industripark in Porsgrunn, Norway, and has started to produce fertilizers using the green ammonia output, Yara executives told investors and analysts at a company earnings call on Feb. 9.

Yara previously indicated that Yara Clean Ammonia’s (YCA) 24 MW green hydrogen pilot will provide enough hydrogen to produce 20,500 mt/y of green ammonia at the pilot plant (GM Feb. 10, 2023; Jan. 28, 2022).

YCA CEO and Yara Executive Vice President Corporate Development Magnus Ankarstrand told investors and analysts that the ammonia output will equate to 45,000-70,000 mt/y of finished fertilizer, depending on grade.

“We have during the commissioning produced the first tons and are testing the facility now, and will be ramping up during the year,” he said, adding that the phasing of the capacity ramp-up will depend on how the commissioning goes.

Yara said it has also taken the Final Investment Decision (FID) for its carbon capture and storage (CCS) project in Sluiskil, in the Netherlands, and estimates the start-up will take place in 2026. It plans to capture some 800,000 mt of CO2 from the process gas from its ammonia production each year at the Sluiskil plant, which it said would be an approximate 60% capture rate of the company’s total ammonia production capability at Sluiskil.

Yare signed a binding commercial agreement last November with Northern Lights JV DA whereby the CO2 captured at Sluiskil will be liquefied and shipped by Northern Lights to permanent storage on the Norwegian continental shelf, 2.6 kilometers under the seabed (GM Nov. 22, 2023). The first tonnes of CO2 are expected to be shipped in 2025 and would be the world’s first cross-border CCS-agreement in operation.

Yara last week also confirmed that it is continuing to work towards taking the FIDs on its two US-based blue ammonia projects, most likely in the second half of 2025. In parallel with that, the company said it is planning for the funding of the projects.

YCA and Calgary-based Enbridge Inc. in March 2023 signed a letter of intent to jointly develop and construct a world scale, low-carbon blue ammonia production facility as equal partners at the Enbridge Ingleside Energy Center (EIEC) near Corpus Christi, Texas (GM March 31, 2023). The plant would have an expected capacity of 1.2-1.4 million mt/y.

In late June, YCA and German chemicals giant BASF announced that they were collaborating on a joint study to develop and construct a world-scale, low-carbon blue ammonia production facility with carbon capture in the US Gulf Coast region (GM June 30, 2023).

YCA and BASF are looking into the feasibility of a plant with a total capacity of 1.2-1.4 million mt/y, with Yara expecting to contract full offtake from the proposed facility. Yara and BASF are long-standing collaboration partners, operating a joint ammonia plant at BASF’s site in Freeport, Texas.

Humboldt Co-op to Build New Facility

News Briefs

Humboldt Co-op, Humboldt, Sask., expects construction of a new fertilizer blending and storage facility to start in May and conclude this fall, according to SaskToday.ca.

The new C$7 million facility in Humboldt would have 20,000 square feet and 6,000 mt of storage. Regina-based GFS Projects will oversee the project, with Jayco Builders, Bow Island, Alta., constructing the wooden structure. The new facility will replace a smaller facility and require the addition of one or two more employees.

Five Companies Settle Natural Resources Claim

News Briefs, U.S.

Five companies have agreed to pay $7.2 million to resolve allegations of natural resource damages at the Duck & Otter Creeks Natural Resource Damage Assessment (NRDA) site near Toledo, Ohio, according to the Justice Department.

Chemtrade Logistics Inc., Ohio Refining Co., Chevron USA, Energy Transfer LLC, and Pilkington North America Inc., allegedly released oil or hazardous substances, including polycyclic aromatic hydrocarbons, arsenic, and lead into the Duck & Otter Creeks NRDA site. The site is east of the Maumee River and includes the creeks, adjoining wetlands, floodplain areas, and uplands, said the DOJ.

“For decades, these companies released toxic industrial pollutants into Ohio waterways, damaging our local wildlife and ecosystem,” said U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio. 

“These settlements will enable restoration work that will significantly improve the environment in the area of the Maumee River and nearby Lake Erie,” added Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Addressing the harm caused by releases of toxic contaminants will benefit local communities and restore important habitat.”

First Phosphate Completes PPA Pilot Production

Canada, Lithium, News Briefs, Phosphate, Phosphoric Acid

Junior miner First Phosphate Corp., Saguenay, Quebec, which is developing phosphate claims in the Saguenay–Lac-Saint-Jean Region of Quebec, announced on Feb. 13 that a pilot project has successfully transformed its high purity phosphate concentrate into battery-grade purified phosphoric acid (PPA) for the lithium iron phosphate (LFP) battery industry.

“Our full transformation process from Quebec igneous phosphate rock to PPA for LFP batteries is now complete,” said First Phosphate CEO John Passalacqua. “We can now engage our partners to begin the pilot process of producing LFP cathode active material and LFP battery cells from a fully North American source of battery-grade PPA.”

The company said PPA samples are available upon selected client request and at nominal fee.

Nutrien Ag Fire Raises Supply Concerns in Australia

Australia, Canada, News Briefs, Nitrogen

There are concerns that a fire that engulfed part of a warehouse storing bulk fertilizers and chemicals run by Nutrien Ag Solutions in Kwinana, 38 kilometers south of Perth’s central business district, may stretch supplies to Western Australian farmers ahead of the seeding season.

The fire, which started at 1:30 p.m. local time on Feb. 9, led to the evacuation of 11 people from the site, but no injuries were reported. Some 70 firefighters responded, and authorities issued a hazmat warning that afternoon for people living in more than a dozen residential suburbs around Kwinana Beach.

The company, a unit of Canada’s Nutrien Ltd., said in a media statement on Feb 12 that certain port infrastructure at the Kwinana Bulk Jetty, including the bulk fertilizer site, were impacted by the fire. It added that its bulk fertilizer site was holding granular products only at the time of the fire and its liquid bulk N fertilizer storage and chemical manufacturing (Genfarm) facilities were not impacted by the fire.

According to an ABC News Australia report, citing the Department of Fire and Emergency Services, the blaze started on a conveyor belt carrying sulfur from a ship to a storage facility, but the cause of the fire is still under investigation. According to local media reports on Feb. 14, citing the Freemantle Ports Authority, the main damage was to the import system conveyor, associated transfer tower, and a shed used for storing fertilizer.

Fremantle Ports said planning is underway to recommence shipping operations as soon as possible, subject to several assessments and conditions being satisfied.

WAFarmers President John Hassel, as cited by the ABC News report, said Nutrien Ag is one of two major suppliers to Western Australia, and the destruction of the conveyor belt might cause a problem that is “a bit of a worry” for Australian imports.

Andrew Duperouzel, Nutrien Ag Solutions Region Manager, West, said in a Feb. 12 statement that the company was assessing the damage and was working closely with Freemantle Ports to “confirm new access routes, adjusted shipping schedules, and alternate storage solutions to ensure the company minimizes any impact to its supply chain.”

“It’s business as usual for Nutrien’s other storage depots across Western Australia, so we are still receiving and dispatching product from out other locations including Geraldton, Esperance, Albany, and Henderson,” he said.

Reward Minerals Seeks Extension of ASX Suspension

Australia, News Briefs, Sulfate of Potash

Aspiring Australian sulfate of potash (SOP) producer Reward Minerals Ltd. on Feb. 16 sought a further extension of the voluntary suspension of its securities pending the release of an announcement related to its proposed acquisition of the Beyondie SOP project in Western Australia.

The voluntary suspension began at the start of trading on Feb. 7 (GM Feb. 9, p. 32) and will now remain in place until the earlier of the company releasing the announcement or the start of trading on Feb. 26, according to a Feb. 16 ASX filing by the company. Reward Minerals on Feb. 12 had sought an extension to Feb. 19.

Senex Watchful as IPL/Pupuk Deal Progresses

Australia, News Briefs

As negotiations drag on between Southbank, Victoria-based Incitec Pivot Ltd. (IPL) and Indonesian state-owned PT Pupuk Kalimantan Timur for the proposed A$1.5 billion (approximately $975.5 million at current exchange rates) sale of IPL’s fertilizer business, Australia’s Senex Energy, a unit of South Korean steel giant POSCO International Corp., is reported to be closely watching the situation and ready to step in should IPL’s discussions with Pupuk Kaltim break down, according to the Australian Financial Review.

According to the report, Senex and the Australian Wesfarmers group were among those that had expressed interest in IPL’s fertilizer business but were knocked out of the running by Pupuk Kaltim’s higher offer.

IPL has been in negotiations with the Indonesian group since last summer (GM July 28, 2023) and divesting the fertilizer unit has been under consideration for some time. There were reports in December that IPL may “walk away” from the proposed deal, with IPL Chairman Greg Robinson citing “complications” in negotiations with Pupuk Kaltim (GM Dec. 22, 2023).

In a business update on Feb. 15, IPL said the process for the potential sale of the fertilizer business is “progressing” but there is no certainty that any agreement will be reached or that any sale transaction will occur.