All posts by hlancey@bloomberg.net

OCI Sells Entire Stake in Fertiglobe to ADNOC; Reportedly Weighing Potential Sale of IFCO

ADNOC - Abu Dhabi, Ammonia, Ammonium Sulfate, Blue Ammonia, Egypt, Featured, Nitrogen, The Netherlands, UAN, Urea

OCI NV and UAE state-owned oil giant Abu Dhabi National Oil Co. (ADNOC) on Dec. 15 announced that they have entered into a binding sale and purchase agreement for ADNOC to acquire OCI’s 50% + 1 share stake in Abu Dhabi-based Fertiglobe Plc for a total consideration of $3.62 billion.

Following the completion of the transaction, OCI will have fully exited the Fertiglobe joint venture while ADNOC’s shareholding in the jv will increase to 86.2%. The free float traded on the Abu Dhabi Securities Exchange will remain at 13.8%. The transaction is expect to close in 2024, subject to regulatory conditions and antitrust approvals.

OCI said the purchase price paid of AED3.20 per share represents an 8% premium on Fertiglobe’s closing price as of Dec. 11, 2023, and a 25% premium on the price at the jv’s $795 million initial public offering (IPO) in 2021(GM Oct. 22, 2021).

The purchase consideration additionally includes a two-year earn-out mechanism for FY2024 and FY2025 linked to free cash flow metrics and commodity pricing that may allow OCI to participate in future nitrogen market upside. OCI said it will seek shareholder approval for the transaction at an extraordinary general meeting to be convened in due course.

The announcement follows media speculation and reports this past week that ADNOC was exploring a potential takeover of Amsterdam-based OCI NV as part of the latest push by the oil major to expand beyond oil.

According to a Dec. 14 Bloomberg report, citing unnamed sources familiar with the matter, the parties were working with advisors and had held preliminary talks about a possible transaction. Some of the unnamed sources cited by the report believed ADNOC could also opt to acquire significant assets from OCI instead of acquiring the entire company.

OCI, backed by Egyptian billionaire Nassef Sawiris, has been evaluating a range of options, including asset disposals, as part of a strategic review.

OCI and ADNOC established the Fertiglobe jv in 2019, combining ADNOC’s fertilizer business into OCI’s Middle East and North Africa nitrogen fertilizer platform (GM Oct.4, 2019). Following the subsequent IPO on ADX, OCI’s shareholding was reduced to half of the jv company’s shares, down from the original 58% stake, while ADNOC’s stake dropped to 36.2% from the original 42% holding.

Fertiglobe is the largest export-focused nitrogen fertilizer platform globally and the largest producer in the MENA region, with a production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia. The jv is comprised of OCI’s companies in Egypt, EBIC and EFC, and its Algeria-based Sorfert company, and ADNOC’s Fertil fertilizer production facilities in Ruwais, UAE.

ADNOC said the Fertiglobe transaction supports its “ambitious chemical strategy and its plans to establish a global growth platform for ammonia, a key lower carbon fuel and hydrogen carrier that is expected to play an important role in the energy transition.”

For Fertiglobe, this transaction supports the company’s future growth plans, “enabling it to accelerate the pursuit of new market and product opportunities and expand its focus on clean ammonia as an emerging fuel and hydrogen carrier.”

Additionally, OCI and ADNOC on Dec. 15 announced a roadmap to explore opportunities for global strategic collaboration on future joint investments, including development projects outside of the Middle East in decarbonization and product distribution across North America and Europe, according to the OCI statement.

In its statement, ADNOC reported the two companies had also signed a Memorandum of Understanding to explore opportunities to cooperate on projects in the US, on ammonia imports into Europe, and on broader development of the low-carbon ammonia market.

Separately, according to a Bloomberg report earlier this week, OCI is also working with advisors to gauge buyer interest in its Wever, Iowa-based Iowa Fertilizer Co. (IFCo) and is seeking more than $3 billion for the business. IFCo has 195,000 mt/y of sellable anhydrous ammonia capacity, and production capacity for 1.5 million mt/y of UAN, 420,000 mt/y of urea, and 315,000 mt/y of diesel exhaust fluid (DEF).

OCI’s shares have taken a 38% dive in Amsterdam trading this year, giving the company as a whole a market value of about €4.4 billion (about $4.8 billion), according to Bloomberg.

Commenting on the media reports, OCI in a Dec. 14 statement said it continually considers strategic initiatives regarding its portfolio, including potential divestments, and previously has disclosed its ongoing strategic review. Within this context, the company confirmed that discussions with multiple potential buyers for certain of its nitrogen assets are ongoing.

OCI reported in its third-quarter earnings release in November (GM Nov. 10, p. 27) that it had hired financial advisors to explore asset monetization opportunities and was engaged in “active discussions” with a focus on “attractive value propositions.”

OCI also reported in November that its strategic review, which has focused on the identification of value accretive monetization opportunities while prioritizing growth in its fast-growing clean fuels business, was nearing completion.

The strategic review, announced in March, followed a request by one of its largest shareholders, activist investor Jeff Ubben of Inclusive Capital Partners, which owns 5% of OCI. Ubben urged OCI to explore strategic options, including asset sales, especially for its IFCo unit, amid shareholder concerns about the company’s stock prices.

OCI reported adjusted third-quarter EBITDA of $242 million, a 75% decline from the year-ago $961.8 million and a big miss on the average analyst estimate of $360.3 million (Bloomberg Consensus). Some 82% of OCI’s third-quarter adjusted EBITDA was generated by Fertiglobe, as noted by Morgan Stanley analyst Lisa De Neve in a Bloomberg report.

Third-quarter revenue was off 54% from the prior year, with the company citing much lower selling prices across both nitrogen and methanol segments, and a front-loaded order book. OCI posted an adjusted net loss of $95.2 million for the quarter versus a net profit of $257.1 million for the same prior-year quarter.

In addition to IFCo, OCI also has nitrogen fertilizer and methanol production assets in The Netherlands, including 1.1 million mt/y of ammonia and 0.73 million mt/y of UAN capacity, according to the Green Markets database. OCI also has ammonia and methanol production facilities in Beaumont, Texas, with 0.3 million mt/y of ammonia capacity.

The company is also developing a 1.1 million mt/y blue ammonia production facility at Beaumont, which is on track to start production in early 2025. OCI reported in November that discussions were underway for long-term product offtakes and potential equity participation.

In 2022, OCI sold some 8.63 million mt of ammonia and nitrogen fertilizers as well as 1.26 million mt of methanol, 917,200 mt of DEF, and 84,000 mt of melamine. In addition, the company sold 3.6 million mt of traded third-party nitrogen products, including ammonia, urea, UAN, and ammonium sulfate.

Separately, ADNOC is close to finalizing a deal with Austrian oil and gas group OMV AG to create a petrochemicals company worth more than €30 billion (approximately $32.4 billion at current exchange rates), according to Bloomberg. The Abu Dhabi oil giant is also working on a potential acquisition of German chemicals company Covestro AG for €11.6 billion (GM Sept. 15, p. 26; Aug. 18, p. 29).

Gulf Coast Ammonia Expected to Start Production Soon

Ammonia, Featured, Germany, Gulf Coast, U.S.

Gulf Coast Ammonia LLC’s (GCA) new 1.3 million mt/y Texas City ammonia plant (GM Jan. 10, 2020) is expected to start production soon, according to knowledgeable sources, though major players in developing the project either had no updates or did not respond to inquiries.

Those players include Lotus Infrastructure Partners (formerly Starwood Energy Group Global LLC), Greenwich, Conn., Mabanaft GmbH & Co. KG, Hamburg, Germany, and Air Products, Allentown, Penn. The project was initially expected to come up in first-half 2023.

When the GCA project was announced, the company said it had already concluded long-term offtake agreements for all 1.3 million mt/y of capacity, with Mabanaft, which will be acting as GCA’s operating partner, expected to market some 500,000 mt/y. While never officially confirmed, major industry players believe that OCP has a sizeable offtake agreement with GCA, if not the entire remainder (GM March 18, 2022) of the capacity.

Yara to Buy Italy’s Agribios Organic Fertilizer Business

Europe, Featured, Norway

Oslo-based Yara International ASA announced on Dec. 13 that it is acquiring the organic-based fertilizer business of Agribios Italiana srl, the company’s second bolt-on acquisition supporting its organic strategy in Europe. Yara has not disclosed the value of the acquisition.

Based in Villafranca Padovana in northern Italy, Agribios has a broad portfolio of organic-based fertilizers produced using animal and agricultural byproducts. With a volume of approximately 60,000 mt produced in 2022, Agribios has a market share of around 10% of the organic-based fertilizer market in Italy, Yara said.

“By acquiring Agribios, Yara will gain a strong foothold in Italy – the second largest organic-based fertilizer market in Europe,” Yara said. “Agribios’ solid market position, combined with our strong commercial presence, will allow Yara to increase sales in the organic-based fertilizer market in Italy and neighboring countries by around 30% within the next three years.”

Yara said it will also be able to offer Agribios’ products to customers outside Italy thanks to its well-established sales and distribution platform in Europe. “We are committed to further expand our offering in the organic fertilizer sector as a complement to our mineral fertilizers to help promote regenerative agriculture and improve soil health,” Yara said.

Yara already sells organic-based fertilizers in many European countries, including France, Spain, and Germany, as well as in the Nordic and Baltic regions. In 2021 (GM Sept. 3, 2021), Yara’s Finnish subsidiary, Yara Suomi Oy, acquired a Finnish producer of organic-based fertilizers, Ecolan Oy (now renamed Yara Eco Oy).

According to global market research firm Kings Research, the organic fertilizer market in Europe is expected to grow at a compounded annual growth rate of 11.53% from 2023 to 2030.

Incitec Pivot Ltd. – Management Brief

Management Briefs

Melbourne-based fertilizer and explosives company Incitec Pivot Ltd. (IPL) announced on Dec. 12 the appointment of Mauro Neves de Moraes as CEO and Managing Director following a comprehensive search process. De Moraes will assume the role on Jan. 22, 2024.

Paul Victor, IPL’s Chief Financial Officer, has been serving as the company’s Interim CEO since early June after IPL’s former CEO and Managing Director Jeanne Johns stepped down (GM June 9, p. 26). Johns had served as IPL’s CEO and Managing Director since 2017.

IPL said De Moraes has executive leadership experience in the mining and logistics sectors across multiple geographies over 30 years. He joined BHP in 2017 as Asset President at the company’s Escondida operations in Chile, the world’s largest copper mine. In 2021 he was appointed Asset President for BHP Mitsubishi Alliance (BMA) in Queensland, Australia’s largest producer and supplier of seaborne metallurgical coal.

From 2014 to 2017, De Moraes served as Executive Vice President – Commercial and Marketing – at Aurizon Holdings Ltd., one of the largest rail freight operators in Australia.

Fertilizers Europe – Management Brief

Management Briefs

Brussels-based industry association Fertilizers Europe appointed Leo Alders, CEO of LAT Nitrogen Austria GmbH, as its new President at the trade group’s Dec. 5 Extraordinary General Assembly, effective immediately.

“I am very pleased to welcome Leo Alders as our new President,” said Director General of Fertilizers Europe Antoine Hoxha. “Given the challenges of high and volatile energy prices, the transition to low-carbon economy, and the upcoming EU elections, the fertilizer industry needs a strong and experienced leader like Leo Alders.”

Fertilizers Europe represents the major fertilizer manufacturers in the European Union (EU), with its members accounting for approximately 70-80% of the bloc’s fertilizer production capacity. Hoxha said Alders’ belief in cooperation and outreach will help Fertilizers Europe strengthen its ties with all Plant Nutrition actors to become a key partner with European institutions on the future of agri-food systems in Europe.

Kore Potash Plc – Management Brief

Management Briefs

London-based junior miner Kore Potash Plc, which is pursuing projects in the Republic of Congo, announced that acting CFO Amanda Farris has resigned, and that Andrey Maruta has been appointed as CFO (non-board), effective Dec. 11. Maruta will report directly to the CEO and is not joining the company’s Board of Directors at this stage.

Maruta was previously Kore CFO from August 2019 until June of 2021 when he left for another role within the mining industry. Farris will remain available for a brief period to facilitate a smooth handover. The Board expressed its gratitude to Farris for her contribution to the company.

Kore said Maruta is a Chartered Certified Accountant with over 25 years’ experience in the mining industry, including as CFO at Petropavlovsk Plc, which had a premium listing on the LSE. He also worked in the audit function at accountancy firm Moore Stephens International in the UK and internationally.

Novaphos – Management Brief

Management Briefs

Novaphos, Fort Meade, Fla., on Dec. 14 announced the appointment of Navy Vice-Admiral Andrew “Woody” Lewis (ret.) as Chief Development Officer, a newly created senior executive position responsible for managing and directing the company’s relationships and engagement with strategic partners, including policymakers, regulators, and industry. He will report to Novaphos CEO Timothy Cotton.

The company said Lewis had a long and distinguished 36-year military career as a three-star senior officer, serving in the US Navy. He most recently served as Commander of the US 2nd Fleet and NATO Joint Force Command in Norfolk, Va.

The announcement is the second significant senior addition to the Novaphos team in the last few months. The company previously announced the appointment of Evgeny Fedoseev as its Chief Operating Officer. He had served in the same capacity at EuroChem Group.

Novaphos is a privately-owned company that has developed proprietary processes for use in the phosphate industry. The technology allows phosphate producers to use low-quality phosphate rock to make high-quality phosphoric acid for use in agriculture and industry without producing any phosphogypsum wastes. The company said the process is scalable, energy-efficient, and produces a useful construction aggregate byproduct – J-Rox™ – instead of phosphogypsum.

CHS Inc – Management Brief

Management Briefs

Seven board members were elected to three-year terms at CHS Inc’s 2023 annual meeting on Dec. 7-8 in Minneapolis, Minn. Reelected to the CHS Board of Directors were Scott Cordes, who raises corn and soybeans near Wanamingo, Minn., representing Region 1; Cortney Wagner, a first-generation cattle and hay producer based near Hardin, Mont., representing Region 2; Jon Erickson, who raises small grains and oilseeds and has a cow-calf operation near Minot, N.D., representing Region 3; Tracy Jones, who raises corn, soybeans, wheat, and cattle near Kirkland, Ill., representing Region 5; Dan Schurr, who raises corn and soybeans near LeClaire, Iowa, representing Region 7; and C.J. Blew, who farms and ranches in a family partnership in south-central Kansas, representing Region 8.

Anthony Rossman was elected to the CHS Board to represent CHS members in Region 1, succeeding Perry Meyer, who retired from the Board at the conclusion of the annual meeting. Rossman operates a diversified crop and livestock operation near Rochester, Minn., and manages genetic alliances in the beef industry.

Elected to one-year terms as board officers were Schurr, Board Chair; Blew, First Vice Chair; Cordes, Second Vice Chair; Russell Kehl, Secretary Treasurer; and Al Holm, Assistant Secretary Treasurer.

Humic Products Trade Association – Management Brief

Management Briefs

Jim Shone, Borregaard Area Business Manager for the Americas, has been appointed to the Board of the Humic Products Trade Association (HPTA). Shone has been an active HPTA member since he joined Borregaard in 2011 and has 40 years of sales and marketing experience in the ag industry.

Shone replaces Lyndon Smith, CEO of Huma Inc. and former Vice President of the HPTA Board. Smith will remain an active member of the HPTA. HPTA Board Member and Secretary Treasurer David Chinn recently joined the staff of Huma as Vice President of Corporate Compliance. In this new role, he will work to advance Huma products and regenerative agriculture.

Chipotle Invests in Nitricity, Greenfield Robotics

California, News Briefs, Nitrogen

Restauranteur Chipotle Mexican Grill, Newport Beach, Calif., on Dec. 11 announced that it is investing in agtech startup Nitricity, San Francsico, and Greenfield Robotics, Cheney, Kan.

Nitricity will used the funds to scale up its renewable nitrogen production at point-of-use, build out company infrastructure, and support the launch of its first commercial product within the next two years, while Greenfield will build out its fleet of autonomous agricultural robots and develop additional capabilities for them going forward, including micro-spraying, cover crop planting, and soil testing.

The two minority investments are being made through Chipotle’s $50 million Cultivate Next venture fund, which makes early-stage investments into strategically aligned companies that further Chipotle’s mission to Cultivate a Better World and help accelerate the company’s aggressive growth plans.

“We’re proud to support Nitricity’s pursuit of a product innovation whose environmental benefits are complimentary to Chipotle’s approach to Food With Integrity,” said Jack Hartung, Chief Financial and Administrative Officer for Chipotle.

“Fertilizers have experienced steep price increases in recent years due to supply chain issues, fossil fuel price volatility, and rising distribution costs,” Hartung continued. “Nitricity’s fertilizer offering not only has the potential to reduce the carbon footprint of the fertilizer industry, but it can be a cost-effective solution for growers in our supply chain.”

“Nitricity is committed to producing fertilizer that is optimized for farmers, not factory production or freight distribution,” said Nico Pinkowski, Co-Founder and CEO of Nitricity. “Partnering with Chipotle will unquestionably accelerate our path toward disrupting the industry with climate-smart technology.”