All posts by hlancey@bloomberg.net

Belaruskali Takes Legal Action Against Lithuania Over Potash Transit Ban

Belarus, Featured, NPK, Potash

Belarus’ Foreign Ministry and state-owned potash producer Belaruskali OAO are preparing to take legal action against Lithuania over the country’s ban on transporting Belarusian potash, or NPK fertilizers, through Lithuanian territory, according to bne IntelliNews, citing the website of Lithuania’s public broadcaster LRT.

Belaruskali has filed a notice of arbitration, alleging that Lithuania’s actions constitute a breach of a bilateral investment-protection agreement, and it is seeking approximately €1 billion (approximately $1.1 billion) in compensation, according to the report.

Lithuania’s government terminated the railway transit contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belaruskali as of Feb. 1, 2022, over national security concerns (GM Jan. 14, 2022). The Lithuanian government’s decision came in the wake of EU and US sectoral sanctions on Belarus, which included, among other things, a ban on the trading and transit of potash.

The removal of the Lithuanian rail route effectively blocked Belaruskali’s key export route. Before the imposition of Western sanctions, the Belarus producer and its marketing/export arm, Belarusian Potash Co. (BPC), shipped 10-11 million mt of potash annually through the Lithuanian port of Klaipėda.

Lithuania’s Transport Ministry confirmed the initiation of legal proceedings but declined to provide further comment, according to the report.

Since the Lithuanian rail ban, Belarus began reorienting transshipment of its potash exports to Russian ports and has also increased its exports to China by rail.

Belarus in July reiterated its plans to export some 8 million mt of potash this year, the state-run news agency BelTA reported, citing Belarusian First Deputy Prime Minister Nikolai Snopkov (GM July 21, p. 1). He said Belarusian potash transshipment through Russian ports could increase to 8.4 million mt this year, up from 3 million mt in 2022.

Belarus railed more than 1 million mt of potash to China in 2022, according to an Interfax report in January, citing Belarus’ then Transport and Communications Minister Alexey Avramenko (GM Jan. 6, p. 28).

According to Green Markets calculations, however, global potash imports of Belarusian potash to various countries were only 3.5 million mt this year through July, equal to last year’s level (GM Sept. 29, p. 27).

PhosAgro, Global Ports Partner at St. Petersburg

Baltic Sea, Featured, Phosphate, Russia

Russian phosphate producer PhosAgro Group and Global Ports, a stevedoring division of Delo Group, have entered into an agreement to transship PhosAgro’s fertilizer through the First Container Terminal operated by Global Ports in St. Petersburg, Russia. The agreement also covers increased shipments through Global Ports’ Petrolesport Terminal, also in St Petersburg.

The agreement follows a Memorandum of Cooperation (MOC) inked between the two parties in April for the handling of an increased volume of PhosAgro’s fertilizers (GM April 21, p. 28). According to the MOC, the fertilizers to be transshipped for export will be produced at PhosAgro’s Cherepovets plant in Russia’s Vologda region.

The agreement was signed for a five-year period and will be effective from 2024-2028. The parties will be able to export at least 3 million mt/y, according to Global Ports, with the fertilizers loaded from special containers onto seagoing vessels.

The new cargo volumes “will increase the capacity utilization of Great Port of St. Petersburg, which is the most important transport hub for Russian foreign trade,” said Global Ports CEO Albert Likholet.

“For PhosAgro, the Russian market has been and remains a priority,” said Mikhail Rybnikov, PhosAgro CEO. “At the same time, under the conditions of external restrictions, our company was able to quickly redirect export flows, increasing the supply of eco-efficient fertilizers to the markets of friendly countries. Partnership with Global Ports will enable PhosAgro to expand and diversify export capabilities.”

Global Ports handled 0.7 million mt of PhosAgro fertilizers at its Petrolesport Terminal in 2022. According to Global Ports, the Russian fertilizer group stopped the transshipment of fertilizers through Russian logistics company Ultramar LLC’s terminal in the Russian Baltic Sea port of Ust-Luga last year, but was not confirmed by Green Markets.

Global Ports in 2022 began work to adapt its First Container Terminal in St Petersburg to facilitate the handling of non-containerized cargoes to compensate for the decline in container transshipments via the Baltic Sea.

Grupa Azoty Start Talks to End Sale of Puławy Subsidiary

Ammonia, Featured, Poland, UAN, Urea

Polish fertilizers and chemicals group Grupa Azoty SA will start talks with Polish energy group Orlen SA aimed at ending the potential takeover of Azoty subsidiary Zakłady Azotowe Puławy, Azoty said in a Nov. 20 statement. Azoty said its management board adopted the resolution to enter talks with Orlen on Nov. 20.

However, Orlen’s President of the Management Board and CEO Daniel Obajtek, writing on X (formerly Twitter), said Orlen “maintains its readiness” to take over the Puławy unit, and “the decision of the management board of Grupa Azoty to suspend the sale of the subsidiary does not serve the purpose of stabilizing the group’s financial position or the fertilizer market.”

Both Azoty and Orlen are state controlled, and there has been speculation that the Puławy acquisition move was government-driven, aimed at helping the ailing fertilizer and chemical producer.

In its statement, Azoty said its decision not to sell Puławy was “influenced by several factors,” including the conclusion of an analysis conducted by an external consulting firm of the potential transaction’s impact on its value creation capacities.

The fertilizer and chemicals group continues to seek ways to rebuild its market value and optimize its businesses, Grupa Azoty Vice President of the Management Board and Deputy CEO Marek Wadowski said in the company statement.

Azoty and Orlen signed a cooperation and non-disclosure agreement on Orlen’s potential acquisition of Puławy in early June (GM June 9, p. 1). The agreement came as Azoty attempted to improve its financial position after warning that it would breach debt covenants at the end of the second quarter (GM May 26, p. 26; May 19, p. 5). The company posted a 2Q net loss of Pln543 million, or approximately $125 million at then current exchange rates.

Azoty was able to secure a waiver of certain covenants and amendments to its group loan agreements and those of its Zakłady Chemiczne “Police” SA subsidiary with 13 financing institutions in early September (GM Sept. 8, p. 26).

The group said in this week’s market filing that it is continuing discussions with financial institutions. The group posted a third-quarter negative EBITDA of Pln348 million but highlighted an uptick in its Agro/Fertilizers business segment amid improving domestic fertilizer demand.

Obajtek in late September reiterated Orlen’s interest in acquiring the Puławy subsidiary and said an economic analysis of the potential acquisition was ongoing (GM Sept. 29, p. 27). Obajtek said the analysis was expected to be completed by the end of this year.

Puławy’s production capacity includes 1.24 million mt/y of ammonia, 1.19 million mt/y of urea, and 1.2 million mt/y of UAN, according to the Green Markets database. In addition, the subsidiary in 2020 commissioned a new AN/CAN fertilizer plant with total production capacity of up to 820,000 mt/y (GM July 10, 2020). One production line is for granulated AN with 1,200 mt/d capacity, while the second is for CAN-27 production at 1,400 mt/d.

Yara, Northern Lights Ink World’s First Cross-Border CCS Agreement

Ammonia, Featured, Norway, The Netherlands

Yara International ASA reported on Nov. 20 it has inked a binding commercial agreement with Norwegian CO2 transport and storage supplier Northern Lights JV DA for the shipping of CO2 from the ammonia production at Yara Sluiskil in the Netherlands to permanent storage on the Norwegian continental shelf.

Yara aims to reduce the annual CO2 emissions from the process gas by 800,000 mt at its ammonia production at Sluiskil and said the deal with Northern Lights will enable the first cross-border transportation and storage of CO2. The first tonnes of CO2 are expected to be shipped in 2025.

The two parties agreed to the main commercial terms of the agreement back in the late summer of 2022 (GM Sept. 2, 2022) and have since been firming up the final contractual details.

“Cutting 800,000 mt of CO2 in Yara Sluiskil corresponds to 0.5% of the total annual emissions (2022) in the Netherlands,” said Yara Netherlands Vice President Michael Schlaug.

Yara Sluiskil will expand its capacity to liquify 12 million mt of CO2 over the next 15 years with an estimated capex of approximately €200 million (approximately $218.6 million at current exchange rates), Schlaug said.

Northern Lights JV will ship liquified CO2 from Yara Sluiskil to Øygarden in Norway. The liquefied CO2 initially will be stored in onshore tanks at that location, prior to injection into an offshore saline aquifer via pipeline for permanent and safe storage, 2,600 meters below the seabed offshore of Øygarden. Operations will continue for 15 years.

Yara Sluiskil is one of the world’s largest ammonia and mineral fertilizer plants. The CCS project forms part of Yara’s ongoing strategic transition to decarbonize and future-proof its core production assets.

“This commercial agreement gives us the opportunity to further utilize the capacity of our storage site below the North Sea,” said Northern Lights Managing Director Børre Jacobsen. “It confirms the commercial potential for CCS and demonstrates that the market for transport and storage of CO2is evolving rapidly.”

Northern Lights JV DA is a registered, incorporated General Partnership with Shared Liability (DA) owned by Equinor, Shell, and TotalEnergies, and is the transport and storage part of the Norwegian government’s Longship project aimed at developing a full-scale CCS value chain in Norway.

Pacific Green Plans on Schedule in Washington

Ammonium Nitrate, CAN-17, News Briefs, Nitrogen, U.S.

Pacific Green Fertilizer Corp. reported that the front-end engineering design (FEED) study for its new 625,000 mt/y green nitrogen production facility in Richland, Wash., (GM March 31, p. 1) is set to conclude by the end of the year, according to plans. The company, owned by Swiss-based Atlas Agro, is focusing production on ammonium nitrate-based fertilizer products.

Atlas Agro North America President Dan Holmes told Green Markets that the products expected to be produced include CAN-17, CAN-27, ANSol-20, and CN-9. “We are excited to support farmers in the PNW with locally produced zero-carbon fertilizers,” he said.

The company has been lining up local farmers for the green fertilizer. “Consumer goods companies and farmers are increasingly tuned into green nitrogen fertilizers being inevitable for crop nutrition,” Holmes said. “We have several dialogues ongoing.”

While not the first to sign up, Stemilt Growers of Wenatchee, Wash., a local fruit grower, has been outspoken in its support for the project, reaching out to the company as early as May 2022. Stemilt and its distributor, G.S. Long Co., have already signed firm contracts to buy.

The $1.2 billion project’s timeline is for groundbreaking in 2024, with the plant to be operational in 2026-2027.

Pacific Green inked a real estate purchase and sale agreement with the Port of Benton, a municipal corporation in Washington, on March 8. Holmes has praised the collaboration with the Port, City of Richland, and the Tri-City Development Council (TRIDEC) in resolving logistical and operational challenges at the site, particularly with respect to lining up rail and barge access.

The plant will be the first of a series that Atlas Agro plans to build in multiple regions across the world. Atlas Agro is also planning an $850 million, 500,000 mt/y green nitrogen plant in Brazil and plans to eventually build 7-9 plants in the country (GM May 12, p. 1). It is also considering building a plant in Paraguay.

In July, Atlas Agro announced that Sydney-based financial services firm Macquarie Asset Management would invest $325 million in the company and related projects via the Macquarie GIG Energy Transition Solutions fund.

And in October, Atlas Agro was selected to begin award negotiations as part of the US Department of Energy’s (OCED) development of the Pacific Northwest Hydrogen Hub (GM Oct. 20, p. 1; Oct. 13, p. 1).

Nebraska Cooperatives Pursue Merger

News Briefs, U.S.

Two Nebraska cooperatives – Farmers Cooperative Elevator Company (FCE) in Hemingford and Panhandle Cooperative (PCA) in Scottsbluff – announced in mid-November that their Boards of Directors have signed a letter of intent to explore a unification of the two companies.

“With the changing demands of the economy of scale, both cooperative Boards recognize the potential benefits of unifying their organizations,” the businesses said in a joint statement. “The agricultural landscapes, climates, and needs of each cooperative have some variation, which means the unified cooperative will find creative solutions to serve all members effectively.”

The Boards said the combined co-op will establish specialized divisions in agronomy, grain, livestock feed and management, energy, market analysis, and retail grocery. The Boards are currently working on a new name for the unified cooperative, updated By-Laws, and a Plan for Merger, all of which will be made available to members of both co-ops in early December.

“A merger of the two cooperatives will offer patrons a broader range of services, increased access to markets, and the potential for improved bargaining power, which will lead to mutual growth and strengthen the agricultural industry in the entire region,” the statement said. “These advantages will not stop at the farm gate. The unified cooperative will continue to invest in local infrastructure, educational programs, and social initiatives, enriching the lives of both farmers and non-farming residents alike.”

Informational meetings will be held for members of both co-ops in mid-December, with each holding a special meeting to certify the count of mail-in ballots after the meetings. If approved by each Board and their members, the merger is anticipated to be effective on March 1, 2024.

Farmers Co-op operates grain, agronomy, and feed divisions from Nebraska locations at Gordon, Hay Springs, and Hemingford. The company has 1,675 stockholders. Panhandle Cooperative has agronomy, feed, energy, and grocery divisions at Scottsbluff and Kimball, Neb., as well as a grocery location at Torrington, Wyo.

Fire Destroys Building at Purdy Farm Center

News Briefs, U.S.

A fire destroyed one building at Purdy Farm Center in Purdy, Mo., in the southwestern part of the state, on Nov. 17. While a few firefighters were briefly overcome by smoke, no major injuries occurred and no hospitalizations were required.

The fire was reported just after 5:30 p.m. Ammonium nitrate was reported to be at the site, and firefighters evacuated those living in a four-block radius and halted rail and vehicle traffic through the area. The fire was out by 7:15 p.m., according to local media.

“We lost one of our buildings, but are thankful it was only one. Cause of the fire is yet to be determined,” Purdy Farm Center said in a statement released soon after the fire. “We will continue business as usual tomorrow morning. Thank you for your continued support.”

Purdy Farmer Center includes a series of buildings along the Missouri-Arkansas Railroad that runs through the middle of town, according to KOAM-TV.

Chemtrade Sells Phosphorus Pentasulfide Business

Canada, News Briefs

Chemtrade Logistics Income Fund, Toronto, has confirmed that on Nov. 8 it completed the sale of its phosphorus pentasulfide (P2S5) business to Trecora LLC, The Woodlands, Texas. The gross proceeds were US$43 million, which consisted of cash of approximately $39.4 million and the assumption of indebtedness of approximately $3.6 million.

Chemtrade estimated a pre-tax gain on the sale of about $14 million, which will be recorded during fourth-quarter 2023. The company said the net proceeds will be used to reduce borrowings from credit facilities.

The phosphorus asset was based in Lawrence, Kan., and was Chemtrade’s lubricant additive business. The business, one of North America’s leading phosphorus pentasulfide producers, will be part of Trecora’s Specialty Chemicals business headquartered in The Woodlands. Trecora is a producer of high purity hydrocarbons. 

“We are extremely enthusiastic and committed to working with the talented team in Lawrence, Kan., to grow and innovate this already great business,” said Trecora President and CEO Brad Crocker. “This business complements our specialty chemical portfolio with its offering of unique and cost-effective solutions for constantly evolving lubricant requirements.”

Trecora is an affiliate of Balmoral, a Los Angeles-based private equity fund founded in 2005. It has approximately $1.5 billion of assets under management. Balmoral typically invests in companies that have revenues between $30-$500 million and require equity investments of $10-$75 million, with the capability of doing more in particularly compelling opportunities.

Plant to Produce Fertilizer from Distillers Grain

Natural Gas, News Briefs, U.S.

3 Rivers Energy Partners, Three Rivers, Mich., held a groundbreaking on Nov. 8 for a new sustainability project that will produce byproduct renewable natural gas (RNG) and fertilizer from distillers grain.

The facility will utilize anaerobic digesters to process spent distillers grains from Beam Suntory’s adjacent Booker Noe Distillery, Boston, Ky., which produces Jim Beam, to produce RNG that will power the distillery.

The project will enable the Booker Noe Distillery to replace 65% of its current conventional energy sources with RNG, greatly reducing its greenhouse gas emissions. The digesters will also produce a high-quality, low-cost fertilizer, which will be made available to local farmers.

Once completed, the anaerobic digester will reduce the distillery’s greenhouse gas emissions by 50% and support regenerative agricultural practices. It is expected to produce up to 1.3 million mmBtu of RNG annually from spent grain.

A similar project by 3 Rivers announced at a Jack Daniels Distillery in Lynchburg, Tenn., in November 2022 was expected to produce up to 1.1 million mmBtu of RNG and enough liquid fertilizer to support 43,000 acres of farmland.

“Our goal is to help Beam Suntory create a sustainable future for their company and the planet,” said John Rivers, CEO of 3 Rivers Energy Partners. “With this process, we can reduce greenhouse gas emissions, create new renewable energy, and help contribute to the agriculture needed to create their products. It is truly a full circle sustainability approach.”