All posts by hlancey@bloomberg.net

Unigel Plans Camaçari Suspension; Downgraded

Brazil, News Briefs, Nitrogen

Unigel Participacoes on Nov. 1 gave 30-day notice to employees of the Camaçari nitrogen plant in Bahia that it plans to suspend production if it is not able to negotiate a lower natural gas price with Petrobras. The plant has 384 workers.

According to Sindiquimica Bahia, the union representing the workers, it has been told by the Unigel subsidiary that operates the plant, Proquigel, that the facility has been running at a loss since the end of 2022.

At last report (GM Aug. 18, p. 28), Unigel’s Sergipe nitrogen plant was still in operation. The company has a ten-year lease for both the Sergipe and Bahia plants from Petrobras. While Unigel received another reprieve to negotiate with bondholders (GM Nov. 3, p. 30, Sept. 8, p. 27), rating agencies have in the meantime downgraded the company.

Fitch downgraded Unigel to RD from C after the company failed to cure the missed interest payment due on Oct. 2 on its senior unsecured notes as part of the company’s ongoing negotiations with creditors, according to Bloomberg, citing a statement from the ratings firm.

Fitch said that the engagement of Moelis, which has been an adviser for several companies that have restructured debt in Brazil, materially reduces the creditors’ willingness to provide new financing to Unigel to cover its 2023 and 2024 funding needs.

Unigel was cut to default by S&P Global Ratings after the fertilizer maker said it failed to pay a coupon on its dollar bonds as a 30-day grace period expired. S&P downgraded Unigel’s rating to D from CCC- on Nov. 2, citing the missed interest payment.

The Brazilian company, which has $530 million in outstanding dollar notes due in 2026, has been at odds with bondholders over the amount of cash it is asking them to deliver amid restructuring talks. However, the company is confident in building a “positive solution” for all its stakeholders, according to a filing.

Unigel earlier postponed the release of its second-quarter financial results that are likely to show it breached a covenant on domestic notes.

Fluor Selected for BHP’s Jansen Stage 2 Project

Canada, News Briefs, Potash, Saskatchewan, U.S.

Fluor Corp.’s Mining & Metals business has been selected by BHP Canada to develop Stage 2 of its Jansen potash project in Saskatchewan, the Texas-based company announced. Fluor did not disclose the contract value.

BHP Group Ltd. on Oct. 31 said it has green-lighted an investment of $4.9 billion for Jansen Stage 2, which, when complete, will add another 4.36 million mt/y of potassium chloride capacity to Stage 1’s 4.35 million mt/y currently under development (GM Nov. 3, p.  1).

Fluor said project execution is scheduled to begin later this month and will be managed through its Calgary and Vancouver offices. The company expects to recognize the reimbursable contract value for Jansen Stage 2 in the fourth quarter of 2023.

“This award is a testament to our track record of successfully delivering complex mega-projects, coupled with our expertise in fertilizer production and execution capability in western Canada,” said Tony Morgan, President of Fluor’s Mining & Metals business.

Thailand Urges K Miners to Accelerate Work

Asia Pacific, Canada, News Briefs, Potash, Thailand

Thailand’s Prime Minister Srettha Thavisin has asked three potash mining companies to accelerate project development or risk losing concessions, according to Bloomberg, citing the Bangkok Post.

“Three concessionaires have already been picked, but they have yet to begin the mining and need to be rushed,” he was quoted as saying. “In case they cannot begin [anytime soon], a new selection of concessionaires will be conducted.”

The concessionaires are Asia Pacific Potash Corp., Asean Potash Chaiyaphum Plc, and Thai Kali Co.

According to the newspaper, the Prime Minister maintained that Thailand is the second-largest source of potash after Canada. “The chemical is high-priced and in high demand, particularly in China,” he said. The miners are expected to produce a total of up to 33.7 million over the next 25 years, he added.

Belarus, Iran Agree on Potash Supply

Belarus, Iran, News Briefs, Potash

Belarus and Iran have agreed on the supply of 400,000 mt of Belarusian potash to Iran, according to a report by Russian state-news agency TASS, citing the Iranian Ambassador to Belarus, Alireza Sanei, speaking on Nov. 5.

The report did not indicate the delivery period nor how much of the volume would be consumed in Iran. Iran consumed just 20,000 mt of potash in 2022, according to IFA data. Minsk and Tehran also agreed that Iran will “provide its capacities to become a hub for reaching other markets in third countries,” TASS reported. 

Sanei noted that the two countries “maintain good cooperation in the oil and petrochemicals sector,” and can “supplement each other and cooperate” to withstand the “unfair tough economic sanctions our countries are faced with.”

Serbia’s Elixir, K+S Partner on MAP Plant

DAP/MAP, Europe, News Briefs

Serbian agribusiness company Elixir Group reported that it has signed a strategic cooperation agreement with Germany’s K+S Group to build a €35 million (approximately $37.3 million) plant for crystalline water-soluble MAP for fertilizer use.

The new plant will be built in Prahovo, in eastern Serbia, in Elixir’s existing industrial complex Elixir Prahovo. The plant will have a production capacity of 50,000 mt/y, Elixir said in a Nov. 2 statement.

Engineering work on the project has started and construction is expected to begin in spring 2024. Production is planned to start in early 2026, and Elixir said a supply of phosphoric acid has already been secured.

Under the agreement, Elixir will be responsible for the construction of the new plant, including all related infrastructure and storage facilities, while K+S will distribute the MAP through its global network, with a focus on markets in Europe and India.

Elixir Group comprises five companies and is a leading regional producer of chemicals and mineral fertilizers, according to the company’s website.

Egypt Advances Green Projects with Chinese Firms

China, Egypt, Green Ammonia, Green Hydrogen, News Briefs

Egypt’s General Authority for the Suez Canal Economic Zone (SCZONE) last month signed investment deals worth $14.75 billion with Chinese companies aimed at the production of green hydrogen and green ammonia, as well as a renewables-powered potassium chloride production facility in Egypt.

SCZONE inked a green hydrogen and green ammonia production framework agreement with state-owned China Energy Engineering Group for the construction of plants at the Sokhna industrial zone in Ain Sokhna, and signed a Memorandum of Understanding (MOU) with Hong Kong-based United Energy Company to develop a complex for the production of potassium chloride based on renewable energy stations with a capacity of 6.1 gigawatts.

The deal with China Energy aims to establish a project for the production of 210,000 mt/y of green hydrogen and 1.2 million mt/y of green ammonia, with investments amounting to $6.75 billion, SCZONE said in a media statement. The announcement follows reports in June that the two parties were close to activating an MOU they had signed (GM June 2, p. 29).

The pact is the latest in a series of agreements Egypt has signed over the last year as the North African country works toward its goal of seizing 8% of the global hydrogen market.

The MOU between SCZONE and United Energy Co. aims to develop a potassium chloride production complex in three stages, starting with a pilot plant for producing 100,000 mt/y, SCZONE said. The project aims to have production capacity of some 4.1 million mt/y, with around 20% of the output targeted for the local market.

SCZONE estimates the project’s total investment, including the renewable energy stations, at approximately $8 billion for the potassium chloride.

“Egypt has a great interest in expanding the establishment of green energy projects and providing more incentives to attract new investments in this promising field,” said SCZONE Chairman Waleid Gamal El-Dien. He added that SCZONE has become one of the most important centers for green energy production in the Middle East and Africa.

Study Promotes Pilbara for Ammonia Bunkering

Ammonia, Australia, News Briefs

Safe ammonia bunkering is both economically and operationally viable within the Pilbara region of Western Australia, according to a new study by Lloyds Register. The study was commissioned by Yara Clean Ammonia (YCA) and Pilbara Ports.

The study indicated that ship-to-ship bunkering operations could be performed within acceptable risk levels at anchorages in Dampier and Port Hedland. Moreover, the study confirmed that existing ammonia production and export infrastructure within the Pilbara, such as Yara’s Karratha plant and Pilbara Ports’ Bulk Liquids Berth at Dampier, could be leveraged to initiate bunkering operations in the near-term.

The results also show the demand for ammonia as a fuel to decarbonize the international iron ore trade, reaching a volume potential of 1 million to 1.5 million mt in 2035.

“The study has shown that a key enabler for meeting this demand is Yara’s existing assets including the world-scale Yara Pilbara Fertilizers ammonia plant near Karratha,” said YCA Senior Vice President Commercial Murali Srinivasan. “Furthermore, the current development of Yuri renewable hydrogen project on the Yara Pilbara site will be the first in Australia to inject green molecules into an existing ammonia plant, and Yara is vigorously exploring options to ramp up volumes of clean and low carbon ammonia to lay the foundation for a reliable supply chain to serve the emerging shipping fuel market.”

He added that the level of demand for bunkering reflected the push by iron ore miners and the steel industry to decarbonize.

“The Pilbara contains the world’s largest bulk export ports,” said Pilbara Ports CEO Samuel McSkimming. “Last year we achieved 752.4 million mt of trade with more than 6,829 vessel visits. This scale of operations cannot be found anywhere else in the world, and it makes the Pilbara’s ports the natural beachhead from which the global bulk carrier fleet will decarbonize.”

“Ammonia is already widely produced, used, and shipped in industrial quantities around the world,” McSkimming added. “To be able to expand its application as a green shipping fuel would greatly reduce shipping emissions.”

Corteva Plunges After Seed Price Warning

Brazil, News Briefs

Corteva Inc. fell the most in more than three years after the seed and pesticide behemoth posted disappointing results while warning that seed pricing growth will slow next year, according to a Bloomberg report. 

The pricing forecast follows a 14% jump in third-quarter seed prices, which helped lift sales in the unit by 1.9%, to $878 million, even as volumes plunged 12%. Still, Corteva’s overall sales fell short of analysts’ estimates and its loss was wider than projected. 

Corteva slashed its 2023 earnings outlook late last month as problems in its Brazil business, including later-than-usual farmer purchases, dented revenue. Sales in Brazil, the world’s biggest supplier of soybeans, have been hurt in part by tighter farmer margins and competition from generic pesticides.

The shares closed down 8.5% at $44.51 on Nov. 9 in New York trading for the worst daily performance since August 2020. The plunge brought the year-to-date loss to 24%.

The company plans to halt production of crop-protection products at its plant in Pittsburg, Calif., as well as some other undisclosed sites. Those measures will lead to as much as $460 million in charges through next year and about $100 million in savings by 2025, the Indianapolis-based company reported on Nov. 8.

Quarterly sales in Corteva’s crop protection business fell to about $1.7 billion, 11% lower than the same period a year earlier. Volumes dropped 16% amid the farm-buying delays and lower prices in North America and Latin America.

Syngenta Delays IPO

Asia, China, News Briefs

Chinese-owned seed giant Syngenta Group on Nov. 9 postponed its Shanghai initial public offering (IPO) until the end of 2024, citing market volatility. Earlier on Nov. 9, Syngenta also reported a third-quarter EBITDA of $300 million, down 68% from a year ago. EBITDA was significantly impacted by a softer market and a one-time seed inventory correction in Brazil.

The company will “remain flexible in our approach and explore alternative methods to expanding our shareholder base,” a spokesperson said.

The IPO delay doesn’t bode well for new listings in Asia for the remainder of the year, according to a Bloomberg report.

The announcement highlights a general malaise in first-time share sales in Asia and follows China’s securities regulator’s decision in late August to slow the pace of IPOs amid an economic downturn that has been weighing on investors. The regulator said it aimed at maintaining market stability, adding that some companies have withdrawn IPOs recently due to declining performance and a lack of stable ownership. The CSI 300 Index is down 6.7% so far this year.

If interest rate hikes stop, there may be “revived interest” for large offerings by Asian companies, according to Ke Yan, the Head of Research at DZT Research in Singapore.

China has been the main source of big-ticket listings in Asia this year, with eight of the top 10 taking place in the country. IPOs in mainland China have raised $53 billion in 2023, down 37.6% from the same period in 2022, according to data compiled by Bloomberg. That’s in line with the nearly 40% year-over-year drop in volume in Asia as a whole.

Syngenta’s $9 billion IPO would have been the largest listing of 2023, beating Hua Hong Semiconductor Ltd.’s July offering in Shanghai, which raised nearly $3 billion.

Sumeet Singh, Head of Equity Research, IPOs and Placements at Aequitas Research in Singapore, said he doesn’t think Syngenta can get such a large deal away at the moment. “I wouldn’t say that it would never happen,” he added.

Asia is not alone, as IPO markets have disappointed elsewhere. Europe’s brief IPO revival is fading as a flurry of deals including CVC Capital Partners, one of the region’s biggest private equity firms, have been delayed amid valuation discrepancies.

Nano-Yield Launches Granular Fertilizer Coating

News Briefs, U.S.

Nano-Yield®, Sandy, Utah, on Nov. 2 announced the launch of the NanoCote™ brand, a nanotechnology-based granular fertilizer coating that the company claims is the first product engineered to complement existing fertilizers, elevating the performance of the granular fertilizer industry.

“We are thrilled with the development of NanoCote over the past several years,” said Clark Bell, Nano-Yield CEO and Co-Founder. “Through extensive lab and field trials, we have harnessed the incredible potential of nanotechnology to enhance every aspect of the farming experience when added to granular fertilizers.”

The NanoCote brand marks Nano-Yield’s entry into granular fertilizer applications, with the company reporting that the product reduces dust, cleans machinery, minimizes wear and tear on equipment, and is biodegradable, setting a new standard for environmentally friendly granular applications.

“Our team is proud to have engineered this technology in a way that is seamless for blending operations,” said Nano-Yield President and COO Mark Slavens. “You can spray it on any type of dry granular fertilizer. It dries very quickly without heat or any other specialized equipment.”