All posts by hlancey@bloomberg.net

CVR East Dubuque Employees Strike

Featured, News, Nitrogen, U.S.

Some 94 members of the local United Auto Workers, Local 1391 (UAW) union went on strike on Oct. 18 at CVR Partners LP’s East Dubuque, Ill., nitrogen plant. The complex, which produces ammonia and UAN, reportedly has approximately 150 employees.

“East Dubuque Nitrogen Fertilizers LLC’s most recent union contract with UAW, Local 1391 expired on Oct. 17 following the company’s good faith collective bargaining with representatives of the company and the union,” said Brandee Stephens, CVR Senior Director, Corporate and Governmental Affairs, in a statement.

“While we value our relationship with the UAW, Local 1391 membership and are disappointed that a new contract has not been agreed upon, we have contingency plans in place to help maintain safe and reliable operations and provide uninterrupted service to our customers,” the statement added.

CVR did not respond to further questions. A UAW official told the Telegraph Herald that a major point of contention was the maintenance of CVR’s 401K match, saying the company froze the match program in the past before later reinstating it.

Proman, Mitsubishi Explore Lake Charles Low-Carbon NH3 Plant; Mexican Financing Achieved

Ammonia, Carbon, Featured, Japan, Methanol, Mexico, Natural Gas, News, Switzerland, Trinidad and Tobago, U.S., Urea

Switzerland-based Proman and Japan’s Mitsubishi Corp. on Oct. 17 announced that they have signed a Memorandum of Understanding (MOU) to explore building a world-scale ultra low-carbon ammonia facility in Lake Charles, La.

The proposed plant would produce approximately 1.2 million mt/y and be located on Proman’s existing site in Lake Charles, adjacent to the company’s natural gas-to-methanol plant, which is also under development.

“We are delighted to be developing this world-scale ultra low-carbon ammonia facility with Mitsubishi Corp.,” said Proman CEO David Cassidy. “Proman is already a leading fertilizer producer, and we are committed to expanding our global production to drive forward ammonia’s critical role as a fertilizer, fuel, and decarbonized future energy source.”

Once completed, Cassiday said the state-of-the-art plant will feature industry-leading carbon capture technology and will be a “major step towards meeting the growing demand for ammonia as a clean fuel. We are honored to be partnering with Mitsubishi on this.”

Ammonia produced at the facility will be primarily exported to Japan as a clean fuel to reduce emissions from coal-fired power plants, in line with Japan’s national strategy to grow domestic ammonia consumption to help achieve its decarbonization goals.

In other news, Proman last month announced the financial close of a $1.5 billion investment in a 2,220 mt/d ammonia plant in Topolobampo, Mexico, with construction now underway. The company has been working its way through Mexico’s regulatory and legal system for several years (GM July 20, 2022; Oct. 18, 2019).

In the past, initial production at the Mexico plant was put at 770,000 mt/y of ammonia and 700,000 mt/y of urea. The company had not responded to inquiries for further confirmation at press time. Proman said the Mexican investment will expand the company’s ammonia production capacity to 2.8 million mt/y.

Proman has assets in the US, Trinidad and Tobago, and Oman, with ongoing expansion into Mexico, Canada, and the UAE. It produces methanol, fertilizer, and other products such as melamine.

Mitsubishi is a global integrated business enterprise that develops and operates businesses together with its offices and subsidiaries worldwide, as well as with its global network of around 1,700 group companies. It has 10 business groups that operate across multiple industries.

Atlas Agro Selected to Develop Hydrogen Hub

Ammonia, Ammonium Nitrate, Calcium Ammonium Nitrate, Carbon, Featured, Hydrogen, News, Nitric Acid, Switzerland, U.S.

Switzerland-based Atlas Agro Holding AG, which is developing the Pacific Green Fertilizer Project in Richland, Wash. (GM March 31, p. 1), has been selected to begin award negotiations as part of the US Department of Energy’s (OCED) development of the Pacific Northwest Hydrogen Hub (GM Oct. 13, p. 1).

The Pacific Northwest Hydrogen Hub is estimated to receive up to $1 billion in Bipartisan Infrastructure Law funding. In total, seven Hydrogen Hubs will receive $7 billion.

The company said the selection enables it to enter award negotiations with OCED and work in partnership to establish the Pacific Northwest Hydrogen Hub. It said OCED funding will support Atlas Agro’s participation in the Hydrogen Hub through the advancement of planning, detailed design, environmental permitting, and procurement of long-lead equipment.    

The Hubs are designed to kickstart a national network of clean hydrogen producers, consumers, and connective infrastructure while supporting the production, storage, delivery, and end-use of clean hydrogen. They are to accelerate the commercial-scale deployment of clean hydrogen, helping generate clean, dispatchable power, create a new form of energy storage, and decarbonize heavy industry and transportation.

Atlas Agro said the Pacific Green project will be a game changer and will boost domestic nitrogen production, slash carbon emissions, protect land and water, and support green hydrogen deployment at scale.

Pacific Green’s development plan is for a 1 million square foot, fully renewable hydrogen production facility. The facility is expected to have the capacity to produce 650,000 mt/y of calcium ammonium nitrate. The complex will include units for ammonia, nitric acid, ammonium nitrate, calcium ammonium nitrate, calcium nitrate, electrolyzers, and air separation.

The capital expenditure is put at $1.2 billion and the company expects the facility to employ 160. The project’s timeline is for groundbreaking in 2024, with the plant to be operational in 2026-2027. The company has inked a real estate purchase and sale agreement with the Port of Benton.

“We can focus on building new, green nitrate assets in the optimal locations,” the company says on its website. “We will build our factories in the market, near the farmer, providing security of supply and avoiding the traditional inter-continental shipping of fertilizer with an associated time, cost, and carbon emissions.”

Pacific Green said by 2030 it will build and license a number of renewable fertilizer plants, build a new generation of fertilizer distribution in attractive markets, and leverage its position as a large, low-cost hydrogen producer to help incubate hydrogen businesses.

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.

CF Industries Holdings Inc. – Management Brief

Hydrogen, Management Briefs, U.S.

CF Industries Holdings Inc. on Oct. 17 reported that the Board of Directors elected Susan A. Ellerbusch to the Board effective immediately. She is an independent non-employee Director. She has been appointed to serve as a member of the Environmental Sustainability and Community Committee of the Board.

Ellerbusch has a 30-year tenure in chemicals and energy industries. She served in a series of diverse leadership roles at Air Liquide since 2015, including as CEO, Air Liquide North America LLC, and President, Air Liquide Large Industries US. Prior to Air Liquide, she worked at BP where she held roles of increasing leadership and most recently served as President, BP Biofuels North America, from 2008-2015. She is a board member of Summit Materials.

Ellerbusch has a Bachelor of Science degree in genetics from the University of Illinois Urbana-Champaign and an MBA from the University of Illinois Chicago. The election of Ellerbusch brings membership of the CF Board to 12. She is expected to stand for re-election by stockholders at the company’s 2024 Annual Meeting.

“We are pleased to welcome Sue to the CF Industries Board,” said Stephen J. Hagge, Board Chairman. “With her extensive leadership experience, global perspective and deep expertise in hydrogen, industrial gases and chemicals, Sue will be a voice the Board and our management team can rely on as we advance the company’s mission to provide clean energy to feed and fuel the world sustainably. We look forward to her contributions as we work together to create long-term value for our shareholders.”

First Phosphate Corp. – Management Brief

Canada, Management Briefs

Junior miner First Phosphate Corp., Saguenay, Que., on Oct. 10 announced the appointment of Jérôme Cliche as Vice President, Business Development. The company said he is experienced in the areas of corporate finance, strategic investment, and corporate development.

Cliche was the Co-Founder of Renmark Financial Communication, a Montreal-based company offering services to small, medium, and large cap public companies trading on all major North American stock exchanges.

Yara Shares Fall as Price Declines Impact 3Q

Ammonia, Earnings, Natural Gas, Nitrogen

Yara International ASA’s shares fell as much as 7.2% to their lowest intraday since December 2020 on Oct. 20 after the company’s third-quarter adjusted EBITDA dropped to $396 million, a 60% decline on the year-ago $1.001 billion and far short of the analyst average estimate of $600.4 million (Bloomberg Consensus).

Yara posted zero net income for the quarter attributable to shareholders of the parent, versus net income of $400 million the previous year, also missing estimates. Analysts had expected net income would come in at $211.8 million.

Third-quarter adjusted net income was $47 million, a 91% decline on last year’s third quarter and well below the average analyst estimate of $219.2 million. Adjusted earnings per share were $0.19 compared with $2.00 per share a year ago. Revenue fell 38% year-over-year, to $3.86 billion from $6.22 billion, against the analyst average estimate of $4.65 billion.

“Third-quarter 2023 results are impacted by strong price declines compared to last year, as the nitrogen industry continues to operate in a lower margin environment,” said Yara International President and CEO Svein Tore Holsether. He noted that European nitrate prices were negatively impacted by a long order book at the start of the third quarter.

The price decline more than offset lower gas prices and higher deliveries. Yara delivered 6.46 million mt of fertilizer in the third quarter, up from 5.66 million mt last year. “Phasing of deliveries is uncertain, as is normal at this stage of the season, but there is risk of new nitrogen curtailments if slow European demand continues,” the company said.

Yara said its European production curtailments remained at “low levels” during the quarter, with 3%, or 130,000 mt, of finished fertilizers capacity curtailed and 6%, or 80,000 mt, of ammonia capacity curtailed. Yara said it will continue to optimize production in response to market conditions.

Third-quarter ammonia production was 12% higher than a year earlier, at 1.72 million mt versus 1.53 million mt. Production of finished fertilizer and industrial products, excluding bulk blends, was up 10% year-over-year, to 5.06 million mt from 4.6 million mt.

Crop nutrition deliveries increased for all regions compared with last year’s third quarter, and deliveries of both premium and commodity fertilizer products improved compared with significant curtailments a year ago. However, Yara noted clean ammonia deliveries were impacted in the quarter by planned maintenance and reliability issues at production plants.

The company said although the season for the European nitrogen industry is off to a slower start than in previous years, fundamentals for the full season are supportive.

It said agricultural conditions are favorable, with industry consultants forecasting increased cereal production in 2023/24 despite drought in several regions earlier this year. Although fertilizer affordability reduced during the quarter, it is still above historical averages, and optimal application rates are up compared to the 2022/23 season, Yara said.

Yara estimated fourth-quarter gas cost to be $520 million lower than last year based on forward markets for natural gas as of Oct. 12, and assuming stable gas purchase volumes.

Norne Securities analyst Tomas Skeivys, as cited by Bloomberg, said Yara’s results “disappoint for the third quarter in a row” and the company’s outlook comments “do not seem like marking a cycle bottom.” Skeivys also noted Yara’s cash flows were good at $1 billion, primarily due to operating capital release, but called the report “disappointing.”

Citi analysts led by Ranulf Orr said commodity fertilizer prices are likely to recover with new season demand, though at lower levels, and this should add to Yara’s product pricing, Bloomberg reported.

For the nine months to Sept. 30, 2023, Yara posted a 70% decline in adjusted EBITDA, to $1.14 billion from the year-ago $3.82 billion. Nine-month revenue was down 36% year-over-year, to $11.97 billion from $18.59 billion.

The company posted a net loss attributable to shareholders of the parent of $196 million for the first nine months, versus net income of $2.01 billion in the same prior-year period.

Yara Production and Deliveries

‘000 mt 3Q-2023 3Q-2022 9M-2023 9M-2022
Production1        
Ammonia 1,722 1,531 4,520 4,942
Finished fertilizer and industrial products
(excluding bulk blends)1 		5,062 4,601 13,503 13,929
         
Yara Deliveries        
Ammonia trade 288 457 1,100 1,304
Fertilizer 6,459 5,660 17,001 17,573
Industrial products 1,692 1,851 4,835 5,514
Total 8,439 7,968 22,935 24,391

1 Including Yara share of production in equity-accounted investees, excluding Yara-produced blends

Yara Deliveries

‘000 mt 3Q-2023 3Q-2022 9M-2023 9M-2022
Crop Nutrition Deliveries        
Urea 1,246 1,007 3,580 3,705
Nitrate 1,257 1,183 3,394 3,415
NPK 2,524 2,234 6,331 6,366
CN 376 341 1,147 1,177
UAN 312 242 835 859
DAP/MAP/SSP 189 157 442 450
MOP/SOP 304 261 537 772
Other products 251 236 735 829
Total 6,459 5,660 17,001 17,573
         
Europe Deliveries 2,202 1,979 5,946 5,793
Americas Deliveries 3,021 2,719 7,723 8,529
         
North America 580 436 2,198 2,173
Brazil 1,960 1,795 4,242 5,044
Latin America excluding Brazil 481 489 1,284 1,313
Africa & Asia Deliveries1 1,237 963 3,332 3,250
         
Asia 943 715 2,497 2,550
Africa 294 248 835 700
         
Industrial Solutions Deliveries 1,692 1,851 4,835 5,514

1 The Africa and Asia business also includes Oceania

Martin Sulfur Segment Outperforms in 3Q

Earnings, Sulfur

Martin Midstream Partners LP’s Sulfur Services segment, which includes both sulfur and fertilizer, outperformed during the third quarter ending Sept. 30, 2023. Operating income was $2.74 million on revenues of $32.6 million, up from the year-ago loss of $6.7 million on revenues of $28.9 million.

Third-quarter fertilizer volumes shot up 142%, to 58,000 lt from the year-ago 24,000 lt, while sulfur was up 63%, to 155,000 lt from 95,000 lt. Combined volumes were up 79%, to 213,000 lt from 119,000 lt.

“The partnership’s financial results for the third quarter met guidance as both the Specialty Products and Sulfur Services segments outperformed but were offset by the Transportation segment as certain industrial customers experienced challenges that negatively impacted the ground transportation business,” said MMLP President and CEO Bob Bondurant.

“This segment had adjusted EBITDA of $5.4 million compared to guidance of $3.1 million,” he told analysts, referring to Sulfur Services. “Our fertilizer group had adjusted EBITDA of $2.2 million, exceeding third-quarter guidance by $2.1 million, as we had forecasted a break-even quarter.”

MMLP’s overall fertilizer sales volume exceeded forecast by 13%, Bondurant said, fueled by unforecasted liquid fertilizer sales to the South American export market. “We also had unforecasted dispersal sales to the US markets as our customer base began to perceive the continued decline in dispersal pricing had floored due to upward pressure in sulfur commodity prices, the primary feedstock for dispersal,” he added.

Bondurant said the unforecasted liquid and dispersal sales allowed the company to improve manufacturing utilization at two of its fertilizer plants, which also contributed to improved profitability.

“The pure sulfur side of our Sulfur Services segment had adjusted EBITDA of $3.2 million, which exceeded guidance by $0.2 million,” he noted. “We continue to see strong sulfur production from our refinery suppliers, which continues to support this business line with greater volumes and profitability than originally forecasted.”

Nine-month Sulfur Services operating income was off 17%, to $12.6 million on revenues of $108.6 million, down from the year-ago $15.1 million and $144.9 million, respectively. Combined volumes were 9% ahead of year-ago levels at 544,000 lt from 497,000 lt. Fertilizer volumes were up 13%, to 192,000 lt from 170,000 lt, while sulfur increased 8%, to 352,000 lt from 327,000 lt.

Company-wide, MMLP reported a third-quarter loss of $1.06 million on revenues of $176.7 million, an improvement over the year-ago loss of $28.04 million and $229.3 million, respectively. The company reported a nine-month net loss of $5.07 million on revenues of $616.9 million, up from a year-ago loss of $10 million and $775.5 million, respectively.

“Our full year 2023 adjusted EBITDA outlook, which does not include losses related to the butane optimization business, remains unchanged at $115.4 million, confirming the recent operational restructuring of our refinery services business model to deliver stable and sustainable cash flows,” Bondurant said.

Looking ahead, Bondurant said he anticipates increased earnings related to the joint venture with Samsung C&T America and Dongjin USA, even as delays in the construction of semiconductor manufacturing facilities may result in deferred demand for electronic grade sulfuric acid.

He noted that during the first nine months, MMLP reduced total debt by $53.6 million, utilizing free cash flow and a significant reduction in working capital due to the exit from the butane optimization business.

USDA Awards $52.6 M to 17 Fertilizer Projects

Featured, U.S.

USDA on Oct. 16 announced $52.6 million in awards under the Fertilizer Production Expansion Program (FPEP), which will fund 17 new projects to boost domestic fertilizer manufacturing, support innovative fertilizer technologies, and help lower costs for farmers.

FPEP is funded by USDA’s Commodity Credit Corp. and is part of a government-wide effort to spur domestic competition and combat an increase in fertilizer costs caused by the war in Ukraine.

State CompanyAmountPurpose
Ariz./Wash.Bio-Gro Inc.    $3 million    Humic Acid
Ariz.    Grower’s Market Inc. $2.4 million Eco-Friendly Fert.
Ariz.    The Fairfax Co. LLC $810,225     Compost-Based Fert.
Calif.   Farm Fuel Inc. $2.05 million Organic Fert.
Calif./Ore. True Organic Products  $5 million Organic Fert.
Fla.  GreenTechnologies LLC $2.4 million Bio-Based Fert.
Ind.  Bionutrients Ag LLC $5.53 million Organic Fert.
Mich. Scenic View Dairy LLC $2.26 million Biofertilizer
Minn.  Northstar Lime LLC $4.41 million Lime Pellets
Ohio  Growers Mineral Corp.  $3.94 million  10-20-10 Fert.
Ohio  Quasar Energy Group $3.96 million Biofertilizer
Penn./Iowa  Holganix LLC  $3.45 million Microbial
Penn./Ohio EnviroKure Inc.    $2.04 million Biofertilizer/Stimulant
PR Colon Pan American $3.84 million Ag Gypsum
Texas  BioXRG LLC     $3.78 million Liquid Potassium Fert.
Utah Aqua Yield Operations  $1.26 million  Nano-Based Liquid Fert.
Wisc.  Dairy Dreams LLC  $2.53 million Organic Fert.

USDA expects to announce additional project selections in the coming months and is inviting public comments on four projects through Nov. 15, 2023. They include:

State   Company    Purpose
Iowa    Quality Flow Environmental  Carbon and Fert. Products
Maryland  Compost Crew Inc.    Compost
Nebraska Viridis Chemical NE Asset Co. 2  Ammonia Plant
Virginia  AdvanSix Inc.  Ammonium sulfate

Major winners to date have included specialty fertilizer manufacturers Ostara Ltd., St. Louis, Mo, which received $7.57 million, and Pursell Agri-Tech LLC, Sylacauga, Ala., which received $5 million (GM March 17, p. 1).

In 2022, USDA made $500 million available under the FPEP to increase innovative domestic fertilizer production, creating jobs in rural communities and providing more options to US farmers. Due to strong demand, USDA in June 2023 increased the funding available for FPEP to up to $900 million.

USDA received requests for $3 billion in applications from more than 350 businesses for the first two rounds of the program. Including the Oct. 16 announcement, USDA has awarded 33 projects for a total of more than $121 million invested since the program was announced roughly 18 months ago.

Ohio, Michigan Cooperatives Approve Merger

News Briefs, U.S.

The members of Luckey Farmers Inc., Woodville, Ohio, and Ida Farmers Cooperative, Ida, Mich., have approved a merger of their cooperatives, according to an Oct. 9 announcement from the companies. The effective date of the merger will be Feb. 1, 2024.

Members approved the merger at special meetings held on Oct. 3. Luckey Farmers had 307 members that participated in the vote, with 86% voting in favor of the merger. Ida Farmers had 117 members that participated in the vote, with 87% voting in favor of the merger.

“On behalf of our Boards, management, and employee teams, we appreciate each and every member who cast a ballot in this cooperative merger,” said Ida Farmers Board Chairman Bryan Otto. “We look forward to realizing the advantages of combining our cooperatives while still maintaining local ownership.”

Together, Luckey Farmers and Ida Farmers will have 11 locations across northwestern Ohio and southeastern Michigan providing products, programs, and services through its grain, agronomy, energy, and feed divisions. The newly unified cooperative will be headquartered at the current Luckey Farmers office in Woodville.

The name of the combined organization was not revealed, but the two co-ops said more information will be provided in the coming months as the integration plans are finalized. The initial board of directors will consist of twelve directors with representation from each geographical district.

“We are confident that together, we will become an even stronger cooperative and be better positioned to improve on our already strong portfolio of products and services that we offer,” said John Moore, Luckey Farmers Board Chairman. “Both cooperatives have employee teams that take pride in their work and will continue their strong culture of service and commitment to our customers.”

Established in 1919, Lucky Farmers has nearly 700 members, seven grain facilities, three agronomy centers, and three fuel stations in Ohio’s Lucas, Ottawa, Sandusky, and Wood counties. Ida Farms operates a grain elevator and agronomy center at its Ida location, offering products and services in fertilizer, seed, pet and livestock supplies, and gardening equipment.

Groups Lobby DOC on Phosphate Import Duties

News Briefs, Phosphate, U.S.

The National Corn Growers Association (NCGA), along with 62 other agricultural groups, including state corn grower organizations, sent a letter on Oct. 19 to US Commerce Secretary Gina Raimondo calling on her to consider the current difficulties faced by farmers as she recalculates duties on phosphate fertilizer imported from Morocco.

The letter comes after the US Court of International Trade ordered the agency to reconsider its previous decision on calculating the duties (GM Sept. 22, p. 1).

“High costs and limited availability of fertilizer continue to strain family farms across the United States,” the letter said. “[We] urge you to consider the impact of phosphate duties as the Department of Commerce works to reconsider its duty rate calculation.”

“Duties levied on phosphate imports, combined with these other factors, have led to substantial price volatility over the past three years as evident by phosphate price increases of over 230% from 2020 to 2022,” according to the letter signatories. “During 2022, farmers spent $36.9 billion on fertilizer and lime, compared to $24.4 billion in 2020.”

“American agriculture must have market access to compete globally, and a major impediment like a fertilizer duty only undermines the ability to establish and expand markets,” the letter noted.

Absent delays, Commerce is expected to finalize its administrative review by Nov. 1, and issue its remand determination by Dec. 13.