All posts by hlancey@bloomberg.net

CF, POSCO Evaluate Clean Ammonia Project, Offtake

Ammonia, Featured, Hydrogen, News, South Korea

CF Industries Holdings Inc. and POSCO Holdings Inc., a South Korean steelmaker, energy trader, and power generator, announced on Sept. 14 that they are evaluating a joint venture to construct a low-carbon clean ammonia plant at CF’s Blue Point Complex in Ascension Parish, La., along with long-term, low-carbon clean ammonia offtake into South Korea.

CF and POSCO will initiate a front-end engineering and design (FEED) study on autothermal reforming (ATR) ammonia production technology. The FEED study is expected to be completed in the second half of 2024, with a final investment decision by CF and POSCO to follow. The proposed facility would cost approximately $2 billion.

ATR technology, when combined with carbon capture and sequestration (CCS), is expected to reduce carbon dioxide (CO2) emissions from the ammonia production process by more than 90% compared to conventional ammonia plants without CCS, enabling the resulting low-carbon clean ammonia to comply with the South Korean government’s Clean Hydrogen Energy Portfolio Standard.

If the project advances, POSCO expects to import low-carbon clean ammonia from the facility to South Korea to support decarbonization of POSCO’s own and third-party coal-based power generation facilities. Additionally, POSCO intends to convert low-carbon clean ammonia into hydrogen in order to use low-carbon hydrogen in gas-based power plants and in the steelmaking process.

“We are pleased to collaborate with POSCO to support both their decarbonization goals as well as those of South Korea,” said Tony Will, CF President and CEO. “POSCO’s concrete plans to use low-carbon ammonia to accelerate decarbonization in steel manufacturing and power generation in South Korea represent significant new demand for low-carbon ammonia as a clean energy source. We look forward to leveraging our two companies’ industry-leading expertise to advance our shared commitment to a more sustainable future.”

“The United States is one of the key strategic regions for POSCO Group as it is actively pursuing the establishment of an economically and reliably overseas hydrogen and ammonia supply network through the IRA support policy,” said Yoo Byeong-ok, POSCO Chief Green Materials & Energy Business Officer. “We plan to establish a production hub for clean ammonia in the United States in collaboration with CF Industries, the largest ammonia producer, and secure a stable supply network to timely provide clean hydrogen necessary for domestic power generation and hydrogen reduction steelmaking.”

Since 2020, CF has advanced projects to decarbonize its ammonia production network and position the company to supply a substantial volume of low-carbon clean ammonia within the next few years. This includes leveraging CCS technologies at its giant Donaldsonville Complex in Louisiana, and also constructing North America’s first commercial-scale green ammonia capacity at the complex, enabling up to 20,000 mt/y of green ammonia production beginning in 2024.

CF has also commenced a FEED study with Mitsui & Co., Ltd. to construct a greenfield low-carbon clean ammonia facility utilizing steam methane reforming (SMR) ammonia technology along with CCS at the Blue Point Complex.

OCP Operations Unaffected by Moroccan Earthquake; No Damage Reported at Khemisset Project

Featured, Morocco, News

OCP Group SA suffered no damage to any of its facilities or mining operations from the earthquake that hit Morocco on Sept. 8, according to media reports, and virtually no disruption to production. All personnel at the company’s facilities were reportedly safe.

The 6.8-magnitude quake occurred in the Al Haouz province in Morocco’s Atlas Mountains, killing approximately 3,000 people and injuring 5,530 more, according to the latest reports. Port operations at OCP’s Jorf Lasf port were initially impacted but were reported to have returned to normal earlier this week.

Isle of Man-based Emmerson Plc, which is developing the Khemisset potash project in northern Morocco, said the project site and the company’s support offices are located some distance from the earthquake zone and were not directly impacted, according to a Sept. 11 company statement. Emmerson reported that all of its employees are safe.

IPL Continues to Pursue Fertilizer Business Sale; Strength in Explosives Offset by Fertilizer Weakness

Ammonia, Australia, Featured, Indonesia, News, Phosphate, U.S.

Incitec Pivot Ltd. (IPL) said it is continuing to pursue a potential sale of its fertilizer business, while the planned sale of its Waggaman, La., ammonia plant to CF Industries Holdings Inc.  remains conditional on approval from the US antitrust regulator.

In a Sept. 11 statement, the Australian group said the sale process of its fertilizer business is progressing “in line with normal expectations for a transaction of this size and complexity.” The company cautioned that discussions are confidential and incomplete and there is no certainty that any agreement will be reached or that any sale transaction will occur.

IPL confirmed in mid-July that it had received several approaches for the potential acquisition of the fertilizer business, noting that its Board was considering a potential sale of the business alongside ongoing proposals to structurally separate Incitec Pivot Fertilisers and the Dyno Nobel explosives business (GM July 14, p. 1). Indonesia’s state-owned PT Pupuk Kalimantan Timur (Pupuk Kaltim) is believed to be the preferred bidder (GM Aug. 11, p. 1).

In this week’s statement, IPL said it remains hopeful that the US Federal Trade Commission’s regulatory review process of the Waggaman sale will conclude by the end of calendar 2023. The group reached an agreement in March for the sale of the plant, which has 800,000 mt/y of ammonia capacity, to CF for a total value of $1.675 billion (GM March 24, p. 1). 

IPL said its global Dyno Nobel explosives business is performing better than expected versus guidance comments in its first-half 2023 results in May (GM May 19, p. 24), while the fertilizer business performance is running below expectations. Overall, the group’s financial performance remains broadly in line with the outlook provided in May, IPL said.

“Dyno Nobel Americas’ focus on price and cost discipline in the explosives business has favorably impacted margins in the second half of the year,” the group said.

IPL expects Incitec Pivot Fertilisers’ (IPF) earnings in the Distribution business to be at the lower end of the “usual range” of A$40-$60 million (approximately $25.7-$38.5 million at current exchange rates) in FY2023.

While the second half has seen an improvement in fertilizer demand, resulting in projected full-year sales volumes being substantially in line with the prior year, IPL said margins remain depressed as a result of selling products into a negatively trending market and farmers switching to lower-margin products.

IPL also expects lower full-year output at its Phosphate Hill plant in northern Queensland, citing maintenance work at its Mount Isa, Queensland, sulfuric acid plant. The group now sees production of 870,000-880,000 mt of ammonium phosphate in FY2023, down some 30,000 mt from the output guidance given in May.

IPL said the volume of sulfuric acid supplied to Phosphate Hill in the second half will be reduced due to maintenance work at the Mount Isa plant brought forward from FY2024. The work is expected to take approximately three weeks to complete.

IPL expects the FY2023 EBIT impact from the reduced ammonium phosphate production to be in the range of A$13-$15 million, including the cost of repairs. However, the group noted that bringing the repair work forward is expected to reduce maintenance costs by roughly A$4 million from what would have otherwise been incurred in FY2024.

IPL said gas supply volumes under its long-term agreement with Power Water Corp. (PWC) for the Phosphate Hill plant have been above the forecast provided by PWC in June (GM June 9, p. 25). IPL now expects the EBIT impact from sourcing shortfall gas for FY2023 to be at the lower end of the A$75-$90 million range advised at that time.

IPL said Waggaman is expected to achieve nameplate capacity of 800,000 mt/y of ammonia in FY2023 in line with guidance in the first-half results. IPL said the Moranbah ammonium nitrate plant in Queensland, part of the Dyno Nobel Asia Pacific business, has had strong performance to date and is expected to achieve 360,000-370,000 mt of production this fiscal year, some 30,000-40,000 mt ahead of previous guidance (GM May 19, p. 24).

Argentina-Brazil Group Wins Mendoza Potash Bid; Hopes to Bring Fertilizer to Market in 18 Months

Argentina, Brazil, Featured, News, Potash

Argentina’s Mendoza province awarded its giant potash project to local firm Cia. Minera Aguilar SA and its Brazilian partner ARG, according to Bloomberg.

The Aguilar-ARG bid prevailed from a shortlist of three groups, and the duo will invest roughly $1 billion over five years to complete the first phase of the Rio Colorado potash mine. The province announced a week earlier that it had narrowed the field to one, but at that point had not named the winner (GM Sept. 8, p. 1).

Mendoza will keep a 12% stake in the mine as well as collect annual royalty payments on the potash produced, Governor Rodolfo Suarez posted on the social media platform now known as X.

Much of the fertilizer will be shipped to Brazil, Emilio Guinazu, who heads the province-owned firm that holds Rio Colorado, said in an interview before the announcement. Some of the potash will also stay in Argentina, itself a huge food supplier, reducing dependence on imports and volatile global markets.

The consortium will take over Rio Colorado a decade after Brazilian mining giant Vale SA withdrew from the project. While potash prices have come off the peaks they touched after Russia’s invasion of Ukraine, they are expected to stay at attractive levels, Guinazu said.

In a first phase, Rio Colorado will churn out as much as 1.4 million mt/y using road transport. Initially there will be a pilot plant to help the mine bring production to market within 18 months. A possible second phase would double capacity and shift to rail.

“We’ve achieved a significant feat in the economic history of the province,” Suarez said.

Aguilar is owned by Integra Capital, which is headed up by businessman Jose Luis Manzano, and has purchased oil, power, and lithium assets in recent years.

Mosaic Updates on Plant Outages, Performance

Earnings, Florida, News, Phosphate, Potash, U.S.

The Mosaic Co. on Sept. 12 reported that its Florida phosphate operations, which halted operations due to Hurricane Idalia, resumed production within three days. Daily production was put at approximately 20,000 mt.

In addition, an unexpected local utility power interruption in Louisiana at the end of August damaged Uncle Sam’s largest sulfuric acid plant. Repairs to the complex, which operates at a production rate of 15,000 mt/week of finished product, are anticipated to be completed by the end of October.

In the meantime, the company reported that July-August volumes were up from year-ago levels for all three major segments – Potash, Phosphates, and Mosaic Fertilizantes – while revenues were down.

Potash revenues took the biggest dive, falling 49.4% to $489 million from the year-ago $967 million. Volumes were up at 1.483 billion from 1.427 billion. Mosaic expects third-quarter potash sales volumes to be near the high end of previous guidance of 2.1-2.3 million mt, reflecting the impact of ongoing strong demand in North America. Potash price guidance remains unchanged at $250-$300/mt.

Phosphate revenues were off 33.5%, to $642 million from $966 million, while volumes were 1.081 million mt from 979,000 mt. Mosaic expects third-quarter volumes lifted to 1.081 million mt. As noted above, shipments were impacted by Hurricane Idalia and a power interruption. Third-quarter realized DAP prices on an FOB basis are expected to be in the previous guidance range of $475-$525/mt.

Mosaic Fertilizante’s revenues were off 35.7% for the two-month period, to $1.15 billion from the year-ago $1.788 billion, while sales volumes were up at 2.016 million mt from 1.891 million mt.

Asmark Institute – Management Brief

Management Briefs, News, South Central, U.S.

The Board of Directors of the Asmark Institute, Owensboro, Ky., a provider of risk management services and regulatory compliance products to the agricultural industry, announced on Sept. 11 a transition in its leadership team. Amber Duke, who has been a part of the organization since 2006 and served as President and CEO since 2019, has decided to embrace a new role as Asmark’s Vice President of Marketing & Communications.

“Transitioning to a new role is a decision I’ve made with great thought and consideration,” Duke said. “My dedication to the industry, the incredible Asmark team, and our clients remains unwavering and I am excited to continue contributing to the organization’s success in a fresh capacity. The role of Vice President of Marketing & Communications aligns perfectly with my professional aspirations and personal strengths and allows me to continue to support and enhance Asmark’s mission.”

“Amber’s enduring commitment to the industry, the Asmark team, and its valued clients remains steadfast, and her contributions have been instrumental to the organization’s growth and success,” said Billy Pirkle, Asmark Board Chair. “Her institutional knowledge, leadership abilities, and skillset have profoundly shaped the organization’s positive trajectory, and the entire Board and the staff stand united in our support of her decision. We are thrilled that she will continue to be a key leadership team member.”

The Board has named Brian Mason as the next President and CEO of Asmark, effective Oct. 1, 2023. He has been with Asmark since 2008 and assumed the position of Vice President and COO in 2019.

European Association of Chemical Distributors – Management Brief

Europe, Management Briefs, News

The Brussels-based European Association of Chemical Distributors (Fecc) has elected Lars Wallstein, current Vice-President, as its new President for the 2023-2025 term. Wallstein is Managing Director of IMCD Deutschland GmbH, based in Cologne, and has more than 20 years of experience in the chemical industry.

Wallstein is succeeding Neville Prior, Chairman of UK-based Cornelius Group, who has led Fecc for the past 10 years. Fecc’s leadership includes Oliver Fox, Board member of AssICC, the Italian Association of Chemical Trade, as Vice-President Elect; and Mikko Pasanen, Board Member of TKL, the Association of  Finnish Technical Traders, as Treasurer.

CHS to Return $730 M in Patronage

News, News Briefs

CHS Inc. on Sept. 12 announced it intends to return $730 million in cash patronage and equity redemptions to its owners in calendar year 2024 based on business done by CHS in fiscal year 2023, which ended on Aug. 31, 2023. Of the amount, $365 million will be cash patronage and $365 million as equity redemptions.

Final financial results for fiscal year 2023 are expected to be announced in November 2023. Additional patronage-related details will be available at that time, including the amount of fiscal year 2023 patronage equity certificates that will be issued to CHS members.

The $730 million patronage was down from the prior year’s $1 billion, which included $500 million each as cash equity and equity redemptions. However, 2022 was a record-breaking year for the cooperative. Net income was $1.68 billion on revenues of $47.8 billion for the year ending Aug. 31, 2022, exceeding previous records (GM Nov. 4, 2022). CHS saw a significant uptick in pretax earnings for all three major segments – Ag, Nitrogen Production, and Energy.

In total, CHS said it will have returned some $3.2 billion to its owners over the past 10 years.

USDA Raises Corn, Soybean Production Estimates

News, News Briefs, U.S.

US growers are expected to produce 15.1 billion bushels of corn for grain this year, up less than 1% from the previous forecast but up 10% from 2022, according to USDA’s Sept. 12 Crop Production report. Based on conditions as of Sept. 1, corn yields are expected to average 173.8 bushels/acre, down 1.3 bushels from the previous forecast but up 0.5 bushel from last year.

Total planted corn acreage is estimated at 94.9 million acres, up 1% from the previous forecast and up 7% from last year, while the area harvested for grain is forecast at 87.1 million acres, up 1% from the previous forecast and up 10% from last year.

Soybean production for beans is forecast at 4.15 billion bushels this year, down 1% from the previous forecast and down 3% from 2022. Average soybean yields are now projected at 50.1 bushels/acre, down 0.8 bushel from the previous forecast but up 0.6 bushel from 2022.

Total planted soybean area is estimated at 83.6 million acres, up less than 1% from the previous estimate but down 4% from last year. Area harvested for beans in the US is forecast at 82.8 million acres, up less than 1% from the previous forecast but down 4% from 2022.

All cotton production is forecast at 13.1 million 480-pound bales, down 6% from the previous forecast and down 9% from 2022. Cotton yields are expected to average 786 pounds/acre, up 7 pounds from the previous forecast but down 164 pounds from 2022.

Cotton planted area is estimated at 10.2 million acres, down 8% from the previous forecast and down 26% from 2022, while the cotton harvested area is forecast at 8.02 million acres, down 7% from the previous forecast but up 10% from 2022.