All posts by hlancey@bloomberg.net

Sinofert Reports 6% Rise in 1H Net Profit

China, Earnings, News, Nitrogen, Phosphate, Potash, Sulfur

Hong Kong-based Sinofert Holdings Ltd. posted a 6% increase in net profit for the first half of the year, to Rmb1.07 billion (approximately $147.1 million at current exchange rates). Net profit attributable to shareholders was up 0.6% year-over-year at Rmb1.0 billion, while basic earnings per share were up 0.6% from the prior year at Rmb0.143.

Six-month revenue declined 14% year-over-year, to Rmb13.13 billion, which Sinofert attributed mainly to the group’s initiatives to adjust the product mix and reduce low margin products. It said the increase in net profit was achieved “with the support of accurate market analysis along with efforts to boost business volume and create value.”

The group’s first-half fertilizer sales volumes increased 6% year-over-year, to 1.15 million mt. While significantly scaling down the low-margin nitrogen fertilizer and sulfur business, Sinofert said it vigorously promoted “bio-fertilizer+” and “Houpu” soil health strategy.

The group’s Growth business segment, which is one of three business segments and includes the production, procurement, and sales of products such as bio-compound and specialty fertilizers, saw first-half segment profit grow 39% year-over-year, to Rmb314 million.

The Production business segment, which includes the production and sales of fertilizers and MCP/DCP, recorded a six-month segment profit of Rmb356 million, up 8% year-over-year. Sinofert’s Basic business segment, however, which includes procurement and sales of potash, phosphate fertilizers, and sulfur, posted a 6% drop in segment profit, to Rmb535 million.

Looking ahead, Sinofert Holdings Chairman Liu Hongsheng said the domestic fertilizer market outlook “remains severe” in the second half of 2023. He noted that under the Chinese government’s policy guidance, the fertilizer industry is moving towards high-quality, diversified, and service-driven development.

“With the promotion of the technology of increasing crop yield with fewer agricultural inputs and water [soluble] -fertilizer integrated technology, the fertilizer industry is set to experience significant changes, which will create considerable opportunities and development for the group’s strategic transformation,” Liu said.

He said Sinofert will continue to consolidate its market share for the potash and phosphate business, further strengthen its capability of strategic procurement, and develop more high-quality sourcing channels, as well as continuing to “fully utilize the advantages of Syngenta Group’s platform.”

Sinofert also announced that its CEO Yue Ma passed away on Aug. 29. Ma joined the group in July 2001, and was appointed as Executive Director and CEO, as well as Chairman of the Corporate Governance Committee of Sinofert, in January 2023.

OCP Sees 37% Revenue Drop in 2Q

Earnings, Morocco, News, Phosphate

Morocco’s OCP Group SA reported a 37% decline in second-quarter revenue, to MAD19.28 billion (approximately $1.88 billion at current exchange rates) from MAD30.69 billion for the same period last year. The group in an Aug. 31 media statement attributed the revenue decline to “the exception global price increase” last year.

Six-month revenue was down 33%, to MAD37.56 billion from MAD56.02 billion. OCP said its capital expenditure totaled MAD12.03 billion in the first six months of 2023, a 53% increase on its first-half 2022 capex total of MAD7.85 billion.

The Moroccan phosphates group will report its full second-quarter and first-half results later this month.

Tech Outage Impacts Norfolk Southern Operations

Midwest, News, News Briefs, Northeast, U.S.

Norfolk Southern expects a now-resolved hardware-related technology outage on Monday morning, Aug. 28, to impact its rail operations for at least a couple of weeks. The outage shut down its systems and disrupted passenger and freight trains.

Norfolk Southern said its teams worked throughout the day and successfully restored all systems at 7:00 pm ET. “We are safely bringing our rail network back online,” the company said. “Throughout this, we have been in contact with our customers and will work with them on updated timing for their shipments.”

The company noted that it has no indication at this time that the outage was a cybersecurity incident. Amtrak said on Aug. 29 that some of its trains were canceled in the Midwest and the Northeast because of the Norfolk Southern outage, according to Bloomberg.

The incident comes as Norfolk Southern faces heightened scrutiny since a chemical train derailment earlier this year in East Palestine, Ohio, which drew national attention to rail safety. The House Energy and Commerce Committee is planning to hold a field hearing in September on the derailment’s cleanup progress.

Russia Implements 7% Fertilizer Export Duty

Hydrogen, News, News Briefs, Phosphate, Russia

Russia has set a new export duty of 7% for fertilizer products, with certain limited exceptions, from Sept. 1 through the end of 2024, according to an Interfax report, citing a government decree published late on Aug. 31.

Earlier in the week, it was reported that Russia was considering a reduction in the proposed new export duty.The first draft resolution providing for a fertilizer export duty of 8%, prepared by Russia’s Finance Ministry, was published in early August (GM Aug. 4, p. 34).

The ministry subsequently excluded from the draft the water-soluble phosphate fertilizers diammonium hydrogen phosphate and ammonium dihydrogen phosphate, which are expensive to produce.

Russian fertilizer group PJSC PhosAgro, the country’s biggest producer of phosphate fertilizers, has been seeking a differentiation in the export duty depending on the complexity and number of processing stages of fertilizer production, according to the report. It is unclear if PhosAgro’s proposals were taken into account in the new duty reduction.

Russia had export duties in place at a flat rate of 23.5% on all types of mineral fertilizer export sales priced above $450/mt FOB since Jan. 1, 2023 (GM Dec. 9, 2022). For fertilizers priced up to a maximum of $450/mt FOB, the rate of duty was zero. The duties had been set to remain in place through Dec. 31, 2023.

Acron Extends Options to Buy Back Shares

News, News Briefs, Potash, Russia

Acron Group has extended options to buy back two share tranches in CJSC Verkhnekamsk Potash Co. (VPC) until December 2023 in the case of a 19.5% tranche, and until February 2024 for a 10% tranche, according to an Interfax report.

Acron currently owns 50% plus one share in VPC, the subsidiary developing the Talitsky potash mine project in Russia’s Perm Region. Russian banks Sberbank Investments, Otkritie Bank, and VTB Group reportedly hold the remaining shareholdings in VPC.

Acron reported in March that VPC had completed the construction of the skip and cage shafts at Talitsky (GM March 10, p. 29). When completed, Talitsky will have an initial capacity of 2 million mt/y of potassium chloride, with the potential for further expansion to 2.6 million mt/y.

Egypt’s Waphco PhosAcid Project Secures Loan

Egypt, News, News Briefs, Phosphoric Acid

The African Export-Import Bank (Afreximibank) has approved a $400 million loan to finance a planned phosphoric acid project by El Wady for Phosphate Industries and Fertilizers (Waphco) at Abu Tartour, in the Egyptian province of New Valley, according to a report by Asharq Business.

Little has been heard of the project since Waphco inked the EPC contract for the phosphoric acid plant in December 2019 with a consortium formed of China State Construction Engineering Corp. Ltd. (CSCEC) and Chinese phosphate producer Wengfu Group Ltd. (GM April 10, 2020).

The plant is projected to have capacity to produce 1 million mt/y of phosphoric acid, all of which will be targeted for the export market.

According to its website, Waphco is an Egyptian joint stock company comprised of nine Egyptian government shareholders, including the operator of Egypt’s largest phosphate mines, Misr Phosphate Co., Egypt’s largest nitrogen fertilizer producer Abu Qir Fertilizers Co., and one of Egypt’s largest oil and gas companies, East Gas Co.

Brazil Potash Project Advancing

Brazil, News, News Briefs, Potash

Potassio do Brasil has applied for an operational license to develop a potash project in Brazil’s Amazon basin with annual potassium chloride production projected at 2.2 million mt (GM April 14, p. 27), according to Bloomberg, citing CEO Adriano Espeschit’s remarks at a recent conference held by Brazil’s IBRAM mining institute.

The company expects the Amazonas state environmental authority to respond in about 30 days, Espeschit said. The $2.5 billion project would be completed within about five years after the license is issued.

The Autazes Project has been trying to get a permit for seven years after a preliminary license was later suspended by a Federal Court that required prior consultation with the Mura indigenous people. Espechit said the consultation process is ongoing.

Potassio do Brasil is owned by Toronto-based Brazil Potash Corp., a subsidiary of Canadian investment firm Forbes & Manhattan.

JPMC Touts New Projects

Jordan, News, News Briefs, Phosphate

Jordan Phosphate Mines Co. (JPMC) is advancing ambitious new projects following record production last year, including a new phosphoric acid plant to be built in cooperation with a Turkish firm, according to JPMC CEO Abdul Wahab Al-Ruwad, as quoted by Jordanian Arabic language daily Al Ghad.

The Jordanian producer in May inked an agreement with Turkish oil trading and logistics company Transpet Petrolcülük ve Enerji AŞ to jointly establish a phosphoric acid plant in the Eshidiya area, where JMPC operates its largest phosphate rock mine (GM May 19, p. 29). Planned capacity is 165,000 mt/y P2O5.No timeframe has been indicated for the project.

Another project highlighted by the CEO will produce 2 million mt/y of aluminum fluoride, which is scheduled to be commissioned at the end of 2024. According to Al-Ruwad, the project is also being developed with a Turkish firm, though he did not disclose the identity of the company nor confirm whether it was Transpet.

Al-Ruwad also revealed that JPMC is considering investing in a project to produce white phosphorus, but the main obstacle to this project is the high energy cost, which he said discourages investors, according to the report.

JPMC produced 11.3 million mt of phosphate rock in 2022, the highest ever output for the company and up 5% from the prior year’s 10.8 million mt (GM Feb. 24, p. 27), according to Chairperson Mohammad Thneibat. Phosphate rock sales volumes were up 10%, to 10.7 million mt.

JPMC reported a 177% increase in net income for the year, to JD733.3 million (around $1.03 billion).

Australia’s BCI Minerals to Focus on Salt at Mardie

Australia, News, News Briefs, Potash, Sulfate of Potash

Australian junior salt and sulfate of potash (SOP) producer BCI Minerals Ltd.’s plan for a 100%-owned Mardie salt and potash project on the Pilbara coast of Western Australia (WA) has been reconfigured to focus on salt as the initial product, with the SOP plant design to be progressed during FY2024, the company said in an earnings presentation on Aug. 18.

BCI in June revealed that the project was experiencing significant cost increases and expected delays to the first shipments of salt and SOP from Mardie (GM June 30, p. 27).

This latest announcement comes close on the heels of two other WA solar SOP potash junior casualties amid growing negative investment sentiment in the developing potash sector.

Australian Potash Ltd. on Aug. 15 announced it was surrendering mining leases for its Lake Wells SOP project, some 500 kilometers northeast of Kalgoorlie, after it had not been able to secure further funding for the project (GM Aug. 18, p. 1). Two weeks earlier, another aspiring WA SOP producer, Kalium Lakes Ltd., collapsed into receivership.

Nevertheless, BCI reported on Aug. 25 that it has secured A$490 million (approximately $316 million at current exchange rates) of debt funding approvals from the Northern Australia Infrastructure Facility (NAIF) and A$160 million from Export Finance Australia (EFA) for its Mardie Salt project.

The funding, which remains subject to satisfying typical project finance conditions, includes all components of the Mardie project other than the SOP plant, the company said.

BCI said debt financing for the SOP plant will advance in 2024 following the completion of further design and cost elements. It is targeting an estimated SOP production at Mardie of some 140,000 mt/y, with first SOP on ship in mid-2027. The company is targeting an estimated 5.35 million mt/y of salt production at Mardie, with first salt on ship now expected in 2026.