All posts by jlarareo@bloomberg.net

K+S to Convert Plants to Dry Processing

Germany, News Briefs

K+S, Kassel, Germany, plans to convert the Unterbreizbach, Thuringia, and Wintershall, Hesse, sites of the Werra integrated production plant to a dry processing method by 2026/27, the company announced on Oct. 17.

The project is the linchpin of K+S’ “Werra 2060” project to strengthen the competitiveness of the Werra plant and extend its life with increased and more stable production, as well as reducing the environmental footprint of the company’s domestic potash production.

K+S said it will use the electrostatic separation (ESTA) process to sort salt minerals dry without the use of water. This technology, which is well established at K+S, has now been “decisively further developed,” the company said. Downstream energy and wastewater-intensive hot solution and flotation processes are no longer required and have been discontinued.

The plant at the Hattorf site, also part of the Werra Plant, will continue to operate with the current technology for the time being.

Preparatory activities for the project are already underway above and below ground. At the Unterbreizbach plant, construction work will begin in 2023 and is scheduled for completion by the end of 2026. The conversion of the Wintershall plant will start in 2024 and last until mid-2027. Implementation at both plants will take place during ongoing production so that operational breaks can be “optimally utilized,” K+S said.

Once completed, the conversion of production at the Unterbreizbach and Wintershall plants will more than halve the total volume of process water for the Werra Plant to 1 million cubic meters per year, the company said. The remaining water will be disposed of off-site or is suitable for storage “sustainably and permanently” underground, it said.

The steam requirement will be also reduced by using the dry processing method. As a result, the power plants can be operated with “significantly” reduced output and minimized natural gas requirements. CO2 emissions will be reduced by around 50% at the two sites, K+S said.

The company is accompanying the conversion of processes by a further development of the product portfolio, “significantly” strengthening the market position for potash-magnesium fertilizers, it said. In addition, the share of rolled granules, which previously accounted for only a small part of production, will increase.

K+S said the product portfolio will become more competitive overall in terms of cost, sustainability, and quality criteria.

The use of the new technologies will also allow the solid production residues from the plants to be transported into the mining cavities, according to the company, which “will have a stabilizing effect” and make it possible to utilize part of the salt present in the pillars for processing, “significantly increasing the yield of mineral resources at the site.”

BHP Jansen Stage 1 Tracking to Plan

Australia, News Briefs, Potash

Melbourne-based BHP Group Ltd. reported that its Jansen Stage 1 potash mine in Saskatchewan is tracking to plan, with civil and mechanical construction activities progressing at the site and at the port.

First production from Stage 1 continues to be targeted for 2026, while the Jansen Stage 2 study has been accelerated, BHP said in its Operational Review for the quarter ended Sept. 30, 2022. Stage 1 was 11% complete by the end of September, and will have capacity to produce 4.35 million mt/y upon completion. Jansen Stage 2 would add another 4 million mt/y.

Worley Selected as Service Provider for Anglo’s Polyhalite Mine

England, News Briefs, Polyhalite, Specialty

Sydney-based Worley Ltd. has been selected as the preferred service provider for Anglo American Plc’s Woodsmith polyhalite project in northeast England. As a result, Worley has been awarded the program management agreement (PMA) for the project, under which it will provide project management, concept engineering, and design services, the Australian company said on Oct. 18.

The PMA also includes the substantive terms for Worley to provide Engineering, Procurement and Construction Management (EPCM) services, which will be completed under separate agreements as the Woodsmith project progresses.

The Woodsmith project is likely to include two deep shafts and an underground mineral transport system, where a 37 kilometer conveyor belt will transport ore for processing and export at a dedicated material handling and port facility. The operations will be integrated and automated from mine to port to support safety, efficiency, and flexibility.

Project services will be executed by Worley’s UK offices, with support from a number of Worley’s global Centres of Excellence.

Anglo American has yet to indicate any projected timeline for Woodsmith, or to indicate an initial production target. Last year, it said it was targeting total production of up to 10 million mt/y of Poly4, the marketed form of polyhalite (GM Aug. 6, 2021).

In late 2021, Anglo completed a detailed technical review of the project to ensure the technical and commercial integrity of the full scope of its design (GM Dec. 10, 2021). Anglo in March said it expected to make a number of changes to the phasing of work, particularly in relation to the two main shafts (GM March 4, p. 30).

ROC Minister Dissatisfied with Kore’s Progress

News Briefs, Potash

Junior miner Kore Potash Plc reported on Oct. 19 that a subsidiary received a letter dated Oct. 12 from the Republic of Congo’s (ROC) Minister of Mines expressing his discontent with aspects of the administration of the company’s subsidiaries in the ROC and the apparent lack of progress that Kore and the Summit Consortium are making towards financing the Kola Project in the ROC’s Sintoukola Basin.

Kore, which is based in London and has a 97% ownership of the Kola and DX Potash Projects in the ROC, said the letter was received following the arrest and subsequent release without charge of two senior employees of the company by the Congolese police. It said neither the employees nor the company have been informed of the reason for the arrests.

The minster also expressed disappointment with the speed of the project in 2020 (GM Dec. 18, 2020). Kore said the recent letter reserves the government’s right to take measures in accordance with its existing agreements and the ROC’s Mining Code, failing a response from the company within 30 days. The company intends to formally respond to the minister’s letter within the 30-day period.

The minister’s letter followed Kore’s Oct. 10 announcement that while it has received an Engineering, Procurement and Construction (EPC) agreement from SEPCO Electric Power Construction Corp. (GM July 1, p. 30), Kore said the EPC’s proposed contractual terms now require further discussion before acceptance. Kore said any changes to the EPC may have to go back to SEPCO and its parent, Power Construction Corp. of China, for approval before the EPC can be finalized.

Kore said that the Summit Consortium, which has signed a nonbinding MOU for the financing of the full construction costs of the project (GM April 9, 2021), remains committed to the financing and is currently awaiting Kore and SEPCO’s finalization of the EPC contract prior to financing the project.

The capital cost to construct Kola is estimated at $1.83 billion, with a construction period of 40 months, according to Kore. The project, which is to be designed and constructed as a conventional underground potash mine and processing plant, will have capacity to produce 2.2 million mt/y of granular potash over an initial 31 year life. The granular potash produced will be at a minimum quality of 95.3% KCl in line with international standards.

Yara Delays Clean Ammonia IPO to 2023

Ammonia, News Briefs

Yara International ASA is delaying the planned initial public offering (IPO) of its clean ammonia unit until 2023 due to unfavorable market conditions, Yara International President and CEO Svein Tore Holsether said in a webcast presentation on Oct. 20. Yara announced in May that it was evaluating the division as an IPO (GM May 6, p. 36).

“From an operational performance point of view, we are ready, but you also have to look at the financial markets, and when the best timing is that we have full flexibility on when to push the button on the IPO, and as it looks at the moment, this is now more realistic in 2023,” said Holsether.

In August, the company reported the demerger and triangular merger of the Yara Clean Ammonia (YCA) business had been completed (GM Aug. 26, p. 1). Yara’s shareholders will have the same number of shares in the company, and the nominal value of the shares in Yara will be the same as before the demerger and triangular merger.

YCA was transferred to intermediary company Yara Clean Ammonia NewCo AS, and the intermediary was merged with YCA by way of a triangular merger. YCA operates the largest global ammonia network with 12 ships, and has access to 18 ammonia terminals and multiple ammonia production and consumption sites across the world through Yara.

Holsether declined to comment on earlier reports that the company is eyeing the Nitrogen Fertilizer Unit-III (UFN-III) of Brazilian energy firm Petrobras SA (GM Aug. 5, p. 36). “In M&A, we don’t comment until such point where we have an agreement,” he said.

Last month, reports suggested a sale was on the verge of happening, but Petrobras said the rumors were “untrue” and that the sales process was still in the binding stage and had not reached the stage to receive proposals (GM Sept. 16, p. 30).

Yara, PPA Select Lloyd’s Register for Clean Ammonia Study

Ammonia, News Briefs

UK-based maritime engineering and technology services company Lloyd’s Register (LR) has been selected by Yara Clean Ammonia and the Pilbara Ports Authority (PPA) to undertake key feasibility studies into using clean ammonia to refuel ships at ports in the Pilbara region of Western Australia.

The announcement follows the signing of a collaboration agreement in late July between Yara Clean Ammonia and PPA, under which they aim to jointly facilitate the uptake of clean ammonia as a marine fuel in the Pilbara region (GM July 29, p. 32). Yara and PPA are jointly assessing the potential ammonia demand and required bunker infrastructure, leveraging Yara’s existing Pilbara ammonia production facility.

As part of the study, Yara Clean Ammonia and PPA will look to establish an advisory committee including representatives of shipping customers and providers to have input into the process.

Yuri is targeted to start operations in 2024. The first phase will produce up to 640 mt/y of renewable hydrogen for Yara, and a 100% offtake contract is already in place between the two parties.

Nitricity Raises $20 M in Funding

News Briefs, Nitrogen

Agtech startup Nitricity, San Francisco, announced on Oct. 12 the close of its Series A investment capital raise at $20 million. The company said its technology produces ready-to-use nitrogen with only air, water, and renewable energy, and it is scaling what it calls the world’s only on-farm, cost-effective, decarbonized solution to fertilizer production (GM Aug. 20, 2021).

This fundraising round was led by Khosla Ventures and Fine Structure Ventures, with additional participation from Energy Impact Partners, Lowercarbon Capital, and MCJ Collective. With this financing, Nitricity has raised $27 million in total funding to date.

The company plans to accelerate its ability to bring climate-smart fertilizer to a market experiencing ongoing and historic fertilizer price volatility and supply challenges. It aims for its renewable technology to be available in the market and benefitting the entire value chain within a two-year period.

​“Today’s fertilizer industry is facing the perfect storm of high GHG emissions, high fossil fuel consumption, rising costs, and geopolitical disruptions,” said Rajesh Swaminathan, Partner at Khosla Ventures. “Nitricity’s decentralized approach to manufacturing fertilizers using just air, water, and renewables-based electricity was born out of a vision to completely transform a 100-year-old industry, and we are excited to be partnering with them.”

​“Nitricity has made rapid progress since our initial investment in their Seed round,” said Allison Hinckley, Senior Associate at Fine Structure Ventures, a venture capital fund affiliated with FMR LLC, the parent company of Fidelity Investments. “In response, we are increasing our support of the company to aid in bringing their differentiated, decarbonized fertilizer products to market in the near term.”

South African Firms Advance Green Projects

Green Hydrogen, News Briefs, South Africa

Sasol South Africa and ArcelorMittal South Africa on Oct. 18 announced a Joint Development Agreement (JDA) to advance studies of two potential green projects.

The Saldanha green hydrogen derivative study will explore the region’s potential as an export hub for green hydrogen and derivatives, as well as steel production. The Vaal carbon capture and utilization (CCU) study will investigate the use of renewable electricity and green hydrogen to convert capture carbon from ArcelorMittal South Africa’s Vanderbijlpark’s steel plant into sustainable fuels and chemicals.

In addition, Sasol signed a Memorandum of Understanding (MOU) with Freeport Saldanha Industrial Development Zone to develop a globally competitive green hydrogen hub and ecosystem within Saldanha Bay.

“We are very excited to be leading the pre-feasibility and feasibility studies on these two potential projects that hold promise to unlock South Africa’s potential to be a global green hydrogen and derivatives player,” said Priscillah Mabelane, Executive Vice President for Sasol’s Energy Business. “These studies are anchored by the local need for green hydrogen and sustainable products, cementing Sasol as the leading contributor to the development of southern Africa’s green hydrogen economy.” 

Last month, Sasol and ITOCHU Corp. signed an MOU to jointly study and develop the market and supply chain for green ammonia, with a focus on its use as bunkering fuel and for power generation. The parties will also evaluate ITOCHU’s potential involvement and participation in Sasol’s green ammonia export-orientated projects, including product offtake as well as financial support from Japan for studies and grants relating to green ammonia projects in South Africa.

Sasol is advancing a number of green hydrogen studies and projects in South Africa, including one in Boegoebaai, in the Northern Cape province, that include green ammonia production at scale for export (GM Oct. 29, 2021).

Drought Continues to Plague Mississippi River; Fertilizer Industry Feels the Impact

Featured, Mississippi RIver, News

Drought continues to plague the Mississippi River with portions closed for dredging. Waters in Memphis, Tenn., fell to a reading of negative 10.79 feet late on Oct. 17, below the previous record low of negative 10.70 set in 1988, according to National Weather Service data.

Part of the river near Hickman, Ky., was shut for dredging after barges grounded. The site reopened later in the week for one-way traffic, with 74 vessels and 943 barges waiting to move, Bloomberg reported on Oct. 19. However, there were at least two other river closures at the time; one at Memphis with 33 vessels and 499 barges stalled, and another at Battle Axe/Tunica with 20 vessels and 322 barges in the queue.

“This is the most severe we’ve ever seen in our industry in recent history,” Mike Ellis, CEO of American Commercial Barge Line told CNBC. “That’s a significant impact to our supply chain. We can’t get the goods there.”

Forecasters see no or little near-term relief. “We are seeing some signs of a little bit of rainfall with the cold fronts working their way through, but nothing that will get us out of the low-water situation,” said Jeff Graschel, a hydrologist at the Lower Mississippi River Forecast Center.

“There is no rain in sight, that is the bottom line,” Lisa Parker, spokeswoman for the US Army Corps of Engineers Mississippi Valley Division, told the Wall Street Journal. “The rivers are just bottoming out.”

Fertilizer industry players pointed to the impacts on the market. “The river is getting to be a big deal,” said one source. “Many barges cannot make it to the docks. We can but it’s a struggle. I think product will tightened up because of it. With the barge/low river problems, we are starting to see a disconnect to the NOLA prices, much like the large grain prices spread on basis. We see price lists that quote a price subject to barge arrival. It is easy to be cheap when you are out.”

Market sources told Green Markets they were relying on their contract freight rates and trying their best to stay out of the spot market for freight. “There is much higher spot rates as well as a reluctance from barge operators to even quote,” said one player. “It’s a mess out there.”

“Spot barges really aren’t available,” added another, saying he had heard rates to St. Louis as high as $100/st.

Ironically, grain spot barge rates from St. Louis dropped to $72.58/st for the week of Oct. 18, down from its peak of $105.85/st for the week of Oct. 11, according to USDA’s Grain Transportation Report, which attributed the drop to some grain shippers delaying deliveries until later in the year. Nonetheless, it said grain spot rates remain up 130% from last year and up 260% from the three-year average.

The disruptions couldn’t come at a worse time for US crops, particularly soybeans. American farmers need to ship them now because it’s the only window they have to dominate world sales. If they fail, domestic inventories will likely stay bloated because Brazil will soon begin harvesting its mammoth crop and flooding global markets with product. 

“The US is losing the opportunity to sell as much as they can before Brazil’s harvest, and all signs point to a record Brazilian crop so far,” said Victor Martins, Senior Risk Manager at HedgePoint Global Markets in Brazil. 

If the US can’t export enough soybeans, that is bearish for prices on the futures exchange in Chicago. US prices are a world benchmark, meaning that the oilseed in other areas of the world can be priced off of the Chicago exchange. Ultimately, cheaper soy means some relief could be on the way for high food prices, since the oilseed is used in everything from cooking oil to animal feed. 

There are already signs the US is losing sales, with top buyer China booking cargoes from Brazil and Argentina instead of the US, an unusual move for this time of year.

Another wildcard that’s hurting US exports is Argentina. At least 8 million tons of soybeans were sold in a few days by Argentinean exporters after the local government allowed farmers to receive a better exchange rate.  “Argentina basically ‘came out of nowhere’ in this market and dumped a lot of ‘cheap’ soybeans that China jumped in and bought,” said Arlan Suderman, Chief Commodities Economist at StoneX.

US sales could also get worse. If shipments to China are pushed back far enough behind schedule, buyers may cancel and switch to Brazil, according to Doug Houghton, an Analyst at Brock Associates Inc. in Milwaukee.

Reports that China is buying US cargoes for arrival in Asia in February is one area where American soybeans are doing well. That is a possible hedge in case Brazilian production isn’t as plentiful as forecast. Last year, a drought in December reduced the nation’s output to the lowest since the 2018/19 season. Last week, China booked 13 cargoes for December and January shipment from the US, according to several market sources.