All posts by mickeybarb@charter.net

Colombia Open to Buying, Expanding Monomeros

News, News Briefs, South America

Colombia is open to buying and expanding the Monomeros Colombo Venezolanos fertilizer plant in Barranquilla, Colombia, according to a Nov. 30 Reuters report citing Colombia Finance Minister Jose Antonio Ocampo.

“On the issue of fertilizers, I have said that we are willing to do anything, even here among us, to buy Monomeros and expand it significantly,” said Ocampo. He went on to suggest that Colombia’s Ministry of Mines and Energy would reveal that Colombia’s natural gas reserves have risen to 20 years from eight previously, which would aid in the country being both a fertilizer producer and a gas exporter.

Monomeros is owned by Pequiven, a unit of Venezuelan state-owned oil company PDVSA. To date, there has been no indication that Monomeros is for sale.

The Monomeros plant returned to the control of the government of Venezuelan President Nicolas Maduro this past fall, and a new Board of Directors and plant manager were named (GM Sept. 23, p. 1). Since 2019, the plant was controlled by a Board appointed by Venezuela opposition leader Juan Guaido (GM June 14, 2019). Guiado’s control allowed the US Treasury Department’s Office of Foreign Assets (OFAC) to lift sanctions on the fertilizer company and better allow raw materials to be supplied.

In the one month after reverting back to Venezuelan control, over 30,000 mt of Monomeros fertilizer was distributed to Colombian farmers, according to Bloomberg in a Nov. 3 report, citing an official with the Venezuelan Oil Ministry. Venezuela said the plant was idle when it regained control. The ministry said it planned to send technicians every 15 days seeking to position Monomeros as Colombia’s main fertilizer producer within the next six months.

Soon after the August 2022 inauguration of incoming Colombian President Gustavo Petro, Colombia re-established relations with Venezuela and the countries traded ambassadors.

In a meeting between Venezuela’s Maduro and Colombia’s Petro last month, the two were reported to have reviewed “strengthening of cooperation” between Monomeros and Pequiven, according to Bloomberg. Maduro called the meeting “fruitful” and “auspicious” in a televised address from the presidential palace in Caracas. “We have talked extensively about trade relations, economic relations, the new steps towards a total and secure opening of the borders.”

Maduro also said they discussed Venezuela’s re-entry to the Andean Community organization and regional human rights institutions

“We want to invite Ecuador, Chile, Peru to accept the re-entry of Venezuela with all its duties,” said Petro.

Maduro also proposed plans for the recovery of the Amazon and the need for a common South American position at the UN climate conference.

Heringer Finds Fraud; Takeover Stalled

Brazil, Europe, News, News Briefs, Specialty

Fertilizantes Heringer on Nov. 23 reported to have found evidence of fraud in the hiring of maintenance services and improper payments of R$50.7 million in overpriced services. It said practices were facilitated by failures in internal controls in the processes of selection and hiring of service providers.

The company said the irregular practices were detected as part of the first phase of an investigation carried out by independent consultants to investigate allegations of corruption at the company. The period investigated was from the beginning of 2019 to August 2022.

According to the investigation, there was manipulation of the competition process and selection of suppliers, as well as overpriced payments and undue amounts.

The company said the second phase of the investigation has begun and should be completed early next year, before the release of the balance sheet for fourth-quarter 2022. Heringer said it is seeking measures to repair the damage done to the company.

Heringer said it first shared the fraud allegations with the market on Aug. 11 and that the initial complaint was received in July (GM Sept. 2, p. 30). At the time, new majority shareholder EuroChem Group AG was seeking to buy out the remaining shareholders (GM April 1, p. 28), take the company private, and delist its shares.

Heringer said an appraisement of the takeover agreement released on Aug. 23 concluded that the fair price per share would be between R$11.48-R$12.62, which was below the price at which it was traded on the stock exchange – above R$15.

Heringer said EuroChem has increased the value offered per share, but there has not yet been an agreement with shareholders. Heringer said the takeover has been suspended since September.

EuroChem closed on the controlling 51.48% stake in Heringer in March. The deal was valued at R$554.8 million (approximately US$116.4 million in exchange rates at the time). The remaining shareholders were expected to receive equal treatment to that given the former majority shareholders.

Higher Prices Offset Lower Exports for OCP

DAP/MAP, Earnings, Morocco, News, NPK, NPS, Phosphate, Phosphoric Acid, Triple Superphosphate

OCP Group SA posted a 6% increase in EBITDA to $1.42 billion on revenues of $3.19 billion for the third quarter ended Sept. 30, 2022, up from the year-earlier $1.34 billion and $2.8 billion, respectively. Year-over-year, third-quarter revenues increased by 14%.

Nine-month EBITDA came in 57% higher on the year, reaching $4.31 billion, versus $2.74 billion for the previous year. Revenues for the period increased 39% to $8.96 billion, up from $6.45 billion.

Operating profit for the nine months jumped to $3.65 billion, compared with the year-earlier $1.99 billion.

“In line with our expectations, we end the first nine months of this year with third-quarter pricing dipping sequentially, as demand was muted by record-high first-half prices and high inventory levels in certain regions, together with adverse weather conditions in others,” OCP said.

The group highlighted that within this operating environment, it increased EBITDA by 76% in local currency on 55% revenue growth, citing higher prices across all product categories, which, it said, more than offset lower volumes compared to the same period last year.

OCP Revenue

  9M-2022 US$ 9M-2021 US$ % change 9M-2022 Percentage of total revenue 9M-2021 Percentage of total revenue
Phosphate rock 1,461 946 +54 16 15
Phosphoric acid 931 969 (4) 11 15
Fertilizers 5,841 3,890 +50 65 60
Others 722 640 +13 8 10
Total revenue 8,955 6,445 +39 100 100

Fertilizers continued to represent a bigger part of sales, accounting for 65% of the total nine-month revenues, up from 60% in the same prior-year period.

Fertilizer revenues for the period increased 68% year-over-year in local currency terms, with higher fertilizer prices mitigating the effect of lower export volumes.

OCP noted that global fertilizer prices gradually eased throughout the second half of 2022, resulting from lower demand in most key markets – notably Brazil, where inventory levels were high, and in Europe and the US, which experienced adverse weather conditions. It added that sharply lower sulfur prices added momentum to the price decline.

Nine-month fertilizer export volumes fell by 10% to 7.1 million mt, down from 7.9 million mt in the same year-earlier period.

Fertilizer Exports by Product Group

Million mt 9M-2022 9M-2021 % change
NPK/NPS/TSP 2.5 2.9 (14)
DAP/MAP 4.6 5.0 (8)
Total fertilizers 7.1 7.9 (10)

OCP said the high demand markets of South America, Asia, and Africa accounted for 88% of nine-month fertilizer exports, compared with the year-ago 76%.

Nine-month phosphoric acid revenues decreased by 6% year-over-year in local currency with lower export volumes, mainly to Europe and India, largely offsetting the increase in phosphoric acid prices. OCP noted the drop in acid volumes to India primarily resulted from a shift from acid to fertilizers.

Phosphate rock revenues in the nine-month period increased by 74% compared with the same prior-year period in local currency, owing primarily to higher rock prices, which largely offset the decrease in export volumes.

OCP sees product pricing for the balance of 2022 to remain similar to third-quarter levels, with increased affordability of phosphates for farmers resulting in a recovery in demand heading into 2023, buoyed by low-to-stable inventory levels in key importing regions.

At the same time, the group expects Chinese exports should remain low at least through the first quarter of next year during China’s spring application season. Also, with the exception of OCP’s additional TSP capacity, which will ramp up progressively in 2023, new supplies are expected to remain limited.

OCP once again did not provide any numbers on its additional TSP capacity plans. However, it is understood the group is adding around 0.5 million mt/y of additional TSP capacity at its Jorf Lasfar site. Existing TSP production capacity at Jorf Lasfar is understood to be some 400,000 mt/y, and at Safi some 900,000 mt/y.

EU Ministers Disagree on Proposed Gas Price Cap

Europe, Natural Gas, News, News Briefs

European Union (EU) energy ministers last week failed to agree to a cap on gas prices aimed at helping offset the ongoing energy crunch in Europe.

The ministers will now meet in the first half of December to attempt to bridge their differences, which, according to reports, “run deep.”

Czech Industry Minister Jozef Sikela, whose country holds the current presidency of the Council of the EU, was cited by a france24 report as saying a couple of other “important measures,” including joint gas purchases and supply solidarity in times of need, however, were agreed upon.

The gas price cap plan sets a maximum threshold of €275 (approximately $285 at current exchange rates) per megawatt-hour (MWh), and comes with conditions. Those conditions include that the cap proposal would only be triggered if the €275 per MWh limit was breached continuously for at least two weeks, and then only if the price for liquefied natural gas (LNG) rose above €58 for 10 days within that same two-week period.

Given the conditions, the price cap would not have been activated even when wholesale gas prices briefly soared above €339 per MWh in late August.

At least 15 of the EU’s 27 Member States want some kind of workable ceiling on wholesale gas prices to tackle the supply crunch since Russia invaded Ukraine.

Before the invasion, the EU relied on Russia for more than 40% of its gas supplies. That has now fallen to below 10%. Alternative sources such as LNG cannot make up for the shortfall.

The price cap plan, if adopted, would begin in January and would run alongside a voluntary initiative for EU Member States to cut their natural gas use by 15% over the northern hemisphere winter.

European gas prices have been rising again over the past couple of weeks. The Dutch TTF – the European benchmark – front-month gas (currently January 2023) closed at €137.0 per MWh on Dec. 1, down from its Nov. 30 close of €146.395, but up from the €97.855 per MWh close on Nov. 11.

Jefferies analyst Richard Johnson was cited in a Dow Jones report on Nov. 30 as seeing the prospect intensifying of more European ammonia capacity being taken offline after the Tampa ammonia price benchmark for December was concluded at $1,030/mt CFR, down $120/mt CFR from November’s $1,150/mt CFR.

Johnson said this comes despite the bounce in European gas prices (TTF) over the past fortnight. He believes the recent increase means European cash costs are now $1,400/mt, “meaning European producers are out-of-the-money,” which, he said, may be causing capacity to be taken offline in Europe.

Johnson, according to the report, put the amount of curtailed European ammonia capacity as of Oct. 20 at roughly one third.

If gas prices continue to firm from here, more capacity could be curtailed once again, he said.

Lifosa Prepares for Restarting Production

DAP/MAP, Lithuania, News, News Briefs, Phosphate

EuroChem Group AG said on Nov. 29 the Lithuanian phosphate fertilizer company Lifosa AB is completing preparations to restart its Kėdainiai production facilities in December. Lifosa is part of the EuroChem group.

EuroChem in November said Lifosa would restart production in December at a reduced capacity, providing sourcing of critical raw materials could be secured “immediately” (GM Nov. 18, p. 30). The fertilizer group in its latest statement did not comment on how much capacity is being restarted.

The planned restart follows an interim agreement with a government-appointed administrator (GM Nov. 11, p. 31; Nov. 4, p. 34).

Lifosa had been under the control of a temporary administrator since the end of May. Production was halted in mid-September due to a shortage of critical raw materials, including ammonia, and high natural gas prices (GM Sept. 16, p. 29; Sept. 9, p. 28). The producer had only resumed operations on Aug. 7.

Lifosa’s main product is DAP, with a production capacity of some 1 million mt/y.

“With the need to continue fertilizer supplies to key target markets in Europe and the Americas and the importance of Lifosa AB to Lithuania, we are pleased that we will be able to restart production in the short term,” said EuroChem Group CEO Samir Brikho.

However, he had warned in a statement last month that to ensure sustainable economic operations beyond December, “additional steps will need to be taken with regard of Lifosa obtaining access to competitively-priced raw materials and the permission to market its products to a broader customer base,” (GM Nov. 18, p. 30).

The CEO said this required Lifosa’s “quick reintegration into the EuroChem sales and procurement network.”

First Consignment of Russian Fertilizer Leaves Dutch Port

Africa, News, News Briefs, NPK, Russia, The Netherlands

The first shipment of Russian fertilizer under the UN’s food security agency, the World Food Programme, left the Dutch port of Terneuzen on Nov. 29 bound for Malawi after days of wrangling to ensure it was not held up or halted by Western sanctions, Agence France-Presse (AFP) reported, citing Dutch and UN customers officials.

The cargo, which comprises some 20,000 mt of NPK, left on board the MV Greenwich, according to the report. The ship was chartered by the WFP.

The shipment is the first of some 260,000 mt of Russian fertilizers stuck in European ports as a result of EU sanctions.

Russian fertilizer group Uralchem JSC last month confirmed that the first consignment of fertilizers produced by itself and potash producer Uralkali PJSC (now owned by Uralchem) would be shipped to Malawi (GM Nov. 11, p. 11).

Officials gave the go-ahead following UN assurances that the shipment would be delivered to Malawi, its intended destination, and that the Russian company and the sanctioned individual would not benefit.

Uralchem confirmed that it is donating the fertilizers for humanitarian needs in Africa, Southeast Asia, and Latin America, with the direct engagement of the WFP.

According to the AFP report, citing UN officials, the consignment will be shipped to the Mozambique port of Beira for overland shipment to landlocked Malawi.

Dimitry Mazepin, Uralchem JSC’s former CEO and owner of LLC Uralchem Fundamental Chemical Co., in a meeting with Russian businessmen earlier this week shown on Russian state television, as cited by a MercoPress report, said Uralchem was ready to increase its fertilizer exports to Africa, but some 262,000 mt of the company’s fertilizers were “frozen” in EU ports in the Netherlands, Belgium, Estonia, and Latvia.

Mazepin stepped down as CEO of Uralchem JSC and sold a 52% controlling stake from his holding in LLC Uralchem Fundamental Chemical Co., which fully owns Uralchem JSC, in March after being added to the EU’s list of sanctioned individuals (GM March 11, p. 1).

Mazepin said other Russian producers, Acron Group and EuroChem Group, have 52,000 mt and almost 100,000 mt of their fertilizers, respectively, stuck in Europe, according to the report.

Uralchem’s current CEO JSC Dmitry Konyaev, in a Nov. 12 statement, said Uralchem/Uralkali had agreed to continue free shipments of their mineral fertilizers stuck in EU ports to the African continent, and “are ready to provide additionally around 240,000 mt.”

This material, Konyaev confirmed, “is still stuck in European ports and that the company is in the process of UN-assisted negotiations to release the fertilizers.”

The UN, in a statement cited by the AFP report, said a second shipment of fertilizers should head to West Africa, and a series of shipments of fertilizer destined for a number of other countries on the African continent would follow in the coming months.

Mazepin and Moscow, as well as the Russian Union of industrialists and Entrepreneurs Commission on Mineral Fertilizers Production and Trading, are continuing to work with the UN to resume the supply of ammonia via the Tolyatti-Odessa pipeline as part of the grain deal, according to the MercoPress report (GM Nov. 25, p. 29 ).

According to a Reuters report on Nov. 30, citing UN Aid Chief Martin Griffiths, a deal to resume Russian ammonia exports through the pipeline is “quite close.”

Russian Fertilizer Production Falls 11%; 2022 Exports Projected to Fall 17%

News, News Briefs, Russia

Russia’s production of fertilizers fell 11% in the 10 months to the end of October, down to 19.5 million mt (active ingredient), compared with the same prior-year period, Bloomberg reported on Nov. 24, citing the Russian Federal State Statistics Service (Rosstat).

Potash production fell 31% over the same period, to 6.2 million mt.

In contrast, both phosphate and nitrogen fertilizer production increased by 0.6% and 3.8%, respectively. Phosphate fertilizer production increased to 3.6 million mt, while nitrogen fertilizer production rose to 9.8 million mt.

Meanwhile, the executive director of the Russian Association of Fertilizer Producers has warned that Russian fertilizer exports may fall by 17% to 31 million mt in full-year 2022 compared to last year.

Maxim Kuznetsov cited difficulties with financial transactions, insurance, and shortage of transshipment facilities after non-Russian Baltic ports became inaccessible to Russian producers, Bloomberg reported on Dec. 1, citing an IFX  report.

The executive director said the shortage of domestic port facilities is the “most critical factor.”

Grupa Azoty’s Kędzierzyn-Based Subsidiary Launches R&D Center

News, News Briefs, Poland

Polish fertilizer and chemicals group Grupa Azoty SA’s Kędzierzyn-based subsidiary has officially opened its new Research and Development Center in Kędzierzyn-Koźle in the south of the country.

The project, worth Pln39 million (approximately $8.67 million at current exchange rates), will significantly enhance the research and development capabilities of Grupa Azoty Kędzierzyn and the entire Grupa Azoty Group, Azoty said in a Nov. 30 statement.

The opening of the R&D center is an important part of Azoty’s strategy, which aims to provide high-quality new and improved products and preserve a long-term competitive advantage.

European Union (EU) funding of some Pln9.5 million was secured under the EU’s “Smart Growth Operational Programme” for the project.

Woodside Energy Selected as Partner for New Zealand Green Hydrogen/NH3 Project

Ammonia, Green Hydrogen, News, News Briefs, Oceania

New Zealand’s Meridian Energy said it has selected Perth, Australia-based Woodside Energy Group Ltd. as the preferred partner to move forward to the development stage of its proposed Southern Green Hydrogen project in Southland, on the country’s South Island.

The 600 MW facility under consideration, if built, would produce 500,000 mt/y of green ammonia, and would be focused on the export market. A final investment decision will follow the development stage.

Wellington-based Meridian said it is also in discussions with Mitsui & Co. Ltd. to join the project and develop the potential market for ammonia offtake, with the aim of creating a world-class collaboration that covers the full hydrogen and ammonia supply chain. Mitsui has 50 years of experience in the ammonia business, including the largest share of ammonia imports into Japan.

Subject to finalizing commercial arrangements, Meridian, Woodside, and Mitsui will work towards commencing front-end engineering design for the project.

The selection of Woodside followed a competitive process during which Murihiku Regeneration, representing both Ngāi Tahu and the local rūnanga of Murihiku, were closely involved.

Hyundai, Daewoo, Turkmenistan Ink MOUs for Fertilizer Projects

Ammonia, Asia, News, News Briefs, Phosphate, South Korea, Urea

South Korea’s Hyundai Engineering said on Nov. 30 it has signed a Memorandum of Understanding (MOU) on business cooperation for the proposed Turkmenistan Ammonia Urea Fertilizer plant with the Turkmenistan Federation of Industrial Entrepreneurs. The project is worth $1.4 billion, according to the South Korean firm.

The MOU was inked at the Korea-Turkmenistan Corporate Conference held on Oct. 29, according to a report by the Korea Times.

The proposed location of the ammonia and urea plant is the Balkan region in the west of Turkmenistan, with a planned production capacity of 1.155 million mt/y of urea and 665,000 mt/y of ammonia. Hyundai did not comment on the timeline for the project.

South Korea’s Daewoo Engineering and Construction (E&C) also has inked an MOU for the ammonia and urea plant project, and will now conduct on-site due diligence according to a Business Korea report.

In a separate development, Daewoo E&C signed a second MOU with Turkmenistan on Nov. 29, to build a 300,000 mt/y capacity phosphate fertilizer production and auxiliary facilities at Turkmenabat in Lebap province near the border with Uzbekistan, according to the report.