All posts by mickeybarb@charter.net

Russia Extends Fertilizer Export Quotas Until End-2022, Opens Export Window for June

Ammonium Nitrate, DAP/MAP, Featured, Mono-Ammonium Phosphate, News, Nitrogen, NPK, Russia, UAN, Urea

As anticipated, the Russian government has extended the quotas for the export of nitrogen fertilizers and complex fertilizers, with the restrictions to be in effect between July 1 and Dec. 31, 2022, Interfax reported on June 1, citing the government press service.

Moscow’s plans to extend the fertilizer export quotas to at least December of this year were reported last month and in late April (GM May 20, p. 31; April 29, p. 32), but have now been formalized under a new resolution just signed.

The quotas introduced on Dec. 1, 2021, on exports of nitrogen and complex fertilizers (GM Nov. 5, 2021) expired on May 31, so in June producers will be able to export these fertilizer products without limits.

The new quotas, to run between July 1 and Dec. 31, are slightly more than 8.3 million mt for nitrogen fertilizers and 5.95 million mt for complex fertilizers, according to the report.

According to Interfax, the amounts of the quotas for the second half of 2022 were calculated based on a schedule agreed to with the Agriculture Ministry. They will include 1.86 million mt for ammonium nitrate, 5.1 million mt for urea, 1.36 million mt for UAN, 3.55 million mt for NPK, 1.8 million mt for MAP, and 584,500 mt for ammonium phosphate sulfate.

Russia’s Industry and Trade Ministry will distribute the quotas among exporters by June 20.

The Russian government is understood to have cancelled export quotas for a number of fertilizers, including ammonium nitrate (AN) and ammonium phosphate (DAP and MAP), according to Interfax. It is unclear from the media reports coming out Russia whether this is just for the month of June or for the rest of 2022, but trading sources consider it is just for June.

The lifting of export quotas for fertilizers such as AN and compound fertilizers such as NPKs in June follows the completion of Russia’s Ministry of Agriculture’s plan for purchases of nitrogen fertilizers for domestic spring field work. Interfax cited an unnamed agribusiness sector source as confirming the Agriculture Ministry’s nitrogen fertilizers purchase plan for domestic farmers for spring field work as “having been carried out in full.”

According to the report, the new purchasing campaign for phosphate fertilizers – which will be needed in the fall – will enter its active phase immediately after harvesting, that is, not before the second half of July.

E.U. Countries Agree on Compromise Deal on Russian Oil Sanctions

Europe, Featured, News, Russia, Ukraine

European Union (E.U.) leaders early this week agreed to ban the imports of around 90% of Russian oil by the end of this year as further punishment on Moscow for invading Ukraine, and gave their final approval on June 2 to the bloc’s sixth round of sanctions against Russia.

This package also imposes further sanctions against Belarus, considering its involvement in the aggression against Ukraine.

The agreement comes into force at 0700 hours GMT on June 3, and come into force with immediate effect.

The initial 27-Member State agreement was reached at a special meeting of the European Council, which began on May 30 in Brussels.

The new sanctions apply to crude oil and petroleum products imported from Russia into the Bloc. The E.U. embargo applies to oil imports that arrive by sea – around two-thirds of the crude oil imported from Russia, according to the European Commission, citing Eurostat data.

However, the import ban does not apply to Russian crude oil delivered into the E.U. by pipeline, following opposition from Hungary’s Prime Minister Viktor Orban, who has held good relations with Russian President Vladimir Putin. Hungary imports around 65% of its oil from Russia.

Other land-locked E.U. countries, such as Slovakia and the Czech Republic, also asked for more time due to their dependence on Russian oil. Bulgaria, already cut off by Russian state-oil and gas major Gazprom, also has asked for more time.

But by the end of this year, the scope of the ban will be wider because Poland and Germany have voluntarily agreed to stop all purchases of Russian oil by the end of 2022. If implemented, this will mean a total of 90% of Russian oil currently coming into the E.U. will be blocked, depriving Moscow of crucial revenues to finance the war.

Russia currently supplies around 27% of the E.U.’s oil imports and around 40% of its natural gas. The combined trades provide Russia with around €400 billion (approximately $428 billion at current exchange rates) a year in revenue. The E.U. so far has dragged its heels on imposing any sanctions on imports of Russian gas.

According to the European Commission, what would be left is around 10-11% of Russian oil imports delivered by the southern Druzhba pipeline supplying Hungary, Slovakia, and the Czech Republic.

But the European Council intends to revisit “as soon as possible” Hungary’s most important exemption – permission for Russian oil to continue flowing through the southern section of the Druzhba pipeline, according to a report by political news portal Politico, citing European Council President Charles Michel, European Commission President Ursula von der Leyen, and other senior officials.

For seaborne crude oil, spot market transactions and execution of existing contracts will be permitted for six months after entry into force, while for petroleum products, these will be permitted for eight months after entry into force.

However, Member States benefiting from the pipeline exemption will not be able to resell such crude oil and petroleum products to other Member States or third countries.

Due to its specific geographical exposure, a special temporary derogation until the end of 2024 has been agreed for Bulgaria, which will be able to continue to import crude oil and petroleum products via maritime transport. In addition, Croatia will be able to authorize until the end of 2023 the import of Russian vacuum gas oil, which is needed for the functioning of its refinery.

According to a Reuters report citing an unnamed E.U. official, in addition to banning seaborne oil imports into Europe, the new sanctions also include an immediate ban on insuring ships carrying Russian oil elsewhere. E.U. experts said that would complicate Russia’s efforts to find other markets for its crude oil, according to the report.

This sixth package of sanctions also includes removing Sberbank, Russia’s largest consumer bank, and an additional two other Russian banks and one additional Belarusian bank from the SWIFT international payment system.

According to the Politico report, the new sanctions also targeted Patriarch Kirill, the leader of the Russian Orthodox Church and a close ally of Putin, as well as Russian military officials responsible for alleged atrocities in Bucha and other towns that were occupied by Russian forces.

But, according to late week reports, before the final adoption of the latest package of sanctions, Hungary blocked the necessary E.U. unanimity for Kirill to be included on the sanctions list, and Kirill was removed from the sanctions list.

OCP to Set Up Organic Fertilizer JV in Spain

Europe, Morocco, News, News Briefs, Specialty

OCP Group SA, Casablanca, has secured government authorization in Spain to create a joint venture with Spanish firm Fertinagro Biotech SL to manufacture and commercialize organic fertilizer for agriculture, Morocco World News reported.

The venture, to be known as Fertinagro OCP Organic Biosolutions, will be held in equal parts by both companies, although OCP already owns a 20% stake in Fertinagro. In addition to manufacturing and commercializing fertilizers, the jv will undertake research and development in the field of organic agriculture, according to the report.

The new company will start with a capital of MAD266 million (approximately $27 million at current exchange rates), with some 40% of this capital coming from the shareholders, according to the report. The remaining 60% will be financed by loans.

Initial turnover is expected to be MAD46.8 million, but is forecast to rise to MAD1 billion by 2029, representing an ambitious annual growth rate of 47%.

Teruel, Spain-based Fertinagro is part of agricultural supply group Térvalis Group, which has subsidiaries in France, Italy, Portugal, Ukraine, Algeria, Mexico, and Argentina.

The new jv is part of OCP’s diversification strategy and its efforts to capitalize on rising fertilizer demand and prices. The Moroccan group was reported just last month to be planning to build a phosphate processing plant in Brazil, according to a Bloomberg report, citing the website of Brazil’s Ministry of Agriculture, Livestock, and Supply (GM May 13, p. 36).

Grupa Azoty 1Q Earnings Up: Sales Prices Offset Feedstock, Lower Volumes

Earnings, News, Poland

Polish fertilizers and chemicals company Grupa Azoty SA, Tarnów, posted a net profit attributable to shareholders of Pln853.6 million (approximately $199 million at current exchange rates) for the first quarter ended March 31, 2022, versus the prior year Pln87.6 million.

First-quarter EBITDA came in at Pln1.34 billion, compared with Pln405.1 million the previous year, while revenue more than doubled to Pln6.83 billion versus the year-ago Pln3.36 billion.

“Despite the challenging market landscape and feedstock pressure, Grupa Azoty delivered positive EBITDA across all business segments,” Grupa Azoty President of the Management Board Tomasz Hinc said in the company’s earnings statement.

“Although gas prices are at all-time highs, we have been able to maintain nitrogen fertilizer production at levels reflecting maximum available capacity, ensuring fertilizer availability ahead of the peak of application season,” he said.

While Azoty in the quarter saw “high and volatile” prices for feedstocks, mainly for natural gas, phosphate rock, potassium chloride, benzene, phenol, and propylene, it also noted increased prices for fertilizers, chemicals, and plastic products during the period.

But sales volumes in Azoty’s Fertilisers/Agro business segment and in the Chemicals business segment were lower year-over-year. The company attributed the lower sales volumes in Fertilisers/Agro as mainly reflecting reduced output of compound fertilizers resulting from a failure of power steam generators at subsidiary Zakłady Chemiczne Police SA in March (GM March 25, p. 29; March 18, p. 32). The stoppage fully ended on April 8 (GM April 15, p. 26).

In the Plastics segment, sales volumes remained largely unchanged versus the same year-ago quarter.

Azoty said due to increased fertilizer demand in Poland during the first quarter, it continued the efforts initiated in the second half of 2021 to redirect its products from foreign markets to the domestic market.

The Fertilisers/Agro business segment accounts for the largest share of Azoty’s results in the first quarter of each year due to the seasonality of fertilizer sales. The first quarter of 2022 was no exception.

This business segment reported a 224% surge in first-quarter EBITDA to Pln814.3 million, while revenue more than doubled to Pln4.22 billion, up from the previous year Pln2.02 billion.

Azoty said the key to the segment’s “solid first-quarter performance” was “its strategy to maximize internal production of nitrogen fertilizers whilest keeping product prices among the lowest in the European Union.”

Brazil Potash Reported to Have Begun Consultation Process with Indigenous People

Brazil, Canada, News, News Briefs, Potash

Toronto-based potash junior Brazil Potash Corp., which is proposing to mine potash in Brazil’s northwestern Amazonas state, has finally begun a consultation process with Indigenous inhabitants, more than a decade after the company first started prospecting, according to a report by Mongabay.com, a California-based environmental science, energy, and green design website. However, this could not be confirmed with Brazil Potash by Green Markets by press time.

While the Canadian junior has promised jobs and prosperity for the municipality of Autazes, Indigenous Mura communities are worried that the development could pollute their rivers, which could kill the fish they depend upon. Their resistance is undermined by the Brazilian government’s long-standing refusal to acknowledge their land claims.

Brazil Potash claims the mine would have minor environmental impact given that the project plans to return processing waste underground.

The proposed mine has gained fresh momentum in recent weeks, fueled by global potash supply shortages as a result of Western sanctions on Belarus – and more recently, on Russia following the latter country’s invasion of Ukraine. The company recently revealed it is proposing to double planned output of potash from its Autazes Potash Project from 2.44 million mt/y to more than 5 million mt/y (GM April 8, p. 29).

New domestic production would be a welcome development to Brazil, which is heavily dependent on imports to meet its potash requirements, importing some 12.8 million mt of potash in 2021.

Perdaman Agrees to Revised EPC Contract for Karratha Urea Project

Australia, Europe, News, News Briefs, Urea

Australian junior producer Perdaman Chemicals and Fertilisers Pty Ltd., Perth, said it has signed a revised Engineering, Procurement, and Construction (EPC) contract with Perth-based Clough Group and Italy’s Saipem SpA for its urea project northwest of Karratha on Western Australia’s Burrup peninsula.

The agreement replaces the one previously announced in late December 2020 (GM Dec. 31, 2020). The new total EPC price is US$2.7 billion, a 12.5% increase on the original contract price.

Perdaman cited changes in market conditions and logistical challenges faced in recent times as behind the upward revision of the contract price. The revised contract also includes further risk and reward provisions to provide flexibility to manage any potential further deterioration in market conditions.

Clough and Saipem, as part of an equally shared joint venture, reached an agreement for the development of Perdaman’s urea project in December 2020, having signed a binding Heads of Agreement in July of that year (GM July 2, 2020).

Perdaman will invest a total of A$4.5 billion to develop the plant. It will have capacity for up to 2.3 million mt/y of granular urea, with first production targeted for the fourth quarter of 2025.The project has been supported by the Western Australian government, being allocated Project of State Significance status.

The company last year secured a 20-year offtake agreement with Australia’s Incitec Pivot Ltd.’s (IPL) wholly-owned subsidiary, Incitec Fertilizers Pty Ltd. (IPF), for up to 2.3 million mt/y of granular urea (GM May 7, 2021).

The deal remains subject to certain conditions precedent, with a primary one relating to Perdaman obtaining financing for construction of the new plant, which in turn depends on the junior producer finalizing gas supply arrangements and obtaining various environmental and other regulatory approvals for the plant.

Perdaman has a 20-year natural gas supply agreement in place with Woodside Energy signed in November 2018, but the agreement remains subject to a number of conditions (GM Nov. 21, 2018).

An application by Traditional Owners this past March to halt construction of the project on concerns about damage to the nearby ancient rock art (GM March 18, p. 30) was knocked back by the Federal Environment Ministry in April. A spokesperson for Federal Environment Minister Sussan Ley said the application had been denied because Ley did not believe the area was under immediate threat.

Toyo to Study Green NH3 Production for Fertilizers in Indonesia

Green Ammonia, Indonesia, Japan, News, News Briefs

Japan’s Toyo Engineering Corp. will start a feasibility study for green ammonia production in Indonesia in collaboration with state-owned Pupuk Indonesia Holding Co. (PIHC) and Pupuk Iskandar Muda (PIM), a subsidiary of PIHC.

Toyo will study the feasibility for green ammonia production at the existing fertilizer plants owned and operated by PIM, according to a statement by the Japanese firm. Toyo built PIM’s existing ammonia plant and aims to modify the facility to produce green ammonia synthesized from hydrogen produced by renewable energy sources.

The scope of the feasibility study also includes the future decarbonization of PIHC’s other fertilizer plants.

Toyo was awarded the contract by Japan’s Ministry of Economy, Trade and Industry. Neither the timeline nor the value of the contract has been disclosed.

JPMC, Indonesia, Explore Further Cooperation on Phosphates

Indonesia, Jordan, News, News Briefs, Phosphate

Jordan Phosphate Mines Co. (JPMC) and Indonesia’s Minister of Agriculture, Syahrul Yasin Limpo, have held talks about the further potential of Jordan supplying Indonesia with phosphate rock and fertilizers. They have also agreed to explore the potential of setting up a joint-venture plant for the production of NPK fertilizers in Jordan’s Red Sea port of Aqaba, according to Petra, Jordan’s state news agency, citing JPMC.

The two parties held the talks at a May 30 meeting on the sidelines of the International Fertilizer Association’s annual conference in Vienna.

The two sides are looking at a potential production capacity of between 300,000 mt/y to 500,000 mt/y for the jv, with the entire output to be exported to the Indonesian partner.

JPMC and Indonesia’s Ministry of Agriculture have agreed to meet in Amman in two months time to discuss the legal framework for the proposed partnership, according to the Petra report.

The Jordanian producer already has a jv in Indonesia, in partnership with PT Petrokimia Gresik. Set up in 2010, the “PT Petro Jordan Abadi” jv produces phosphoric acid and consumes about 800,000 mt/y of phosphate rock from JPMC. The jv is a 50:50 partnership between the two companies.

A second jv, established in 2014 in partnership with PT Pupuk Kalimantan Timur (PKT) and also for the production of phosphoric acid, however, was liquidated due to the jv’s inability to secure licenses. JPMC held a 40% stake in the jv.

Trafigura Weighs Australian Green Plant, Sees Opportunity in “Lumpy” Market

Asia, Australia, Green Hydrogen, News, News Briefs

Commodities trading and logistics giant Trafigura Group, Singapore, is on track to make a final investment decision (FID) this year on the A$750 million ($539 million) hydrogen and ammonia project in Port Pirie in Australia, Tim Rogers, Trafigura General Manager Australia, told Bloomberg on June 1.

The project would be a joint investment with Nyrstar NV and the South Australia government. Trafigura has also signed on to a joint venture for a 600 mt/d green ammonia plant in Norway (GM Feb. 4, p. 30).

The Port Pirie project would eventually produce 100 mt/d of green hydrogen and utilize a 440-megawatt electrolyser. The product would be used both domestically and turned into ammonia for export.

The facility would be integrated with Trafigura’s Nyrstar metals recovery smelter at the site, utilizing existing infrastructure and gaining a brownfield advantage over a greenfield project. A FID is expected by the end of 2022, and if approved, construction would begin in 2023. The parties initiated an A$5 million Front End Engineering Design (FEED) study in December.

Australia looks to its abundant potential to produce electricity using solar and wind to become a major exporter in the nascent green hydrogen market, with projects in the country accounting for more than 40% of those planned globally, according to BloombergNEF. Many of these plants will be big, leading to a “lumpy” transition that will allow Trafigura to benefit from its trading experience, Rogers said.

“There’s going to be a difference in profile between production coming online and the demand for that production,” he said. “There’ll be price movements within that market. And that’s obviously what an organization like ourselves does – help solve those shorter-term anomalies in supply and demand.”

The company currently has ammonia traders in its three main hubs in Geneva, Singapore, and Houston, mainly buying and selling gray ammonia, Rogers said. “Those fertilizer markets, those feedstock into explosive markets, they will likely also over time move toward being green,” Rogers said.

Trafigura has also signed a Memorandum of Understanding (MOU), with Yara International ASA, Oslo, to collaborate on the development and promotion of ammonia as a clean fuel in shipping and to explore possible opportunities to work together on certain clean (green and blue) ammonia fuel infrastructure and market opportunities (GM June 11, 2021).

Landus, DMWW Partner on Water Quality Project

News, News Briefs, Western Cornbelt

The Ames, Iowa-based cooperative Landus announced that it has teamed with Des Moines Water Works (DMWW), the state’s largest drinking water utility, to create “Plots in the Park,” a project that will allow the public to observe corn, soybean, and cover crops planted and grown in Des Moines Water Works Park, a 1,500-acre urban green space near downtown Des Moines.

Landus said the upstream-downstream collaboration is the first of its kind, and will demonstrate how farming and improved water quality can coexist. Des Moines Water Works Park is located next to the Racoon River, a drinking water source for 600,000 Iowa residents, and is a popular area for hiking, fishing, and other outdoor activities. “Plots in the Park” was scheduled to open to the public in late May.

“We are proud of the work our farmers do, but also recognize concerns from those outside of agriculture,” said Matt Carstens, Landus President and CEO. “The ag industry must be willing to sit at the table and work alongside others with differing perspectives. Landus is working diligently to bridge the gap between the work happening on Iowa farms and the many communities and industries impacted by it.”

DMWW made national news in 2015 when it filed a lawsuit against three neighboring counties for polluting the Raccoon and Des Moines Rivers with high levels of nitrates from farm runoff (GMJan. 19, 2015). The lawsuit, which was heavily criticized by numerous state and national ag and industry groups (GM May 25, 2015), was ultimately dismissed by a federal judge in March 2017 (GM March 24, 2017).

“DMWW is committed to leading and advocating for improved surface water quality in Iowa,” said Ted Corrigan, CEO and General Manager of DMWW. “We understand that meaningful improvement will not be possible without large-scale implementation of the types of modern agricultural best practices, which Landus will demonstrate in Plots in the Park.”

Landus employees will conduct educational tours of the plots for visiting agricultural producers and groups. The plots have been developed with guidance from DMWW grounds employees regarding chemical usage and location within the park, which is a natural water filter. Visitors will read about concerns and ideas for how to improve Iowa’s water quality directly from educational materials on site.

“DMWW and urban residents have a legitimate and compelling concern on issues that impact water quality, particularly when it comes to farming operations” Carstens said. “Landus wholeheartedly shares that concern and strives to work with farmers to continue to deploy responsible farming practices in the communities where our farmers also raise their families.”

Landus said the project will demonstrate the many sustainability practices Iowa farmers are implementing to reduce nutrient runoff. In turn, DMWW will work with Landus to bring the drinking water utility’s visitors to Landus’ new Innovation Center to learn more about best management practices. The center is opening in downtown Des Moines this summer.

“By bringing Iowa’s farmers to Water Works Park, where they can hear our story and understand the challenges we face, we believe we can create the type of upstream-downstream collaboration it will take to drive real change in Iowa,” Corrigan said.