All posts by mickeybarb@charter.net

Intrepid Potash Inc. – Management Brief

Management Briefs, Potash, Southern Plains, Specialty

Intrepid Potash Inc., Denver, Colo., announced the appointment of Christina Sheehan as General Counsel and Corporate Secretary, effective May 17, 2022. Sheehan has been an employee at Intrepid since December 2021, most recently serving as Intrepid’s Deputy General Counsel.

Prior to joining Intrepid, she was a partner at the private practice law firm Modrall, Sperling, Roehl, Harris & Sisk, P.A. from September 2009 to November 2021. Intrepid said Sheehan specialized in environmental and regulatory law, and has legal expertise in the areas of water rights, water quality, mining, energy, air quality, natural resources, and environmental compliance.

“Christina’s experience in mining, natural resources, and water rights makes her ideally suited for this role,” said Bob Jornayvaz, Intrepid’s Executive Chairman and CEO. “Since joining the team in December 2021, we’ve benefited from Christina’s extensive understanding of New Mexico’s water and environmental regulations, and have been impressed by her leadership, work ethic, and thoughtful approach to her job. On behalf of Intrepid, I’d like to congratulate Christina on this promotion, and we look forward to her continued contributions to our team.”

African Bank Provides $1.5 B for Food Production

Africa, News, News Briefs, Russia, Ukraine

The African Development Bank Group, Abidjan, Ivory Coast, on May 23 announced that its Board of Directors has approved a $1.5 billion Emergency Food Production Facility to help tackle the global food crisis sparked by the Russian-Ukraine conflict.

The money will fund input procurement so that some 20 million African farmers can produce an extra 38 million mt of food to address growing fears of starvation and food insecurity on the continent.

Landus Joins Integrated Agribusiness Professionals

California, Featured, News, Western Cornbelt

Landus, Iowa’s largest farmer-owned cooperative, reported on May 20 that it is the latest organization to join Integrated Agribusiness Professionals (IAP), Fresno, Calif. The IAP network, which consists of 32 retailer-owners across the U.S. with annual sales exceeding $2 billion, helps its members access competitive fertilizer and crop protection positions, and also advocates on behalf of the ag retail industry.

“IAP membership better positions Landus and our farmer-owners for competitive access to fair-priced inputs and advantageous collaboration with an international network of like-minded purchasers focused on doing what’s right for the farmer,” said Matt Carstens, Landus President and CEO. “We continue to seek out valuable partnerships that benefit the more than 7,000 farmers we represent.”

Based in Ames, Iowa, Landus was formed in 2016 by the merger of Farmers Cooperative Co. (FC) in Ames and West Central Cooperative in Ralston, Iowa (GM April 15, 2016). The co-op employs about 600 full-time employees at more than 60 Iowa locations, serving over 7,000 farmer-owners with products and services in agronomy, grain, feed, animal performance, and data. The company’s agronomy offerings include fertilizer, chemicals, seed, and custom application.

“We are excited to have Landus join the IAP family of retailers,” said Jim Fargo, IAP President. “This marks an important step in the continued growth of IAP. Now in its 31st year, IAP ownership is committed to independent retailers across the US. Landus and IAP exist to improve our customers’ capabilities and competitiveness. This alliance will help both organizations create value and provide growth opportunities for our suppliers, our retailers, and the farmer customers we serve.”

IAP said it represents more than 724 PCA’s/CCA’s, 362 retail locations, and 4,809 employees across the U.S. IAP is also a founding member of AgLink International, a global alliance of independent member organizations across Australia, Canada, and Brazil. AgLink members work together to share, collaborate, and create prosperity in agriculture globally.

Micronutrient Production Planned for Saskatchewan

Canada, News, News Briefs, Specialty

A new $19 million project by Protein Industries Canada (PIC), Regina, and a consortium of companies will commercialize Soileos, a new micronutrient fertilizer. The project includes the installation of a new manufacturing process for the production of Soileos in Rosetown, Sask., that will produce up to approximately 6,500 mt/y of micronutrient fertilizer and create 25 jobs.

The parties said the fertilizer is sustainable, non-polluting, and climate-positive, and is created from the upcycling of pea, lentil, and oat hulls – co-products from food processing. Initial field trials on broad-acre crops such as durum, lentils, and peas demonstrated how Soileos transports zinc, manganese, and iron to plants – leading to improved protein content, yields, and soil health, while increasing returns for farmers, minimizing environmental impacts, and bringing value to low-value byproducts.

This new 50-50 joint venture is between AGT Foods, Regina, and Lucent BioSciences, Coquitlam, B.C., and will operate as AGT Soileos. Burnaby, B.C.-based NuWave Research Inc.’s technology will help reduce the reaction time and energy use in making Soileos, while IN10T, Chesterfield, Mo., and Aberhart Ag Solutions, Brandon, Man., will support the distribution and acceptance of Soileos among Western Canadian farmers, providing distribution and sales support.

“AGT Foods is pleased to join with our partners at Lucent to announce the commercial production of Soileos,” said AGT Foods Founder and CEO Murad Al-Katib. “AGT is a value-added miller of pulse crops and other grains that produces fiber byproducts. To use these byproducts to produce a micronutrient pellet that assists farmers in boosting their yield while at the same time returning carbon to their soil and reducing the need for nitrogen fertilizer application in the future years is ground-breaking innovation.”

“This project is an example of what happens when innovation and collaboration collide,” said PIC CEO Bill Greuel. “From a chance meeting in 2019, to a pilot project that produced 1 kg of Soileos a day and tested the effectiveness of pea, lentil, and oat hulls through 2020 and 2021 and now to full-scale commercialization, this project proves how important innovation is to the long-term competitiveness and sustainability of Canada’s agri-food sector, and the commitment of the industry to sustainability and the environment.”

PIC is an industry-led, not-for-profit organization created to position Canada as a global source of high-quality plant protein and plant-based co-products. It is one of Canada’s five innovation Superclusters. PIC said that along with industry partners, it has invested more than $480 million in the past three years in growing Canada’s plant-based food, feed, and ingredient sector. PIC’s goal is to grow Canada’s plant-based food sector to $25 billion a year by 2035, supported by 17,000 jobs.

USDA Extends Comment Period in Ag Input Competition Inquiry

News, News Briefs, U.S.

The USDA has extended its comment period from May 16, 2022, to June 15, 2022, with regard to information regarding competition in the markets for fertilizer, seed, and agricultural inputs, in particular as they relate to the intellectual property, system, and retail, including access to retail through wholesale and distribution markets (GM March 18, p. 27).

“As I talk to farmers, ranchers, and agriculture and food companies about the recent market challenges, I hear significant concerns about whether large companies along the supply chain are taking advantage of the situation by increasing profits – not just responding to supply and demand or passing along the costs,” said Secretary of Agriculture Tom Vilsack in March when the inquiry was launched.

The inquiry stems from the July 9, 2021, Executive Order on “Promoting Competition in the American Economy,” which created a White House Competition Council and directed federal agency actions to enhance fairness and competition across America’s economy.

Comments can be submitted to www.regulations.gov or sent to Jaina Nian, Agricultural Marketing Service, USDA, Room 2055-S, STOP 0201, 1400 Independence Ave., SW, Washington, D.C 20250-0201. Comments will be made available for public inspection at the above address during regular business hours or online.

USDA said it will use the comments received to develop reports mandated under the Competition E.O., and to develop policies relating to fair and competitive markets, supply chain resiliency, pandemic response, local and regional food systems, and other areas.

Incitec Pivot to Split Fertilizers, Explosives Businesses, After Record Half-Year Profits; North American Assets Included in Dyno Nobel

Australia, Featured, News, Specialty

Incitec Pivot Ltd. (IPL), Southbank, Victoria, has revived its plan to separate its Incitec Pivot Fertilisers and Dyno Nobel businesses to create two separate companies, on May 23 announcing plans to demerge its fertilizer and mining explosives divisions into two separately Australian Securities Exchange (ASX) listed companies by mid-2023.

IPL said the decision to pursue a structural separation of the company is the result of a comprehensive review, “with robust underlying market conditions supporting each business to move forward with appropriately strong balance sheets.”

IPL said its rationale to separate the businesses includes the significant growth potential for both businesses by accelerating the company’s core technology offering to two different essential industries. It said, among other factors, that the two businesses have minimal overlap today, and there is declining synergy in sharing an ammonia manufacturing core, as its explosives and fertilizer customers require specialized and differing solutions.

The proposed separation of Incitec Pivot Fertilisers and Dyno Nobel is expected to be implemented via a court-approved scheme of arrangement, subject to relevant approvals. Under the proposal, IPL will become Dyno Nobel Ltd. and the Incitec Pivot Fertilisers business will be demerged under a standalone entity, Incitec Pivot Fertilisers Ltd., which will seek listing on ASX.

IPL said preparatory separation and cost analysis has been concluded, with the transaction now moving into the execution phase. The company is targeting “a practical separation” of the two businesses late in the 2022 calendar year, ahead of the shareholder vote in the first quarter of 2023 and formal separation shortly after, subject to required approvals and consents.

If the separation by way of demerger is approved and implemented, IPL shareholders will receive shares in Incitec Pivot Fertilisers Ltd. in proportion to their existing shareholding in IPL, and will also retain their existing IPL shares, which will be rebranded Dyno Nobel Ltd.

Based on preliminary estimates and analysis undertaken to date, the company expects one-off costs to be A$80-$105 million (approximately US$56.7-$74.4 million at current exchange rates), and ongoing costs to be approximately A$25-$35 million a year.

It expects the largest proportion of the one-off costs to be tax (predominately stamp duty), transition support and advisory costs, while the major ongoing costs are expected to include establishing core corporate and support functions in Incitec Pivot Fertilisers. The ongoing costs will be allocated between the two separated businesses.

The asset perimeter is expected to be largely as per current reported segments, and the future business options are expected to be determined by the time of the company’s Investor Day scheduled for later this year – possibly in late August/early September – when a further detail on strategy and growth will be provided as well as a transaction update.

“There is a clear and compelling logic for our Dyno Nobel and Incitec Pivot Fertilisers to thrive as two independent companies,” said IPL Chairman Brian Kruger.

“Both have market-leading positions in very attractive industries, supported by global mega trends, with clear opportunities for growth through leveraging technology,” he told analysts at a company earnings call on May 23.

“We believe that creating two market leading companies that are well capitalized, with strong technology, clear strategies for growth and listening to our customers will unlock significant value for our shareholders,” said IPL Managing Director and CEO Jeanne Johns.

Regarding the risks related to the volatility and seasonality of the Fertilisers business in the demerger, Johns told analysts that IPL has invested in the resilience of the business over the last two years, including in terms of manufacturing reliability. She pointed to the ongoing Phosphate Hill turnaround, which, she said, is the largest of its kind and setting up for a solid reliable run.

She also has “every expectation” that the Glencore Mount Isa copper smelter, which is integral to IPL’s Phosphate Hill operations as a supplier of sulfur as a byproduct to IPL’s Mt. Isa sulfuric acid plant, will continue to be operated into the future (GM Sept. 25, 2020).

Johns also pointed to the company’s investment in Australia Bio Fert, and the urea offtake arrangement with the potential Perdaman project (GM Dec. 17, 2021; May 7, 2021).

Investors, however, gave the proposal a cool reception, sending IPL’s shares sliding almost 4% immediately following the announcement, despite the company reporting record half-year profits (see Separate Earnings Story).

IPL’s decision to split its two businesses comes some 20 months after the company first undertook a strategic review of its fertilizer business, and was considering three possible outcomes – sale, demerger, or retain and invest (GM Sept. 6, 2019). In early 2022, it concluded to retain the business “as the best outcome for shareholders,” citing “the extraordinary market uncertainty and travel restrictions caused by the COVID-19 pandemic” (GM April 24, 2020).

The IPL Chairman told analysts at a company earnings call on May 23 that “the decision was the right one at that time.”

While IPL has been buoyed by an upturn in commodities that has fuelled demand for fertilizer and explosives, shares in the company have remained well off record highs achieved in 2008, The Australian Review reported, after this week’s spin-off plan was announced as IPL seeks to lift its appeal.

Ratings service S&P believes IPL has sufficient balance sheet flexibility at the “BBB” rating level to accommodate the proposed demerger of its fertilizer business, Bloomberg reported, citing a statement by the rating company.

IPL remains committed to maintaining its credit quality and has the track record, business strength, and balance sheet capacity to manage the demerger within the constraints of the rating, S&P said.

S&P considers the likelihood of a rating change arising from the demerger as “low.” As cited by the Bloomberg report, the rating company said although the fertilizers business is inherently more volatile than the explosives unit, the proposed demerger will likely lessen the company’s scale of operations and earnings diversity.

Rating stability will likely be reliant on the adoption of more conservative financial policy, S&P said. It sees IPL’s leverage improving further during the second half of FY22 on sustained growth and expected trade working capital unwind.

IPL ASX listed businesses

  Dyno Nobel Incitec Pivot Fertilisers
Owners: IPL shareholders 100% 100%
Entities (ASX listed) Existing listed group holds Explosives business Dyno Nobel (ASX listed) New standalone listed company comprising Fertilisers business: Incitec Pivot Fertilisers
Key businesses Dyno Nobel Americas Dyno Nobel Asia Pacific Titanobel Australian Bio Fertilisers  Distribution  Manufacturing
Key assets WALA (Waggaman), Louisiana Moranbah, Queensland Cheyenne, Wyoming St Helens, Oregon LOMO, Louisiana, Missouri Global Initiating Systems (IS) platform Phosphate Hill, Queensland Gibson Island, Queensland Geelong, Victoria Extensive distribution network

Key business metrics1

  Incitec Pivot Ltd. Dyno Nobel Incitec Pivot Fertilisers
LTM Revenue (A$m)2 5,244 3,015 2,229
LTM EBIT (A$m)2,3 1,065 559 505
No of employees Over 5,000 Over 4,400 Over 700
LTM revenue split Incitec Pivot Fertilisers 57% Dyno Nobel 43%   Dyno Nobel Americas 67% Dyno Nobel Asia Pacific 33% Distribution 58% Manufacturing 42%

1 Results for the six months ending Sep. 30, 2021, and six months ended March 31, 2022

2 Does not include corporate costs and eliminations

3 Does not include any adjustments for incremental ongoing standalone costs

Russia Mulls Easing Ukraine Ports Blockade if West Lifts Sanctions

Featured, News, Russia, Ukraine

Russia has said that it is open to easing the blockade on Ukraine’s ports if sanctions on Moscow are lifted, according to a Dow Jones report, citing a Russian official on May 25.

Russia’s Deputy Foreign Minister Andrey Rudenko said in comments to Russian state media that Moscow is willing to establish a humanitarian corridor that would provide safe passage for ships carrying food from Ukraine’s ports. But in return, Western countries would have to lift sanctions that were imposed on Russian exports and financial transactions, he said.

On May 26, Russian President Vladimir Putin said he is willing to facilitate grain and fertilizer exports, but only if sanctions on his country are lifted, according to a Bloomberg report, citing a Kremlin statement. Putin’s comments were made in a phone call with Italy’s Prime Minister Mario Draghi. The Russian president did not specify whether he was referring to Russian exports or those from Ukraine.

But an unnamed Ukrainian official cited by the Dow Jones report questioned whether Moscow could be trusted, and urged world leaders to focus on ending the war and strengthening sanctions.

U.S. State Department spokesperson Ned Price – as cited by the report – said the U.S. would not lift its sanctions in response to “empty promises” by the Russian Federation, and U.S. non-food sanctions would remain in place until “Putin stops his brutal war.”

Rudenko did not elaborate on how a humanitarian corridor might work. But the U.K.is reported to be in discussions with allies about sending warships to the Black Sea to protect freighters carrying Ukraine grain and to escort the vessels from the Ukrainian port of Odessa through the Bosporus, according to a report by the U.K’s Times newspaper.

But the operation would require clearing mines from the harbors of Ukraine’s ports.

According to a U.N. food agency official on May 6, cited by a Reuters report, nearly 25 million mt of grains are stuck in silos in Ukraine, including some 20 million mt of wheat. In five or six weeks new grain will be harvested, but there is no further storage space.

About 98% of Ukraine’s grains used to be exported through its main ports on the Black and Azov Seas, but since Russia’s invasion on Feb. 24, it has had to resort to exporting by train via neighboring countries or via its small Danube River ports.

Lithuania this week received its first rail delivery of grain from Ukraine for onward shipment. According to a U.K. Times newspaper report, LTG, Lithuania’s state-owned railway, said the delivery, which came via Poland, had arrived at the port of Klaipėda on May 23. The port expects to receive a train a day from Ukraine, each with up to 1,500 mt of grain and other produce.

Transporting the grain to Lithuania via rail is not without difficulties. The report highlighted that in order to reach Klaipėda, a Ukraine grain shipment will have to transhipped twice, first at the Polish border, from Russian gauge to standard gauge, and then back onto Russian gauge at the Lithuanian border.

U.N. Secretary General Antonio Guterres in recent weeks has been in “intense contacts” with Russia, Ukraine, Turkey, the U.S., and the European Union in an effort to restore Ukrainian grain exports as the global food crisis worsens (GM May 20, p. 30).

Addressing a food security meeting at the U.N. hosted by U.S. Secretary of State Antony Blinken on May 18, Guterres had appealed to Russia to allow “the safe and secure export of grain stored in Ukrainian ports.”

But while the question of withdrawal of export restrictions for Russian potash was indeed discussed with the U.N. Secretary General, it was not in exchange for Ukrainian grain, Russian Permanent Representative to the U.N. Vasiliy Nebenzya told reporters in Moscow earlier this month, as cited by Russia’s state news agency Tass.

Incitec Pivot 1H Profits Up Ten-Fold on Commodity Upswing

Ammonia, Ammonium Nitrate, Australia, Earnings, Green Ammonia, News, Phosphate, Specialty, Urea

Incitec Pivot Ltd. (IPL), Southbank, Victoria, reported a big surge in net profit after tax (NPAT) to A$384.1 million (approximately US$272 million at current exchange rates) for its first fiscal half-year ended March 31, 2022, up from A$36.4 million the previous year. Earnings per share were 19.8 Australian cents versus the year-ago 1.9 cents.

Earnings Before Interest and Tax (EBIT) increased by 416% to A$568.2 million, up from A$110.2 million, while revenue rose 48% to A$2.55 billion, up from the prior year A$1.72 billion.

IPL said in its earnings statement released on May 23 that these first-half results were the best on record, and had “captured the commodity upswing,” with continued customer growth and margin growth.

But EBIT was weaker than anticipated by analysts. Bloomberg cited a note by Jefferies analysts, led by Richard Johnson, who wrote “it looks like this is mostly related to low realized ammonia prices in the second quarter,” adding the explosives result also looks “a little underwhelming.”

Bloomberg also cited Citi analysts, led by Paul McTaggart, who also noted the first-half EBIT growth was not as strong as expected “given moves in urea pricing.”

EBIT for the Fertilisers Asia Pacific business increased to A$256.9 million in the first fiscal half year, up from A$20.2 million in the same year-earlier period, capturing the value of the commodity price upswing. Revenue grew 53% to A$962.9 million, up from the year ago A$628.3 million.

Total volumes sold fell by 13% year-over-year, to 1.098 million mt versus 1.257 million mt, while domestic fertilizer volumes sold were down 3% to 881,900 mt from the prior year 906,300 mt.

IPL attributed the decline as mainly due to applications for the winter season being delayed as a result of recent floods in New South Wales (NSW) and Southern Queensland, and higher prices delaying some farmer demand.

Despite the lower domestic volumes sold, the company reported Distribution earnings were up marginally as a result of a favorable product mix.

At Phosphate Hill, Queensland, ammonium phosphates production saw a marginal uptick (1%), to 431,900 mt in the first fiscal half versus 428,500 mt the previous year, with production for the period averaging 86% of nameplate capacity compared with guidance of 90%. IPL attributed the lower-than-expected production as mainly due to some critical pieces of equipment operating at below capacity leading in turnaround that started in early May.

Phosphate Hill ammonium phosphate volumes sold fell 12% to 364,000 mt, down from 413,000 mt.

The Gibson Island plant in Brisbane, Queensland, produced 194,700 mt of urea equivalent in the reporting period, down 19% from the year-ago 241,800 mt. The company cited the majority of the reduced output as resulting from various minor equipment failures and inefficiencies, the majority of which, it said, have been addressed.

Output sold from the plant in the first fiscal half fell to 136,000 mt of urea equivalent, down from 152,000 mt.

IPL said Gibson Island was able “to rapidly reconfigure” its production with the assistance of Australia’s Federal government to up-rate the production of AdBlue in response to the critical shortage of the diesel engine emissions reduction product in the Australian market resulting from international supply chain disruptions (GM Jan. 28, p. 30; Dec. 31, 2021; Dec. 17, 2021; Dec. 10, 2021).

It said Gibson Island is continuing to produce AdBlue, and is currently producing approximately 80% of Australia’s domestic requirements of AdBlue. The company earlier said it would also produce technical grade urea for AdBlue production at Gibson Island, in addition to manufacturing AdBlue.

But despite the move to produce AdBlue at Gibson Island, the company has maintained its decision to cease manufacturing at the plant at the end of December 2022. IPL announced the planned closure in November last year, due to the company being unable to secure “an economically viable” long-term gas supply to the plant beyond its current supply contract, “despite extensive efforts” (GM Nov. 12, 2021).

The Gibson Island site is currently Australia’s sole urea producer. The site has capacity to produce 340,000 mt/y of granular urea, according to Green Markets data. It also produces ammonia and ammonium sulfate, with nameplate capacity of 300,000 mt/y and 200,000 mt/y, respectively, according to IPL’s website.

IPL said this week that planning for the closure of manufacturing at the site at the end of calendar 2022 “is well underway,” with increased fertilizer import capacity to support its Australian customers. It said the site will remain an important dispatch point for the fertilizer business

Incitec Fertilizers Pty Ltd. (IPF) in May 2021 inked a 20-year offtake agreement with junior producer Perdaman Chemicals and Fertilisers Pty Ltd. with a commitment to take up to 2.3 million mt/y of granular urea from Perdaman’s proposed urea plant at Karratha on Western Australia’s Burrup Peninsula (GM May 7, 2021). But the agreement is subject, among other conditions, to the Perdaman plant being built, and first production is not expected before the first quarter of 2025.

As previously reported, IPL is assessing the industrial-scale production of green ammonia at the Gibson Island fertilizer manufacturing facility in a partnership with global green energy company Fortescue Future Industries Pty Ltd. (FFI), announced last October (GM Oct. 15, p. 1).

IPL said progress on its soil health strategy continues, with growth in Nutrient Advantage earnings and a 25% year-over-year increase in liquid fertilizer sales volumes. It highlighted the performance of the Nutrient Advantage laboratory, which showed an increase of 13% in the number of lab tests conducted in the first fiscal-half compared with the same prior year period.

It reported that the Australian Bio Fert joint venture is progressing to plan, with key management positions in place and planning for the construction of the initial commercial production facility well under way.

IPL, via IPF, bought a majority stake in Rowville, Victoria-based Bio Fert Co. (ABF) late last year for A$38 million, and announced it would build the country’s first large-scale sustainable fertilizer plant (GM Dec. 17, 2021). The granular biofertilizer plant is being built near Lethbridge, Victoria, and will have capacity of 75,000 mt/y. Product is expected to be available in commercial quantities to customers in the middle of 2023.

IPL anticipates potentially three Australian plants in total to service the bio-fert market, although the company said any further investment will be demand-led and subject to their return on investment criteria (GM Jan. 28, p. 30).

A planned turnaround at Phosphate Hill in the second half of FY22 is scheduled to result in eight weeks of lost production. As Gibson Island approaches the end of its turnaround cycle prior to being closed at the end of the calendar year, IPL expects the plant to produce at approximately 85% of the rates achieved in FY21.

Looking ahead, IPL said the company’s Fertilisers business earnings will continue to be dependent on global fertilizer prices, the Australian dollar/U.S. dollar exchange rate, and weather conditions.

The company believes that despite the severe flooding in NSW and southern Queensland, agricultural conditions across Eastern Australia are generally favorable. Increased soil moisture levels in most districts on the East Coast, coupled with high dam levels, is expected to drive demand for fertilizer through the year.

It also sees farm economics remaining favorable through FY22, with farmer cash flows supportive of strong fertilizer demand – although it noted high fertilizer prices can influence volumes.

IPL expects Distribution margins and volumes to remain subject to Australian East Coast agronomic conditions and global fertilizer prices.

With volatile global fertilizer prices and long supply chains increasing price risk, the company said it was actively managing the business to mitigate these risks.

IPL’s Dyno Nobel Americas (DNA) business delivered EBIT of US$182.4 million in the first fiscal half, up from the year-ago US$23.1 million, supported by improved volumes and technology driven margin improvements.

DNA revenue increased 5% to US$801.5 million, up from US$503.5 million.

Waggaman’s earnings swung to the black, posting a first fiscal half EBIT of US$92.7 million versus the year-ago negative EBIT of US$18.2 million. IPL reported that the significant upswing in ammonia prices, which began in the second-half of FY2021 and continued through the first-half of FY2022, driven by high European gas prices impacting supply, favorably impacted Waggaman’s earnings.

The company noted performance at the Waggaman ammonia plant was “very strong” until an incident in mid-February resulting from a release of hydrogen that resulted in an eight-week closure of the facility, of which six weeks fell into the current reporting period (GM Feb. 18, p. 1; Feb. 25, p. 1). The plant restarted on April 19 (GM April. 22, p. 1).

As previously announced, the impact of the outage on the first fiscal-half results was US$96 million (of which US$47 million is the cost of the outage excluding commodity price movements). But this amount does not factor any insurance proceeds covering the incident, with the claim expected to be resolved in the second fiscal half. IPL put the cost of the full eight-week outage at US$128 million.

Since returning to full production following the incident, IPL said the plant has produced efficiently at nameplate capacity, which is 800,000 mt/y of ammonia.

Waggaman produced 307,900 mt of ammonia in the first fiscal half, some 84% more than the 166,900 mt in same prior year period, while ammonia volumes sold were up 53%, at 365,800 mt versus 238,800 mt the previous year.

IPL expects the Waggaman plant to produce at nameplate capacity in second-half FY2022, but added operational earnings of Waggaman remain subject to movements in ammonia and natural gas prices.

The company’s current plan is to install the new replacement cooler at the plant in FY23 at the same time the new boiler is installed. But it said the timing in FY23 will be determined by plant performance and market conditions.

DNA’s Agriculture & Industrial Chemicals (AG & IC) swung to the black in the first fiscal half, posting EBIT of US$37 million versus the year-ago negative EBIT of US$2.5 million. Revenue increased by 122% to US$115.0 million, up from US$51.8 million.

IPL cited the improved performance of the St Helens, Ore., plant in the fiscal first-half following its successful turnaround in FY2021. The improved level of production and plant efficiencies contributed earnings of US$5 million (excluding commodity price movements) in the reporting period compared with a year ago.

But the company said AG & IC earnings remain subject to movements in global fertilizer prices, particularly urea.

IPL also reported improved operating performance at the Cheyenne, Wyo., and Louisiana, Missouri, plants in the first fiscal half. The company plans a turnaround at the Cheyenne plant later this year.

DNA’s Explosives segment posted a 20% increase in EBIT to US$52.7 million in the first fiscal half, up from the prior year US$43.8 million, while revenue was 11% higher at US$447.8 million versus the year ago US$405.2 million.

The company noted that improved reliability at DNA’s two ammonium nitrate (AN) manufacturing plants had resulted in a US$8 million benefit in the reporting period compared with the prior-year period.

IPL’s Dyno Nobel Asia Pacific (DNAP) segment saw fiscal first-half EBIT increase 13% to A$79.1 million from the year-ago A$70.2 million, which the company attributed to solid growth in volumes across all markets, technology, and recovery in the international business. It also noted that the end of unfavorable Western Australian supply contracts accounted for a year-over-year A$4 million earnings improvement.

Revenue was up 13%, reaching A$517.0 million from A$455.8 million the previous year.

Some 12% of DNAP’s revenue was generated internationally by Indonesia, Turkey, and Papua New Guinea, and was 52% higher than the same prior year period.

International volumes increased by 37% as mines that had been shut due to COVID-19 restrictions in FY2020 and FY2021 returned to production.

IPL reported reliability at the Moranbah, Queensland, AN plant was 93% in the fiscal first-half, up from 90% the previous year, with reliability expected to reach the target of 95% in the second fiscal-half.

Moranbah manufactured AN sales volumes dipped 2% in the reporting period, to 178,700 mt from the year-ago 183,000 mt. But DNAP’s total AN first fiscal half sales volumes increased by 7% to 343,800 mt versus 319,900 mt the previous year.

IPL reported that its Moranbah nitrous oxide tertiary abatement project has now been approved, and is moving into the execution phase.

The company will pay a fully franked interim dividend of 10 Australian cents per share, representing a 51% payout ratio of NPAT.

Casale to Deliver Basic Engineering Design for IPL’s Planned Green NH3 Plant

Ammonia, Australia, Europe, Green Ammonia, Hydrogen, News, News Briefs

Casale SA, Lugano, said it will deliver the know-how and basic engineering design to convert Incitec Pivot Limited’s (IPL) ammonia plant at Gibson Island, Queensland, from natural gas to renewable hydrogen as raw material.

IPL is partnering with Fortescue Future Industries (FFI) on the project, and it is currently proposed that FFI would construct an onsite water electrolysis plant and develop and operate the hydrogen manufacturing facility, with IPL operating the ammonia manufacturing facility (GM Oct. 15, 2021; Nov. 12, 2021).

The new water electrolysis facility would produce up to 50,000 mt/y of renewable hydrogen and be a complete replacement of Gibson Island’s current natural gas feedstock. This renewable hydrogen would then be converted into more than 300,000 mt/y of green ammonia for Australian and export markets.

The project has been found to be technically feasible, and IPL and FFI are currently conducting a Front End Engineering Design (FEED) study that will inform a potential Final Investment Decision.

IPL Managing Director and CEO Jeanne Johns told analysts at company earnings call on May 23 that IPL is making good progress on exploring the green ammonia opportunities, and is looking to complete the FEED by the end of the year.

The project has the potential to transition Gibson Island to a renewable future, and the plant could become Australia’s first existing facility capable of producing 100% emission-free ammonia.

Switzerland and Belgium Lift Sanctions on EuroChem After Change of Ownership

Ammonium Nitrate, Calcium Ammonium Nitrate, Europe, News, News Briefs, NPK, Russia

Switzerland has lifted sanctions and unblocked the accounts of Zug-based EuroChem Group AG after the fertilizer group’s founder and main beneficiary, Andrey Melnichenko, ceased to be a beneficiary and left the company’s Board of Directors, according to an Interfax report this week, citing Swiss newspaper Tages-Anzeiger.

Melnichenko stopped being a beneficiary and left the company’s Board after his inclusion on the European Union’s expanded sanctions list against Russia, unveiled on March 9 (GM March 11, p. 1). He previously had controlled 90% of EuroChem Group AG via Cyprus-based AIM Capital SE.

The new beneficiary of the trust to which the controlling stake in EuroChem previously held by Melnichenko has been transferred to his wife, Alexandria, according to the newspaper report, citing Switzerland’s State Secretariat for Economic Affairs (SECO), the organization responsible for monitoring sanctions against Russia.

Having received the information about the change of beneficiary, SECO concluded that there was no proof that a person subject to sanctions has control over EuroChem, according to the report.

UBS and Credit Suisse temporarily froze EuroChem’s accounts on March 16 after Andrey Melnichenko was put on Switzerland’s sanctions list, making it impossible for the fertilizer group to make due interest payments on its Eurobonds (GM April 22, p. 28) In line with the SECO charter, EuroChem’s accounts and payments have now been unfrozen.

Following the management change at EuroChem, the Belgian government on May 24 allowed EuroChem Antwerpen to restart production, and to also buy raw materials. The plant’s assets include nitric acid units, as well as NPK, ammonium nitrate, and CAN units, and a nitrophosphoric acid plant.