All posts by mickeybarb@charter.net

Strike Picks Koch for Urea Offtake

Australia, Featured, News, Southern Plains, Urea

Australian junior urea producer Strike Energy Ltd., West Perth, said on May 19 that it has completed its competitive urea offtake process (GM Sept. 24, 2021) and selected Koch Fertilizer LLC, a subsidiary of Koch Industries Inc., Wichita, as the preferred bidder for the offtake of 100% of the 1.4 million mt/y of granulated urea production from Strike’s proposed Project Haber development adjacent to Geraldton Port, Western Australia.

“This award creates the foundations for an exciting and transformational period for the company, at the conclusion of which Strike will have completed its journey to becoming a fully vertically integrated manufacturer of high energy intensive and low-carbon emission products,” said Strike Managing Director & CEO Stuart Nicholls. “Securing Koch Fertilizer as Strike’s sole offtaker would give Project Haber a high degree of creditworthiness and financial security. Having a single long-term offtaker for 100% of the urea production will provide the foundation for the financial architecture required to successfully finance this nationally significant development.

“Australia’s farmers are set to benefit from the re-domestication of Australian urea manufacturing, which will secure a local supply of globally cost competitive, low-carbon emission nitrogen-based fertilizer,” he added. “With global urea prices at all-time highs, the timing for this development in Australia is now.”

Strike and Koch have entered into a nonbinding term sheet and will now enter into the drafting and negotiation of a full form definitive offtake agreement reflective of key terms agreed in the term sheet, which include a 10-15 year supply period, pricing linked to international benchmarks, and a condition precedent relating to Project Haber’s final investment decision.

Strike told Green Markets that there is no firm schedule on when construction will begin on the new plant, however, more news is expected soon. The company still needs to complete the front-end engineering design (FEED) and offtake agreement and financing, as well as confirm the final resource for South Erregulla natural gas.

Project Haber will be a fully integrated low-carbon urea development based at the edge of the West Australian Wheatbelt in the Mid-West region. Strike said through the integration of its adjacent low impurity natural gas, application of global best in class ammonia technology, domestication of fertilizer supply, and incorporation of green hydrogen, it is aiming to develop a low-carbon urea product to support the abatement of Australia’s agricultural emissions.

Enviro Groups File Suit over BLM Approval of Bayer Phosphate Mine

News, News Briefs, Pacific N.W., Phosphate

Three environmental organizations have filed suit in U.S. District Court in Idaho urging that the U.S. Bureau of Land Management’s approval of P4 Production LLC’s open pit Caldwell Canyon phosphate mine be rejected due to BLM’s allegedly faulty environmental review of the project.

P4, a subsidiary of Bayer AG, argues the crucial mine on the Caribou/Targhee National Forest is needed to sustain the company’s elemental phosphorus plant operations near Soda Springs, formerly owned by Monsanto Inc. The mine’s ore would be used to produce the herbicide glyphosate, used in Roundup weed-killing products.

Company officials said the Caldwell Canyon Mine would sustain about 185 mining jobs and 585 plant jobs for about 40 years, and would aid the region by providing $47 million annually in payroll, taxes, royalties, and purchases, as well as sustaining support and service jobs.

BLM approved the Caldwell Canyon Mine in August 2019 (GM Aug. 16, 2019) after issuing a final environmental impact statement three months previously. The project is designed to develop three leases on Schmidt Ridge in Dry Valley about 13 miles northeast of Soda Springs.

P4 would use mining methods at the Caldwell Canyon Mine similar to those used at the company’s Blackfoot Bridge Mine. Work would begin in time to transition from the Blackfoot Bridge Mine near the Blackfoot River, where ore is projected to be depleted in less than seven years.

In total, mining and support facilities would disturb about 1,559 acres – 153 acres of BLM public land, seven acres of previously disturbed U.S. Forest Service land, 230 acres of Idaho State Endowment land, and 1,169 acres of private land. The expected mine life would be 42 years, followed by an expected two years of reclamation.

Bloomberg Law reported that the Center for Biological Diversity, Western Watersheds Project, and WildEarth Guardians in their May 13 filing charge that BLM violated the National Environmental Policy Act (NEPA) by failing to consider the effects of the mine’s ore processing on air quality, radiation risks, and “impacts related to water, noise, and wildlife.”

BLM also violated NEPA by failing to take a hard look at the mine’s effects on greater sage grouse, the groups contend. Instead, BLM “grouped all wildlife species into a single discussion made up of unhelpful generalities,” they said.

They charged that BLM did not consider a reasonable range of alternatives to the project, rejecting the alternative of maintaining existing lease boundaries to protect greater sage grouse, whose population has declined in recent years.

BLM considered only two alternatives other than the “no action alternative” that were “not varied enough to allow for a real, informed choice,” the groups said, citing precedent. They added that the bureau violated the Clean Water and Federal Land Policy and Management acts by failing to require that the mine meets Idaho water quality standards.

BLM is “extremely unlikely to be able to support the same authorizations on remand,” they stated. The groups originally sued to block the project in April 2021.

The case is being overseen by U.S. District Judge B. Lynn Winmill.

BHP Sees “Strong Case” for Potash Expansion

Australia, Featured, News, Potash, Saskatchewan

BHP Group Ltd., Melbourne, is looking at options to bring forward first production for its US$5.7 billion Jansen Stage 1 potash project in Saskatchewan from calendar 2027 into 2026, according to a May 17 presentation by CEO Mike Henry. The group also has begun studies of the feasibility and economics of Jansen Stage 2, which would add another 4 million mt/y.

“Jansen Stage 1 is compelling in its own right, but now the overall Jansen proposition is even more attractive,” Henry told participants at a Bank of America-organized “Global Metals, Mining, and Steel Conference” in Miami.

Early this month, BHP was reported to be considering ways it could speed up development of the Jansen project as prices surged amid supply shortfalls (GM May 6, p. 36).

The events of recent months playing out in Ukraine have highlighted the higher-than-usual potential for supply side disruption in the potash market, with Western sanctioned Belarus and Russia accounting for around 40% of global product. Many believe the Western sanctions on the two countries will remain in place for at least the medium term – and perhaps long term.

“For BHP, all of this has positively reinforced the decision that we took to enter potash,” said Henry.

He told conference participants that the group is looking at options to accelerate first production from Jansen’s Stage 1 to start as soon as 2026. But he conceded “the Saskatchewan winter build conditions make it hard to consider an acceleration beyond that.”

He said the Stage 1 project is “tracking to plan,” with US$1.4 billion of contracts awarded so far, which is some $200 million more since BHP reported its half-year results in February (GM Feb.18, p. 35).

Stage 2 could be brought to market more quickly than expected “if the market suits,” the CEO said.

BHP’s Board only gave the final go-ahead for Jansen Stage 1 last August, after nearly a decade of evaluations and deliberations (GM Aug. 20, 2021).

Henry told participants that he wished the project had been approved five or even 10 years ago. If it had, it would be generating an extra US$2-$3 billion of EBITDA a year, he said.

“Even without the events in Ukraine, potash’s fundamentals are good. We have been positive on potash dynamics now for many, many years. Strong potash demand growth will be driven by ongoing global population growth, changing diets, and stronger expectations globally in terms environmental stewardship,” said the CEO.

Before Russia’s invasion of Ukraine, BHP was forecasting new potash supply would be needed by the end of the decade.

Jansen’s Stage 1 is expected to produce 4.35 million mt/y of potash once fully ramped up.

“Stage 2, if it proceeds, would add another 4 million mt/y, at a lower capital intensity than Stage 1. At US$800-$900/mt, it would be almost 30% lower because Stage 2 will be able to leverage the infrastructure being put in place with Stage 1, and this includes the shafts,” Henry told conference participants.

BHP estimates that Stage 2 would have an Internal Rate of Return (IRR) of around 18-20% and a payback period of around four years at long-term consensus prices that are well below current spot prices.

BHP’s Jansen project has potentially four stages with an envisioned eventual production capacity of between 16-17 million mt of potash a year – equivalent to about 25% of the current market, albeit by the time the new production was brought on stream, the market would have grown further, the CEO noted.

Each stage would have lower operating costs, lower capital intensity, faster payback, and with higher incremental returns than Stage 1.

“If we decide to bring on all four stages, and even if potash prices were at just half of where they are today, we would be generating about US$4-US$5 billion of annual EBITDA,” said Henry.

BHP sees a path to a Jansen potash business that is at least equivalent in size and scale as its current petroleum business, which it is currently divesting/demerging via the merger of BHP Petroleum with Woodside Petroleum. BHP’s shareholders will emerge with a little less than half of the enlarged business.

BHP’s petroleum business has delivered around US$3 billion per annum in EBITDA on average over the past five years. The CEO pointed out that the free cash flow is even more favorable than petroleum for potash.

Henry told conference participants the other appeal of potash is that its market and pricing are uncorrelated and even “negatively correlated” with other commodities that BHP produces, while the Canadian location brings geographical diversity in operating jurisdiction and markets.

“Potash within BHP’s portfolio will bring a greater cash flow stability and returns stability, with the fundamentals for potash remaining strong,” said Henry.

He said at the time of the final investment decision, BHP had over 50% of the engineering for Stage 1 completed, which has given the group greater confidence in the project schedule and capital cost ranges.

Train Collision Not Impacting ICL Iberia’s Deliveries

Europe, Israel, News, News Briefs, Potash

ICL Iberia’s potash deliveries have not been impacted by the accident involving the collision between a freight train carrying potash and a passenger train in northeastern Spain’s Barcelona province in the early evening on May 16.

A spokesperson for parent company ICL Group Ltd. confirmed to Green Markets the potash cargo was that of ICL Iberia and that the accident has had no influence on the Spanish operations’ supplies.

The driver of the passenger train was killed in the collision, which occurred after the third car of the freight train derailed at the entrance to the Sant Boi de Llobregat station at around 6 p.m. local time and hit the front cab of a passenger train that was leaving the station at that time, according to local media reports, citing the regional rail company FGC. More than 80 people were also injured – 86 according to some reports.

The causes of the accident are under investigation by FGC and the Mossos d’Esquadra regional police.

ICL Iberia owns the Cabanasses underground mine and Suria processing plant, located near Barcelona. The company produces salt as well as potash at the operation, where it expects to reach annual run-rate of approximately 1 million mt of potash by the end of the second quarter of this year (GM May 13, p. 31). ICL Iberia also operates a terminal in the port of Barcelona, where it completed a new terminal in early 2020.

OCP 1Q: Higher Prices Offset Lower Sales Volumes; Volumes to be Raised 10% in 2022

Earnings, Morocco, News

OCP Group SA, Casablanca, reported a 117% rise in EBITDA to MAD11.6 billion in the first quarter ended March 31, 2022, on revenues of MAD25.33 billion. This compares to the year-ago MAD5.34 billion and MAD14.29 billion, respectively. Revenues were up 77% year-over-year.

In U.S. dollars, EBITDA also more than doubled, to $1.23 billion, up from $596 million, while revenues grew by 68% to $2.67 billion from $1.59 billion the previous year.

OCP attributed what it described as the “record results” to the strong market conditions, as well as operating efficiencies. It said the Russia-Ukraine conflict has exacerbated the tight supply/demand situation in the phosphate market and has pushed prices even higher.

The group also noted that phosphate price increases have been supported by rising raw materials prices, particularly ammonia and sulfur.

OCP said the first-quarter revenue growth reflected higher year-over-year selling prices across all product categories, which more than offset lower volumes. It did not report sales volumes for the period.

The group’s capital expenditure in the quarter totaled MAD2.99 billion, a 71% increase over the same prior-year MAD1.75 billion. In dollar terms, capex increased by 61%, to $315 million versus the year-ago $196 million.

Looking ahead to the rest of the year, OCP said the strong first-quarter performance supports the group’s positive outlook for full-year 2022.

Robust market conditions, representing underlying global demand, as well as tight supply conditions and rising raw material prices, are expected to continue to support high prices, it said.

OCP expects to increase volumes in 2022 by approximately 10% “to serve customers in high growth markets where it has established leading share positions.”

Russia to Extend Fertilizer Export Quotas until December

Ammonium Nitrate, News, News Briefs, Nitrogen, Russia

The Russian government will extend fertilizer export quotas from June 1 until at least December 2022, Deputy Prime Minister Victoria Abramchenko said at a May 18 meeting, according to Bloomberg, citing Interfax.

It was reported late last month that Russian President Vladimir Putin had ordered the extension of quotas on Russian fertilizer exports to be extended to Aug. 31, and for further quarterly extensions of the restrictions to be considered (GM April 29, p. 32).

Abramchenko said the domestic market must remain a priority for Russian fertilizer producers in order to fully meet the needs of Russian farmers, and achieve results in the production of agricultural products.

According to the report, from June 1, 2022 until May 31, 2023, more than 15 million mt of fertilizers will have to be purchased for the domestic market, which is a 23% increase from the previous year.

Russia’s current quota for the export of nitrogen fertilizers and complex nitrogen-containing fertilizers is valid until May 31, 2022, after being put in place on Dec. 1, 2021 (GM Nov. 5, 2021).

The ban on the export of ammonium nitrate (AN) was extended in late March to run until May 1 (GM April 1, p. 26). The AN export ban that was first imposed starting Feb. 2 had been due to run only until April 2, and was aimed at ensuring the country had enough product for its domestic sowing season (GM Feb. 4, p. 29).

U.N. Secretary-General Discusses Export of Russian Potash, But Not for Ukrainian Grain, Says Envoy

Europe, News, News Briefs, Potash, Russia, Turkey, U.S., Ukraine

The United Nations (U.N) Secretary-General Antonio Guterres said that he is “intense contact” with Russia, Ukraine, Turkey, the U.S., and the E.U. in an effort to restore Ukrainian grain exports as a global food crisis worsens.

Addressing a food security meeting at the U.N. hosted by U.S. Secretary of State Antony Blinken on May 18, Guterres 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, as cited by Russia’s Tass.

A number of media outlets reported that Guterres held negotiations on access to Ukrainian grain in exchange for withdrawal of export restrictions for Russian and Belarusian potash.

Nebenzya, as cited by the Tass report, confirmed that the U.N. Secretary General discussed the export of Russian potash to the global market with Russian First Deputy Prime Minister Andrey Belousov, because the global market, especially the agricultural states, is in desperate need of fertilizers. But he said the issue of fertilizers trade is not being discussed as an exchange for export of grain.

Kremlin spokesperson Dmitry Peskov on May 17, as cited by a Reuters report, said Russian fertilizer producers were trying to fulfill international contracts despite Western sanctions against them. Russia and Belarus together account for some 40% of global exports of potash.

Ukraine used to export most of its goods 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 or via its small Danube River ports.

Russia and Ukraine together account for nearly one-third of global wheat supplies. Ukraine is also a major exporter of corn, barley, sunflower oil, and rapeseed oil.

According to a U.N. food agency official on May 6, cited by a Reuters report, nearly 25 million mt of grains were stuck in Ukraine.

But Peskov, as cited by the report, said Ukraine’s ports were heavily mined, and reminded that Russian President Vladimir Putin told the U.N. Secretary General during recent talks in Moscow removing the mines would be a very complex operation.

JPMC, India Ink $1.5 B Phosphate Supply Deals; New Phos Acid Plants Studied

Di-Ammonium Phosphate, Featured, India, Jordan, News, Phosphate Rock, Phosphoric Acid

Jordan Phosphate Mines Co. (JPMC) has signed several agreements worth $1.5 billion with several Indian companies for the supply of phosphate rock and DAP, aimed at increasing the Jordanian producer’s phosphate exports to India, according a report by The Jordan Times, citing Jordan’s state news agency, Petra.

The deals, inked on May 15, have also paved the way for building two new plants for the production of phosphoric acid in southern Jordan at Eshidiya, the location of JPMC’s biggest mine, and at the Red Sea port of Aqaba. Economic and technical studies will be undertaken on the proposed two plants.

According to the report, the supply agreements provide for the supply of 2 million mt/y of phosphate rock and 100,000 mt/y of phosphoric acid to Indian Farmers Fertiliser Cooperative Ltd. (IFFCO), and 250,000 mt/y of DAP each to IFFCO and Indian Potash Ltd. (IPL).

JPMC additionally will supply IPL with 100,000 mt/y of phosphate rock used in India’s SSP industries, and also 100,000 mt/y of phosphate rock to RCF. IPL is a shareholder in JPMC, holding a 27.38% stake as of Dec. 31, 2021, according to the Jordanian company’s annual report.

JPMC and India’s Teestra Agro Industries Ltd. have also started talks to supply the Indian company with 2 million mt of phosphate rock, according to a separate report by Petra last week.

India imported 146,828 mt of DAP from Jordan in calendar 2021, making up just over 3% of its total imports of 4.68 million mt, according to Trade Data Monitor. About 26% of JPMC’s DAP exports last year went to India, according to the company’s 2021 annual report. In total, it produced 728,050 mt of DAP at its industrial complex at Aqaba last year.

In 2021, India took around 75% of JPMC’s total phosphate rock export sales, according to JPMC’s annual report. The Jordanian company produced just over 10 million mt of phosphate rock in last year and expects output to be around this level in 2022, with some 6 million mt of export sales targeted.

The latest proposals to establish joint venture phosphoric acid plants come on the heels of JPMC and Teestra signing a MOU in March to discuss building a phosphoric acid plant, and possibly a DAP plant, in Jordan. The two parties are reported to be mulling a DAP production capacity of 300,000 mt/y.

The Jordanian producer earlier that month also inked a MOU with Germany’s LUMA-International Co. to establish a phosphoric acid plant with a production capacity of 300,000 mt/y (GM April 1, p.29).

JPMC recently revealed its interest in establishing a jv fertilizer plant with Brazil, according to a report last week by the Brazil-Arab News Agency (ANBA), the news website of the São Paulo-based Arab Brazilian Chamber of Commerce (GM May 13, p. 36). The proposed plant could be located either in Jordan or Brazil, he said, and would serve the Brazilian market.

JPMC Chairman Mohammad Thneibatmet met with the Brazilian Minister of Agriculture, Livestock, and Food Supply Marco Montes in the Jordanian capital of Amman on May 8.

The proposed partnerships will boost the Jordanian producer’s competitiveness in the global phosphate market and enhance its exporting capacity and sales, thus positively reflecting on its finances and ability to attract more partners, Petra reported, citing Jordanian officials.

In addition to producing phosphoric acid at its Aqaba industrial complex, JPMC also produces phosphoric acid at the Indo-Jordan Chemicals Co. (IJC) and the Jordan-India Fertilizer Co. (JIFCO). It fully owns IJC, which last year sold 303,714 mt P2O5 of acid. JIFCO is a jv with IFFCO, with JPMC owning 48% of the company. The entire output of JIFCO goes to India to IFFCO.

JPMC has been studying an expansion of phosphoric acid production capacity at its Aqaba industrial complex, and it expects to start implementing the project during the second half of this year. The project, on completion, would raise phosphoric acid production capacity by some 67% to reach 1,500 mt/d P2O5, according to the company’s annual report.

The Jordanian producer has also initiated studies to increase production capacity at IJC to reach a daily production rate of 2,000 mt/d of phosphoric acid.

JPMC currently produces phosphate ore at four mines in Jordan, the Eshidiya mine in southern Jordan as noted earlier being the largest, producing over 7 million mt of phosphate rock last year, according to the company.

JPMC is working on a phosphate ore exploration at Al Ruwaished, in Jordan’s eastern region, and the preliminary results are reported to be “promising.”

The estimated volume of phosphate reserves during the first phase of the exploration project are estimated at more than a half billion mt of phosphate suitable for manufacturing with a P2O5content ranging between 25-26%, according to a Jordan Times report last weekend, citing Jordan’s Energy Minister Saleh Al-Kharabsheh.

The project was launched last December, and this first phase of exploration was conducted over an area of 60 km2.

Tunisia Resumes Phosphate Rock Exports

News, News Briefs, Phosphate Rock, Tunisia

Tunisia has resumed phosphate rock exports and expects to ship more than 300,000 mt this year, according to a Reuters report, citing a senior official from the state-run producer Compagnie des Phosphates de Gafsa (CPG).

The exports are the first appreciable phosphate rock volumes to be shipped from the country in more than seven years.

CPG also is targeting to increase exports to at least 600,000 mt next year, according to the report.

The North African country, which is suffering its worst financial crisis, is seeking to regain its position as a leading exporter of phos rock to take advantage of surging fertilizer and fertilizer raw materials prices.

Tunisian phosphate production was badly hit by the social unrest in the country in the years that followed the Arab Spring of late 2010-early 2011, with long-running worker sit-ins and strikes at the mine sites, as well as transport blockades.

Phosphate rock production fell from 8.13 million mt/y in 2010 to between some 3.2-4.4 million mt/y, after sinking to a low of 2.5-2.6 million mt/y in 2011 and 2012, according to IFA data.

Exports plummeted from just under 700,000 mt in 2010 to 85,000 mt in 2012. After 2014, export volumes were negligible, causing billions of dollars in lost revenues.

In 2019, Tunisia even turned to importing phosphate rock, taking in 23,600 mt and 93,000 mt the following year, according to IFA data.

In the first quarter of 2022, Tunisia’s phosphate rock production reached 1.13 million mt, a near 750,000 mt increase on the same year-ago period, CPG reported in early April (GM April 8, p. 12).

The official sited by this week’s report said with the realization now of sufficient stocks for local customers – which include CPG’s sister company, phosphate fertilizer producer, Groupe Chimique Tunisien (GCT) – the state-run phosphate rock producer is speeding up the pace of exports.

CPG is targeting phosphate rock production of 5.5 million mt this year, compared to 3.7 million mt last year, and near pre-Arab Spring export sales levels next year, the official said, as cited by the report.

According to an earlier report by Tunisie Numérique, citing unnamed “informed sources,” CPG reached an agreement with French company Relais to resume phosphate rock supplies after a gap of 11 years. The producer is also reported to have been in talks for potential phosphate rock export sales with Turkey, Brazil, Indonesia, and Pakistan.

Ma’aden Expands International Presence with New Office in South Africa

News, News Briefs, Saudi Arabia, South Africa

Saudi Arabian Mining Co. (Ma’aden), Riyadh, has announced the opening of a new regional office in South Africa.

The announcement was made during the Saudi Night event, organized by the Saudi Ministry of Industry and Mineral Resources and sponsored by Ma’aden, at the African Mining Conference “Indaba 2022” held on May 9-12 in Cape Town, the Saudi Press Agency (SPA) reported.

Ma’aden strengthened its presence in the African market in 2019 with the acquisition of Mauritius-based fertilizer distributor Meridian Group, one of the largest fertilizer distributors in Africa (GM Sept. 6, 2019).

As a result, Ma’aden said today it has a network of operations across Eastern and Southern Africa, from Malawi to Mozambique, Zimbabwe, and Zambia, with a 35-65% market share in the four countries. Beyond Meridian Group’s regional distribution operations, the Saudi company’s fertilizer business currently has a direct market share of 48% in East and South Africa combined, it said.

“Africa is one of the world’s fastest growing agricultural regions and will generate approximately 30% of global demand for phosphate fertilizers over the next decade. Most of this demand will come from East and South Africa,” said Ma’aden CEO Robert Wilt.