All posts by mickeybarb@charter.net

Doyle, Riverview to Expand Operations in Missouri

News, News Briefs, Western Cornbelt

Doyle Equipment Manufacturing and Riverview Manufacturing, both manufacturers of dry fertilizer handling equipment based in Palmyra, Mo., announced on May 6 that they are launching a joint expansion in Palmyra that will add 80,000 square feet of production space for an estimated investment of $1 million.

“By increasing manufacturing space for our Tender Product Lines and Automated Blending Systems, we will be creating new jobs in Marion County,” said Doyle Enterprises President Monty Doyle. “That means more people who will stop at local gas stations going to and from work, eat in local restaurants over lunch breaks, and shop at local stores when heading home. We have also seen more and more Illinois employees moving into Marion County.”

The two companies said the expansion will add 30 jobs to meet increased product demand. Positions for the new jobs include production assembly, production welding, fabrication, machining, product design, service, maintenance, and sales. The project will expand Doyle’s operations to more than 240 employees with 275,000 square feet of production space.

“Our state’s positive business climate continues to attract significant investment from leading manufacturers like Doyle Manufacturing and Riverview Manufacturing,” said Missouri Gov. Mike Parson. “By focusing on keeping costs low, strengthening our workforce, and investing in infrastructure, we’re helping create quality jobs. The success of these two companies is great news for our state and Missourians in Palmyra and beyond.”

For their expansion, Doyle and Riverview used the Missouri Works program, a tool that helps companies expand and retain workers by providing access to capital through withholdings or tax credits for job creation. The project is also supported by the Hannibal Regional Economic Development Council (HREDC) and Marion County, among other public and private partners.

“We’re pleased to see both Doyle Manufacturing and Riverview Manufacturing expanding their operations and creating more opportunities for Missourians,” said Maggie Kost, Acting Director of the Department of Economic Development. “This project is a testament to Missouri’s advantages, as well as the ability of our state’s economic development partners to deliver what businesses need when expanding. The growth of these companies will have a positive impact on their local economy that will benefit residents of Marion County for years to come.”

Enbridge, Humble Eye Development of World-Class Blue Hydrogen and Ammonia Facility in Texas

Blue Ammonia, Blue Hydrogen, Featured, News, Texas

Enbridge Inc., Calgary, and Humble Midstream LLC, Denver, an EnCap Flatrock Midstream portfolio company, on May 6 announced the joint development and marketing of a blue hydrogen and ammonia production and export facility, which will be located at the Enbridge Ingleside Energy Center (EIEC), near Corpus Christi, Texas.

“The plant will be a world-class facility, which typically means capacity exceeding 1 million mt/y ammonia,” Humble Midstream CEO Steven Huckaby told Green Markets. “We are still in negotiations with several potential ammonia customers, so we haven’t nailed down an exact capacity yet. Interest is very high, and we expect to easily exceed the 1 million mt/y size. We anticipate building the hydrogen section 20-25% bigger than needed for ammonia production to supply hydrogen to the regional market.”

Enbridge and Humble intend to jointly market the capacity of the facility. The construction of any facilities will be subject to sufficient customer support and receipt of all necessary regulatory approvals.

If built, the facility would cost roughly $2.5-$3 billion and could come online as early as 2026.

“This is a good example of how Enbridge is leveraging existing conventional energy assets and capabilities to extend growth and capitalize on low carbon opportunities in the energy transition,” said Colin Gruending, Enbridge Executive Vice President and President, Liquids Pipelines. “The EIEC is already the premier export facility on the U.S. Gulf Coast and will play an even greater role in global energy security and sustainability. We’re excited to work with Humble to further develop this opportunity.”

Enbridge paid $3 billion for the EIEC in 2021, providing it with a 100% operating interest and related pipeline and logistics infrastructure, along with a 20% interest in the 670,000 barrel-per-day Cactus II Pipeline.

“Humble is pleased to be joining Enbridge in this first-mover effort to develop clean energy alternatives on a world-class scale,” added Huckaby. “We believe the midstream expertise of both companies positions us well to provide affordable hydrogen and ammonia to a marketplace seeking low carbon alternative fuels. Our team is glad to be partnered with EnCap Flatrock Midstream to pursue this opportunity, a natural extension of their longstanding midstream strategy.”

Huckaby noted that the EIEC site was a former naval base commissioned during the Clinton administration and closed during the Obama administration. “Given the late vintage of those facilities, the grounds are well suited to a quick repurposing to ammonia and hydrogen production, and much had been done by Enbridge for their crude oil export business,” he said.

He said the two companies will be working to reduce the carbon intensity (CI) of both the feedstock and the utilities required to produce hydrogen and ammonia and expect that the result will be one of the lowest carbon footprints on the Gulf Coast. Initial discussions with many of the stakeholders in the area have been very productive and supportive of this development, he added.

The parties said up to 95% of the carbon dioxide (CO2) generated in the production process will be sequestered in newly developed carbon capture infrastructure, including facilities to be owned and operated by Enbridge, making this a fully integrated low-carbon solution. Enbridge’s affiliate, Texas Eastern Transmission Pipeline, is expected to provide the transportation service for feed gas that will be used for the production process. Both hydrogen and ammonia have zero CO2 emissions at the point of use.

Huckaby said the parties are several weeks away from determining the technology vendor for the project, but the efficiency in carbon capture being designed does shrink the field a bit.

Enbridge is a North American energy infrastructure company, with core businesses in oil and natural gas pipelines, distribution, and storage, as well as renewable power generation.

Humble was formed in 2020 with an initial $300 million equity commitment from EnCap Flatrock Midstream, San Antonio, which provides value-added growth capital to proven management teams focused on midstream infrastructure opportunities across North America. The firm manages investment commitments of nearly $9 billion from a broad group of institutional investors.

Biden Continues Efforts to Boost US Food Production; NCGA, TFI Praise Move

Featured, News, U.S.

President Joe Biden, on May 11, addressed farmers in Kankakee, Ill., to announce that his administration would be giving farmers additional tools and resources to boost crop production and maintain global food security.

Biden committed to double the previously announced funding for domestic fertilizer production from $250 million (GM March 18, p. 27) to $500 million in order to ensure accessibility of this fertilizer for growers; cut costs for farmers by increasing technical assistance for technology-driven precision agriculture, resulting in less fertilizer usage without reducing yields; and increase the number of counties eligible for double cropping insurance, which will allow farmers to plant a second crop on the same land in the same year, helping boost production without relying on farmers to substitute crops or cultivate new land.

“American corn growers continue to feed and fuel the world even as they face challenges stemming from the war in Ukraine and high input costs,” said National Corn Growers Association CEO Jon Doggett, who attended the announcement. “We’re appreciative of the efforts that President Biden and USDA are making to help farmers navigate these challenges, and the recognition of the key role farmers play in providing solutions.”

The Fertilizer Institute President and CEO Corey Rosenbusch welcomed the announcement that the investment in domestic fertilizer production would be doubled.

“The importance of fertilizer in food production and national security is taking center stage,” said Rosenbusch. “Fertilizer increases crop yields that can be attributed to feeding 50 percent of the global population. TFI supports efforts to bolster fertilizer supply through domestic production and technology, and we also urge policy makers to remove the regulatory burdens that inhibit growth of existing fertilizer production.”

Rosenbusch added that the US has one of the most robust and competitive fertilizer industries in the world and is one of only three countries to have at least twenty unique fertilizer producers.

“We look forward to working with the USDA on how to most efficiently leverage those funds in a way that positively impacts farmers who rely on fertilizers to feed the crops that feed the world,” he said.

Rosenbusch noted that President Biden also addressed the need to increase access to existing nutrient management tools, an issue that TFI has been supporting through its industry-wide 4R Nutrient Stewardship program and by seeking streamlining of USDA technical assistance programs.

“There are barriers to adoption that must be addressed,” Rosenbusch stressed. “The biggest thing the administration can do is to allow Certified Crop Advisors (CCAs) to be recognized as Technical Service Providers (TSP), which would allow them to write nutrient management plans known as 590 plans.”

TFI said additional improvements include expanded eligibility for the 590 grant program, allowing agricultural retailers to be eligible for all Natural Resource Conservation Service (NRCS) grants and Regional Conservation Partnership Program (RCPP) funds, building a dedicated Environmental Quality Incentives Program (EQIP) initiative to support and encourage sustainable, climate smart nutrient stewardship practice adoption, and to increase the cost-share rate within NRCS programs to 75 percent.

ReMo Energy Launches New Green Ammonia Technology

Featured, Green Ammonia, News, Northeast

ReMo Energy Inc., Boston, on May 9 announced the launch of a new fertilizer technology that can produce green ammonia from air, water, and cheap renewable energy. The company said that its new green ammonia product called ReMonia™ allows growers to source this critical nitrogen from a local producer.

“With this technology, we are not only tackling decarbonization, but we are also helping to shorten agricultural supply chains and ensure farmers everywhere can nourish the world without being at the mercy of uncertain fertilizer supply,” said Scott Rackey, ReMo Energy CEO and Co-Founder. “Most importantly, we’re ready to go now. The technology is proven, and the economics already work – even before these wild price spikes.”

“The extreme volatility in nitrogen fertilizer prices over the last several years have shown the need for a local distributed approach,” added Rackey. “At ReMo Energy, we believe it is possible to transform the production of chemicals and materials in a way that solves for both climate change and food security. Our proprietary plant designs, control algorithms, and our methods for leveraging low-cost renewable energy are what is needed to move the industry forward.”

Rackey told Green Markets that its full-scale plants will produce 80,000-100,000 st/y. “At this scale, it is pretty large for a single location. However, a vendor with a chain of locations could serve a county-scale region with a plant of this size. We would be happy to get into discussions with prospective distributors who might be interested in a long-term contract.

“We are in discussions with several prospective offtakers now, and some of these discussions are quite advanced,” added Rackey. “As with renewable energy projects, a plant is only constructed after the project is fully contracted. This means we need to have the offtake contract executed, received binding quotes for all major equipment and engineering, procurement and construction (EPC) work, achieved land control, received all necessary permits, etc. So far we have completed a front-end loading (FEL) level 2 study for a 16,000-ton demonstration scale facility. This facility would incorporate off-the-shelf components and ReMo’s patent-pending architecture.”

ReMo lists as an investor Breakthrough Energy, Kirkland, Wash., which was established in 2016 by Bill Gates and a coalition of private investors concerned about the impacts of accelerating climate change. The company supports the innovations that will lead the world to net-zero emissions by 2050.

K+S 1Q Profit Surge, Outlook Reiterated; But Cash Flow Hit

Earnings, Germany, News, Specialty

K+S Group, Kassel, posted a surge in EBITDA for the first quarter to €524.1 million, up from the previous year’s €126.0 million. Revenues increased by 65%, to €1.21 billion versus the year-ago €733.3 million.

EBITDA beat the Bloomberg Consensus, the average estimate of major analysts, which was €515.9 million.

The company cited higher average prices in both its Agriculture customer segment and its Industry+ customer segment, as well as positive currency effects. This more than offset lower volumes and increased costs for energy, logistics, and materials in the quarter.

“We have again translated our continued strong operating performance and favorable market conditions into increased earnings and higher cash flows,” said K+S Chairman of the Board of Executive Directors and CEO Burkhard Lohr.

K+S still sees full-year EBITDA at €2.3-€2.6 billion, which was raised in April for the second time this year (GM April 15, p. 1).

K+S has reduced debt to €520 million, compared with €3.2 billion at the end of 2020.

“Our target is clear, we want to get back to K+S being an investment-grade rated company, although the rating is not there yet,” Lohr told analysts at a company earnings call on May 11.

Adjusted free cash flow (FCF) increased to €103 million in the first quarter, versus minus €15.1 million in first-quarter 2021.

However, the company’s first-quarter FCF was hit by more than €80 million cash outs for CO2 certificates, and a €106 million negative factoring effect.

K+S shares were down as much as 7% immediately following the news of the adverse impact on first-quarter FCF, Baader Bank AG Markus Mayer noted, as cited by a Bloomberg report.

Excluding the repayment of the factoring volume and the purchase of CO2 certificates in the first quarter of 2022, K+S said the adjusted FCF would have been €291.0 million.

Excluding the special effect from the almost complete repayment of factoring and the purchase of CO2 certificates totaling around €230 million, and assuming a good €400 million in capital expenditure, K+S expects adjusted FCF to range between €1.0-1.2 billion for full-year 2022.

It reminded the outlook is based on the assumption of uninterrupted production for the rest of the year. Possible interruptions to production caused by potential disruptions to energy or gas supplies at the company’s German sites have not been taken into account.

The increase in outlook is mainly based on further higher average prices in the Agriculture customer segment, and these will “significantly exceed” expected cost increases, particularly for energy, logistics, and materials, the company said.

In the K+S Agriculture customer segment, first-quarter revenues more than doubled, to €944.1 million, up from €469 million. The company attributed the increase to significantly higher average selling prices and positive currency effects.

At the same time, sales volumes were 11% lower year-over-year, at 1.79 million mt versus the prior year 2.01 million mt. K+S cited “occasional logistical shifts” and lower inventories at the end of 2021.

In terms of logistical issues in the quarter, the company cited the CP rail strike, as well as some issues in Germany, with some shipments that had been scheduled for the first quarter slipping into the second quarter. The company also said for sanction reasons it stopped its deliveries to EuroChem Group.

It said this was accompanied by NPK customers not being able to take their usual potash volumes in the first quarter as a result of their production restrictions due to nitrogen shortages.

Europe sales volumes were down 22% year-on-year, at 0.76 million mt, from the prior-year 0.97 million mt. Overseas sales volumes were marginally off, at 1.03 million mt versus 1.04 million mt a year ago.

Agriculture Customer Segment

  1Q-2022 1Q-2021 % change
Revenues € million 944.1 469.0 +100
Europe 349.9 250.6 +40
Overseas 666.5 263.1 +153
Sales volumes mt 1.79 2.01 (11)
Europe 0.76 0.97 (22)
Overseas 1.03 1.04 (1)
Average price €/mt 527.0 233.3  
Europe €/m 462.1 258.4  
Overseas $/mt 644.3 253.0  

In the Industry+ customer segment, revenues rose by 1.5% in the quarter, to €268.2 million versus the year-ago €264.3 million, which K+S attributed to mainly higher average prices and volumes for products containing potassium chloride. This more than offset lower sales volumes caused by weather-related conditions compared with the above-average de-icing salt business in the same prior-year quarter.

K+S noted the higher prices had a positive impact in particular on industrial products and products for the chemical industry.

Industry+ customer segment sales volumes were 25 off year-over-year at 1.83 million mt, down from 2.43 million mt. Of this total, de-icing salt volumes fell 55%, to 0.61 million mt from the year-ago 1.35 million mt.

Looking ahead for the remaining months of 2022, K+S said as a result of the severely restricted supplies from Belarus and Russia, the company expects that the record world potash sales of up to 77 million mt (including just under 5 million mt of potassium sulfate and potash grades with lower mineral contents) from 2020 and 2021 cannot be achieved and will be lower in 2022 due to availability (2021: about 77 million mt; previous outlook: up to 77 million mt).

For its Agriculture customer segment, assuming uninterrupted production for the remainder of this year – i.e., no natural gas shortages – K+S expects sales volume of all products in the customer segment, likely to be “a good 7.7 million mt” (2021: 7.62 million mt), in particular due to the further ramp-up of production in Bethune.

The company noted that particularly from the end of the first quarter, the tighter sanctions against Russia and Belarus and the resulting uncertainty in the market regarding the availability of fertilizers caused prices for potassium chloride both overseas and in Europe to rise further from the already high level at the end of the previous year.

K+S said consequently it now assumes an even stronger increase in potassium chloride prices on an annual average than before. It therefore also expects fertilizer specialties to increase more significantly on average over the year.

Lohr noted that with “the untypical price development on the MOP side,” the company is seeing a significantly lower premium for SOP, and that as long as MOP prices are on the current high level, the premium is not going to grow further.

“That is a mechanism that is only working in normal price environments,” he said.

It expects the strong increase in average prices in the Agriculture customer segment to “significantly exceed” expected cost increases, in particular for energy, logistics, and materials, “assuming that there are no production restrictions in Germany due to bottlenecks in the availability of natural gas.”

K+S said a cutback in the supply of natural gas would immediately lead to supply bottlenecks in Germany, as, like almost all industrial operations in the country, the company depends on a reliable supply of natural gas. It said the processing of crude sold, as well as the generation of heat and electricity at its German production sites, is based entirely on natural gas.

It said in Europe only its Wintershall site, which one of three sites on the Werra plant, is supplied mainly with energy from a waste-to-energy incineration plant. The Bethune potash plant in Saskatchewan is of course independent of natural gas availability in Europe.

“If our gas requirement cannot be covered, this will lead to production restrictions,” K+S said.

However, Lohr emphasized to company earnings call analysts that K+S would not lose full production in the event of gas supply issues. The company needs gas for energy and heat, not the production process itself. However, Lohr conceded that if, for example, the company has only 20-30% less gas available, it still would be “very tricky for us.”

K+S said it is “working at full speed” on various scenarios and deriving the necessary measures from them in order to be best prepared for changed framework conditions. This includes, among other things, changing the mode of operation at its plants.

Lohr said the company could substitute the gas, but that would take time, and the most probable route would be using oil. The company said it is making preparations to do this; some of its production sites used to run on oil years ago, while other sites would take longer to convert.

Responding to an analyst’s question about K+S’ energy, logistics and materials costs for 2022, Lohr said K+S already has secured prices for 92% of its natural gas demand for this year and also prices for more than 70% for 2023 and 2024, but not all.

He said the company expects more than €100 million higher energy costs this year than in 2021, and an additional €100 million each on logistics and materials in 2022 compared to last year.

K+S Accelerates Ramp-Up of Bethune

Featured, Germany, News, Potash, Saskatchewan, Specialty

K+S Group, Kassel, reported this week that the company is increasing the capex budget by €50 million (approximately $52.7 million at current exchange rates) for its Bethune potash mine site in Saskatchewan to accelerate the ramp-up of the operation. It said the decision has been facilitated by the high free cash flow expected for K+S for the 2022 fiscal year (see Earnings Story).

“This additional capex does not only target the short-term acceleration of the ramp-up, but proactively also the longer-term ramp-up of the site,” K+S Chairman of the Board of Executive Directors and CEO Burkhard Lohr told analysts at a company earnings call on May 11.

K+S said it has started the hiring process for more than 70 additional people for the further ramp-up project, mainly in the fields of engineering, IT, and operations.

The ramp-up project will not only increase production and reduce production costs, but improve environmental and sustainable impact.

However, Lohr said the ramp-up project would increase production capability at Bethune by no more than 50,000-150,000 mt annually as of next year. He reminded that for technical reasons there is not much more capability than that in Bethune, and that the increase would come from secondary mining.

Responding to an analyst’s question about potash shipments from Bethune, Lohr said K+S is continuing to increase volumes into the US, reiterating the target of 500,000 mt/y, which he said may be achievable in 2023 or 2024. He expects that close to 300,000 mt should be shipped to the US this year from Bethune.

Lohr said the company is going to reduce its Chinese volumes again compared to last year due to the netback situation, and that it has also started shipping volumes into Europe from Bethune.

“For the time being, we are the last significant remaining EU producer and allocator of potash in this region, and that is our contribution to stabilize the agricultural situation here in Europe,” he said.

On the question of any logistical challenges or limitations on shipping potash from Bethune to Europe, Lohr noted that for shipments of bulk products are possible from Vancouver to Europe, although he added it is now more expensive than it was a few years ago.

However, he did not indicate the volumes K+S is shipping to China and Europe.

Lohr added “non-organic” moves could be possible, including M&A transactions. But he pointed to the “very, very dynamic situation” with the war in Ukraine and that K+S wants to keep its balance sheet and financials “robust.” Nevertheless, Lohr said the company looks at “all opportunities.”

Specialties, Commodity Upside Boost ICL 1Q; Hikes FY22 Guidance

Earnings, England, Israel, News, Polyhalite, Potash, Specialty

ICL Group Ltd., Tel Aviv, reported a 368% surge in net income attributable to shareholders of the company to $632 million in the first quarter ended March 31, 2022, up from the prior-year $135 million. Adjusted earnings per diluted share were $0.48, versus $0.11 a year earlier.

Adjusted EBITDA for the quarter was $1.0 billion, up from the previous year $302 million, while first-quarter sales increased by 67% to $2.53 billion, up from $1.51 million.

ICL attributed the quarterly results to the company’s continuing long-term strategic focus on specialty solutions, bolstered by “significant commodity upside,” with increased demand and higher prices in most markets, and despite higher overall costs and worldwide supply chain challenges.

“Once again, all our specialty businesses achieved new quarterly results records, as all four of our divisions contributed to our significant growth and new ICL record sales and EBITDA,” ICL President and CEO Raviv Zoller said on May 11.

“The disruptions caused by the pandemic, sanctions, and the conflict in Ukraine have radically shifted market dynamics and could continue to significantly impact global agriculture, food and industrial markets in the near term,” he said, adding that the company would continue to optimize its customer and supplier relationships, to manage through global supply challenges and to work to ensure “consistent and reliable” product supply to its customers.

Due to the very strong results in the first quarter, and the significant changes in market dynamics, ICL is raising its expectations for full-year adjusted EBITDA to a range of $3.5-$3.75 billion (previous: $1.85-$2.05 billion), with between $1.3-$1.4 billion (previous: $875-$925 million) coming from its specialties focused businesses.

ICL’s Potash division achieved a significant increase in first-quarter operating income to $410 million, up from the year-ago $29 million, while sales increased 128%, to $795 million (including sales to internal customers) from $349 million the previous year.

Potash segment EBITDA for the quarter surged to $450 million, up year-over-year from $62 million.

The company highlighted that the average potash realized price per ton for the quarter was $601/mt, an increase of 134% year-over year, as prices continued to increase due to global disruptions in fertilizer availability, which have been exacerbated by the conflict in Ukraine.

ICL’s potash production fell 5%, to 1.093 million mt versus the year-ago 1.152 million mt, mainly due to a decrease in total production at ICL Dead Sea at Sdom due to the annual maintenance shutdown being completed in March this year versus April in 2021. This was partially offset by higher production at ICL Iberia, where first-quarter potash output increased by 38% year-over-year to 182,000 mt.

The company said production improvements continue to advance at the ICL Iberia Cabanasses mine following the completion of the ramp project in 2021, together with processing plant improvements to the Suria plant.

As a result, ICL expects to increase potash production capacity at ICL Iberia to an expected annual run-rate of approximately 1 million mt by the end of the second quarter of this year, while lowering the cost per ton. It expects to reach a level of about 1.3 million mt/y “in the future,” following the completion of “additional necessary adjustments” to the mine and surface production facilities.

The company reported the P-9 pumping station at ICL Dead Sea became operational at the beginning of the first quarter, after being commissioned late last year.

First potash sales volumes (including internal sales) increased by 7% to 1.15 million mt, up from 1.075 million mt the previous year. The company cited higher sales quantities to Brazil, China, and India, partially offset by lower sales to the US, the UK, and to Spain.

ICL signed framework agreements in February with customers in China and in March with its customers in India to supply 700,000 mt and 600,000 mt of potash (firm tons), respectively, this year, at $590/mt CFR (GM March 25, p. 14; Feb. 18, p.15).

Zoller told analysts at a company earnings call on May 11 that the company was sold out of potash for the second quarter, and expects the average selling price in the second quarter for potash to be around $800/mt before transport costs – so the realized price would be around $760-ish/mt, he said.

He pointed out that one third of the company’s potash for the year is already sold at $590/mt CFR to China and India, adding that the company does not expect that to change.

ICL Boulby, the company’s polyhalite mining operation in northeast England, and other European business components have been allocated from the Potash and Phosphate Solutions segments, respectively, to the company’s Innovative Ag Solutions (IAS), segment, as part of ICL’s consolidation of its specialty agriculture businesses into one segment under the IAS division, and as the company continues to focus on targeting long-term growth through its diversified specialty solutions.

The Phosphates Solutions division saw first-quarter operating income surge to $200 million from the prior year $42 million, while sales (including internal sales) were up 59% to $798 million.

The division’s EBITDA rose 163 percent to $247 million in the quarter, up from $94 million.

Phosphates specialties posted a 140% increase in EDITDA to $115 million on a 49 percent increase in sales to $437 million. Phosphate commodities saw a 187% rise in EBITDA, to $132 million, while sales were up 74%, to $361 million.

ICL reported that its YPH joint venture in China delivered record results and continued growth in profitability, with strength in pricing in both specialties and commodities.

The IAS division posted a surge in operating income in the first quarter to $93 million, up from $20 million a year earlier, and a 66% rise in sales to $566 million (including sales to internal customers) from the prior year $340 million. IAS recorded a 233% increase in first-quarter EBITDA to $110 million versus $33 million a year ago.

ICL cited higher sales prices in most regions and business lines, including “the strong performance” of the newly acquired companies in Brazil (Fertiláqua, completed in January 2021 (GM Jan. 8, 2021) and ADS – formerly Compass Minerals América do Sul SA – completed in July 2021 (GM July 2, 2021), as well as the increase in markets prices in all regions.

The company reported sales to the specialty agriculture market increased year-over-year due to higher sales prices of straight, liquid, and controlled-release fertilizers, as well as the aforementioned strong performance of the newly acquired Brazilian businesses.

Sales of IAS’ Turf and Ornamental business increased in the first quarter versus a year ago, also due to higher sales prices.

First-quarter production of polysulfate at ICL Boulby in the U.K increased 30% year-over-year to 238,000 mt while sales volumes increased by 11%, which ICL said helped ICL Boulby to achieve quarterly profit contribution for the very first time.

Sales of polysulfate-based products branded as FertilizersPluS contributed both in terms of prices and volume.

Zoller told analysts that in order to reach production targets for polysulfate at Boulby, it took down salt production at the site by 65,000 mt.

Responding to an analyst’s question about the company’s expectations for the Boulby business for the rest of this year, Zoller said the expectation is for the output to be relatively stable for the rest of the year, and to end the year at about 1 million mt of production.

Based on the first-quarter results, ICL will pay a dividend of 23.83 cents per share, or $306.5 million, versus 5.25 cents, or $67 million in first quarter 2021.

ICL Boulby Makes First Quarterly Profit; ICL Continues to Eye Potential M&A Targets

Earnings, England, Israel, News, Specialty

ICL Group Ltd. reported that higher production and selling prices at ICL Boulby, the company’s polysulfate operation in northeast England, helped the operation achieve a quarterly profit contribution for the very first time in the first quarter of 2022 (see Earnings Story).

Responding to an analyst’s question at a company earnings call on May 11 about whether ICL expects to continue to achieve profits long-term at Boulby when commodity price cycles inevitably turn down, ICL President and CEO Raviv Zoller said pricing of polysulfate increased to about $210/mt in the first quarter of 2022, up from about $115/mt in the same quarter last year.

He said while the price increase has to do with the commodities upside, the increase has much more to do with the positioning of the product.

He reminded that ICL brands the line of products as polysulfate FertilizerS, which is an organic product that has some potash, a lot of sulfur, and micronutrients such as magnesium and calcium.

“We expect the premium that some markets will pay will be higher due to the organic certification that we now have both from the E.U. and from the U.S., and the growing appreciation of the product that we are selling,” he said, reiterating it took the company three-to-four years to penetrate markets.

ICL expects to maintain profitability at Boulby, possibly even “grow profitability” in the second half of this year, “as long as no dramatic changes happen,” said Zoller.

“Over time, we will build additional premium because of two reasons. One, because of the positioning of the product as a high value organic product, and second, because we are developing a whole line of products that involves the combinations of polysulfate with other nutrients – a granulated product – that create better use efficiency for plants and those additional products are being accepted very well,” he said.

“So the product portfolio success, together with the acceptability of the branding, is going to give us an additional premium and higher prices in the future that will enable us to grow our margin,” said Zoller.

“The reality is that it may not be a high margin business on its own. But given the results that we have so far, we know that in combination with other nutrients, we get some tremendous results,” he said, adding that the embedded value of the potash will go down (in down pricing cycles) but the premium and acceptance of polysulfate products will go up.

However, Zoller conceded it is unlikely to be “a multi-million ton” market, with ICL believing the global annual requirement is 1-2 million mt.

“Our assessment of the market is that we are nicely sized for a niche market, and that is why we are treating it as a specialties market and a specialties product,” he said.

“We don’t think it can be profitable selling as a commodity business and competing with SOP or other like type products,” he added.

Zoller also conceded ICL has “a long way to go” to get the premiums it wants for polysulfate products and to get long-term stability where the company feels it is safe making a nice margin in this business.

ICL reported it recently became the first fertilizer producer globally to obtain “Fertilizing Products Regulation” certification from the European Union (EU).

“This certificate, which is based on the new EU fertilizer regulation, addresses the biodegradability of polymer coatings for controlled release fertilizers, or when combining mineral fertilizers with biostimulants,” the company said.

Meanwhile, Zoller told analysts that ICL continues to look at M&A opportunities, but has found the past year and a half “frustrating” in this respect due to “the crazy valuations,”

“If valuations rationalize, then definitely that creates more opportunity for us. We do have the liquidity and we are generating plenty of cash, so we want to be opportunistic,” he said.

ICL does have its eyes on “a few interesting targets”, said Zoller, but did not elaborate further.

Jordan’s APC, JPMC Seek to Increase Exports to Brazil; New Plants Considered

Brazil, Jordan, News, News Briefs, Potash

Arab Potash Co. (APC) wants to increase its potash exports to Brazil and plans to open a representative office in the South American country by the end of this year, according to a report this week by the Brazil-Arab News Agency (ANBA), the news website of the São Paulo-based Arab Brazilian Chamber of Commerce said.

APC President and CEO Maen Nsour met with the Brazilian Minister of Agriculture, Livestock, and Food Supply Marco Montes in the Jordanian capital of Amman this past weekend. The meeting was part of a Brazilian agribusiness delegation to Jordan to address the supply of fertilizers to Brazil. The delegation was also visiting Egypt and Morocco this week.

APC started exporting to the Brazilian market in 2019, with a volume of 42,000 mt of red granular potash, according to the report, citing Nsour. The company had begun red granular potash production that year, with the objective of opening new markets and to diversify its customer base (GM Aug. 9, 2019).

According to the report, this export volume increased to 154,000 mt in 2020, with 138,000 mt shipped in 2021.

Some 91,000 mt were shipped in the first quarter of 2022, and the Jordanian company is targeting to ship 300,000 mt to Brazil by the end of this year, according to Nsour.

He said APC’s production of red granular potash increased to 381,000 mt last year, from 69,000 mt in 2019, and its goal is to reach 1.2 million mt of granular red potash production by 2023.

The company is targeting sales of 500,000 mt to Brazil in two years, and wants to reach sales of 1.2 million mt by 2026, according to the report, citing Nsour.

The Brazilian minister clarified that the Brazilian government does not buy potash directly, but is an instrument for cooperatives and companies to negotiate with sellers.

APC is also reported to be interested in potentially establishing production facilities in Brazil.

Jordan Phosphate Mines Co. (JPMC) also is interested in establishing a joint venture plant to produce fertilizer to supply the Brazilian market, according to a separate ANBA report.

JPMC Chairman Mohammad Thneibat and the Brazilian minister met in Amman on May 8. JPMC already exports phosphate rock to Brazil in small quantities, but said it has the potential to sell much more to the South American country.

According to the report, Thneibat said the Jordanian company is ready to invest “a reasonable stake” in a fertilizer plant with Brazilian investors. The plant could be located either in Jordan or Brazil, he said, and would serve the Brazilian market.

India’s Coromandel to Acquire 45 Percent of Senegal Phosphate Producer BMCC

Africa, India, News, News Briefs, Phosphate

India’s Coromandel International Ltd. has reached a deal to acquire a 45% stake in the Senegal-based phosphate mining company Baobab Mining and Chemicals Corp. (BMCC) for $19.6 million, plus a loan to BMCC of a further $9.7 million.

Coromandel is making the acquisition through a wholly-owned subsidiary, Parry Chemicals Ltd., according to a May 6 statement by the Indian company. The transaction is expected to be completed in the second quarter of Indian fiscal year 2022-23, and remains subject to the satisfactory completion of conditions precedent in the parties’ acquisition agreement.

As part of its strategy to strengthen its value chain, Coromandel said it has been evaluating opportunities in the phosphate mining sector to secure its phosphate rock needs.

“Towards this, Coromandel’s Board has approved the buyout of equity of 45% in BMCC. The investment will help in strengthening our backward integration and will ensure long-term supply security of the key raw material,” the Indian company said.

BMCC is in the business of the mining, production, and sale of rock phosphate. It stabilized its operations and commenced active production from 2021, and at full capacity BMCC can meet up to one-third of Coromandel’s phosphate rock requirement, Coromandel said.

The Indian company’s fertilizer assets include three plants capable of producing 3 million mt/y of phosphate fertilizers. It is a partner in Tunisian phosphoric acid producer Tunisian Indian Fertilizer SA (TIFERT) and holds an interest in South Africa’s Foskor Pty Ltd., via which it secures its phosphoric acid requirements.