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EuroChem Closes Deal to Buy Controlling Stake in Heringer

Brazil, Europe, Featured, News

EuroChem Group AG, Zug, Switzerland, on March 28 closed the deal to buy a controlling 51.48 percent stake in Brazilian fertilizer distributor Fertilizantes Heringer SA, Viana, EuroChem announced in a statement.

A EuroChem subsidiary, EuroChem Comércio de Productos Químicos Ltda., and Heringer Participações Ltda.(controlled by the Heringer family and Fertilizantes Heringer’s controlling shareholder), signed an agreement for the acquisition last December (GM Dec. 31, 2021).

The deal is valued at R$554.56 million (approximately US$116.4 million at current exchange rates), half of which is being paid in cash in Brazilian currency at closing, according to a Fertilizantes Heringer statement.

An Extraordinary Shareholders Meeting was to be held on March 31 to appoint a new Board of Directors and a Management Board of Fertilizantes Heringer.

As per Brazilian Corporation Law, EuroChem Comércio de Productos Químicos will now carry out a public “Tag-Along” tender offer for the acquisition of Fertilizantes Heringer’s remaining shares from other shareholders in the company at the same price it paid for the 51.48 percent stake.

EuroChem also said at the time of the acquisition agreement that it may consider delisting Heringer as part of the “Tag-Along” offer, a move permitted under Brazilian Corporation Law.

But the Zug-based fertilizer group made no comment in its March 28 statement on further share purchases or on the potential delisting.

According to the last update (June 1, 2018) of Fertilizantes Heringer’s ownership breakdown on the Brazilian company’s website, OCP SA via Netherlands-registered OCP International Cooperatieve U.A. owned a 10 percent stake in the company, and Nutrien Ltd. a 9.5 percent interest. The identities of the owners of the remaining 29.02 percent of Fertilizantes Heringer were not listed, but are known to include some funds.

EuroChem founder and main beneficiary Russian billionaire Andrey Melnichenko resigned from the EuroChem Group Board and withdrew as a main beneficiary on March 9 after he came under European Union sanction (GM March 11, p. 1 & p. 34). Melnichenko, until March 9, had controlled 90 percent of the EuroChem Group.

Fertilizantes Heringer has 14 storage, blending, and distribution units in Brazil, and is the country’s fourth-largest distributor in terms of installed capacity, at more than 4 million mt/y. Eleven of the company’s blending units are in operation, with one idled unit expected to restart late this year (see separate story).

The Head of EuroChem’s Commercial Division in South America and CEO of EuroChem Fertilizantes Tocantins, Lieven Cooreman, said the acquisition further strengthens the EuroChem Group’s production and distribution capabilities in Brazil.

“The conclusion of this agreement reinforces the EuroChem Group’s commitment and investment in Brazilian agribusiness, allowing the company to serve its customers better and offer a complete fertilizers line from North to South,” he said.

The transaction is EuroChem’s third in Brazil in the past five years. In 2020, it bought the remaining stake in Fertilizantes Tocantins (FTO) (GM Aug. 21, 2020), which distributes about 4 million mt/y of fertilizer in the country. In August 2021, it announced the purchase of the Serra do Salitre project (GM Sept. 10, 2021; Aug. 6, 2021) in Minas Gerais, which will add about 1 million mt/y of phosphate production by 2024.

A deal for Uralkali PJSC and Uralchem JSC to acquire control of Fertilizantes Heringer bit the dust in late 2019, just days after Brazil’s antitrust regulator approved the deal “without restrictions” (GM Jan. 10, 2020; Jan. 3, 2020). Fertilizantes Heringer blamed Uralkali for the failure of the deal (GM Feb. 14, 2020).

The parties had signed a binding letter of intent in September 2019 for the acquisition (GM Sept. 27, 2019).

As per the Extraordinary Shareholders Meeting on March 31 to appoint a new Board of Directors and a Management Board of Fertilizantes Heringer, the new Board is now comprised of seven members.

Kuzma Marchuk, EuroChem CFO, has been appointed Chairman of Fertilizantes Heringer’s Board, and Lieven Cooreman, Head of EuroChem’s Commercial Division in South America and CEO of EuroChem Fertilizantes Tocantins, has been appointed the new Vice-Chairman of the Board, as well as Fertilizantes Heringer’s CEO.

Putin Issues Decree Requiring Rubles for Gas; Loophole Reported

Natural Gas, News, News Briefs, Russia

Moscow has demanded that customers of Russian natural gas pay in Russian rubles, a demand unanimously rejected early this week by the G7 countries (Canada, the U.S., the U.K., France, Germany, Italy, and Japan).

Russian President Vladimir Putin is also reported to want to expand ruble payments to certain other of Russia’s exports, including fertilizers.

Putin on March 31 issued a decree requiring “unfriendly” foreign countries pay Russian rubles for their natural gas supplies from Russia, starting April 1, or see their supply contracts halted. However, he appeared to temper the order by allowing U.S. dollar and Euro payments through a designated bank.

Countries deemed “unfriendly” for imposing sanctions on Russia over its war in Ukraine can continue to pay in foreign currency through a Russian bank that will then convert the money into rubles, according to a Kremlin decree published by Russian state media on March 31.

Kremlin spokesperson Dmitry Peskov on March 30 dismissed reports that the new mechanism of payment for Russian natural gas would start from March 31, conceding the new payment mechanism would take some time to implement, according to a Prime news report.

Peskov earlier in the week told reporters that Russia aims to keep supplying gas to foreign buyers and “remains a trusted supplier,” but reiterated Russia wants to receive rubles for its gas supplies, Bloomberg reported.

“Buyers in the European Union [and elsewhere] must pay Russian rubles for Russian gas, but other contract terms will remain unchanged,” Bloomberg cited Peskov as saying.

Putin earlier had ordered the government to create a mechanism of switching Russian gas major Gazprom PJSC’s contracts with “unfriendly countries” into rubles by March 31.

Natural gas supplies from Gazprom remained broadly stable this week, but the gas major is reported to be assessing its options in case supplies have to be cut, according to the Bloomberg report, citing a person with direct knowledge of the matter.

According to Bloomberg, citing a Gazprom statement on the company’s official Telgram channel, the gas giant was sending notifications about the new payment order to customers on April 1.

European benchmark natural gas prices on the Dutch TTF gas futures exchange fluctuated as traders struggled to make sense of Russia’s ruble payment plans. The front-month contract (currently May) closed at €120.980 per megawatt-hour on March 31, up 0.959 percent on the day. The May contract had closed the day’s trading on March 25 at €101.27 per megawatt-hour.

Putin is also reported to want to expand ruble payments to other exports such as fertilizers, grain, oil, coal, metals, and timber.

CF to Keep U.K. Billingham Plant Open, CEO Says

Ammonia, Ammonium Nitrate, News, News Briefs, NPK, United Kingdom

CF Industries Holdings Inc.’s Billingham plant in Teeside, Northeast England, is currently profitable and should stay open for the coming months, CF President and CEO Tony Will told Bloomberg in an interview.

“Our expectation is that we can run the plant through the application season this spring, and then by the time we get to June and the summer months when there’s really no fertilizer application going down, there’s a question to the viability,” Will said.

“Then gas costs start becoming a real big question there as well,” he said.

CF secured a new offtake and pricing agreement with the U.K.’s carbon dioxide industry in early February, allowing the Billingham plant to continue to operate while global gas prices remain high (GM Feb. 4, p. 28). The previous agreement between CF and its industrial gas customers expired on Jan. 31 (GM Jan. 28, p. 29).

The company’s two U.K. plants – the other is at Ince, Cheshire, and is currently idled – produce an estimated 60 percent of the U.K.s commercial supply of CO2, which is a byproduct of ammonia production.

Will confirmed to Bloomberg thatits Ince plant remains offline, and said the company probably will not be able to bring it back “anytime soon.”

He said exporting out of the Ince plant is “a challenge” since it is landlocked, and the plant has a limited flexibility in the product mix it can make.

Market dynamics make a restart right now unfeasible since it requires burning millions of dollars of gas for days before a product can be made, the CEO told Bloomberg.

Back in early November 2021, CF had said it could use bought-in ammonia to get the Ince plant back online (GM Nov. 5, 2021).

“It is also not good for plants to be restarted and then closed frequently, so CF needs visibility for several months out to know it will be profitable longer term. Right now, with the tumultuous world we live in, we don’t have that kind of clarity six to nine months out,” Will said.

In addition to ammonia, CF’s two U.K. plants largely produce ammonium nitrate and NPKs.

U.K. Delays Solid Urea Fertilizer Use Restrictions

News, News Briefs, United Kingdom, Urea

The U.K.’s Department for Environment & Rural Affairs (Defra) has decided to delay the implementation of restrictions on the use of solid urea fertilizer in the country until April 2023, at the earliest, due to the current uncertainty around fertilizer supply and the impacts this is having on prices.

In the meantime, Defra will continue to monitor effects on supply, prices, and food security, the government department said in a March 30 statement.

Defra had been looking at a potential total ban on the use of solid urea fertilizer in the U.K. as the preferred option among two others, amid concerns that ammonia emissions from solid urea fertilizer use are harmful to the environment and to human health.

But the department decided upon an alternative approach incorporating the two alternate options rather than a total ban. Once implemented, it will restrict the use of untreated or unprotected urea fertilizers from Jan. 15 to March 31 each year, with the use of urease inhibitor-treated (a chemical that helps to slow the conversion of urea to ammonium) or protected urea fertilizers throughout the rest of the year.

Defra launched its original consultation in November 2020 (GM Nov. 6, 2020). The government department had argued that a ban on solid urea fertilizers would achieve around 31 percent of the ammonia reduction target by 2030.

The U.K. government committed itself to reducing ammonia emissions by 8 percent of 2005 levels by 2020, with a 16 percent reduction targeted by 2030.

The country’s Agricultural Industries Confederation (AIC), a trade association representing the agricultural supply chain sectors of arable marketing, crop protection and agronomy, feed, fertilizer, and seeds, had argued that a total ban on the sale and use of solid urea fertilizer was unwarranted (GM Feb. 12, 2021).

The U.K’s National Farmers Union (NFU) also had urged Defra to adopt an “industry-regulated approach” to solid urea fertilizer rather than a total ban, which it had said would have a “huge impact” on farmers’ ability to produce food (GM Jan. 29, 2021).

The country has no domestic urea production, and imports all its urea requirements. It imported 715,166 mt in 2021, down from 873,192 the previous year, according to Trade Data Monitor.

Azomureş Could Restart Production in April, Helped by E.U. Aid Package

Ammonium Nitrate, Calcium Ammonium Nitrate, Eastern Europe, News, News Briefs, NPK, Urea

Romania’s biggest fertilizer producer, Azomureş SA, said on March 28 it could resume production in “the first part of April” if the European Commission (E.C.) this week grants a financial aid package designed to benefit European energy-intensive fertilizer companies.

Under the Commission’s economic support package, energy-intensive fertilizer producers can benefit from up to €50 million (approximately $55.7 million at current exchange rates). The support is intended to balance the costs of energy, especially natural gas for fertilizer producers.

For Targu Mureș-based Azomureş, this aid would cover the difference between the purchase price of natural gas and the cost of production of fertilizers, the company said in a March 28 statement.

“The market price of gas is beyond the gas price equalling to world market fertilizer prices,” the company said.

The EC is expected to make an announcement this week on the granting of the European aid to energy-intensive fertilizer producers. The aid comes amid concern by the Commission about availability of fertilizers to European farmers given that fertilizers from Belarus, Russia, and Ukraine are no longer available.

If the aid package is granted this week, Azomureş said it plans to start up half of its production installations in the first part of April, while the start-up of its other installations is scheduled for May.

It said this start-up schedule and the change at fair price for natural gas would allow for the production of 600,000 mt of fertilizers. The company did not say over what time period this production target would be achieved, but said this output would cover part of the fertilization needs of Romanian farmers in the autumn agricultural campaign “essential for next year’s crops.”

However, Azomureş added that the exact restart date of production and the volume of output is subject to availability of natural gas on the Romanian market.

The producer temporarily stopped fertilizer production on Dec. 17 last year due to the “very high prices” for energy, natural gas, and electricity, saying “the resulting fertilizer prices based on the prevailing energy costs would not be affordable to distributors and farmers” (GM Dec.17, 2021; Dec. 10, 2021).

Azomureş has production capacity for around 1.8 million mt/y of fertilizers, according to Swiss Group Ameropa’s website. Ameropa, via a subsidiary, has owned Azomureş since 2012.

Azomureş puts its annual production under normal operating conditions at 1.6 million mt of fertilizers. It produces granular and prilled ammonium nitrate, granular CAN, granular urea and NPKs, and NPs, and provides about 75 percent of the fertilizers used on Romanian farms, according to the company.

JPMC, LUMA-Intl. Ink 20-Year Rock Deal, Sign MOU for JV Phos Acid Plant

Germany, Jordan, News, News Briefs, Phosphate Rock, Phosphoric Acid

Jordan Phosphate Mines Co. (JPMC) and Germany’s LUMA-International Co. GmbH on March 28 signed an agreement for JPMC to supply the German company with 850,000 mt/y of phosphate rock under a 20-year deal, the Jordan news agency Petra reported, citing a JPMC statement.

The phosphate rock will be supplied at world market rates, according to the statement.

JPMC and LUMA on March 30 also inked a Memorandum of Understanding (MOU) to establish and operate a phosphoric acid facility in southern Jordan, either at the Red Sea port of Aqaba or at Eshidiya near JPMC’s mining operations, according to a company filing to the Amman Stock Exchange and a Petra report. Such a move is understood to have been under discussion between the two parties for some time.

Under the agreement, JPMC would provide the proposed plant with all its phosphate rock requirements, while LUMA would commit to buying the entire phosphoric acid output. No further details about capacity or project timescale were provided.

JPMC Board Chairman Muhammad Al-Thneibat said he hopes the deal will open the door to broader cooperation between JPMC and German companies in the field of phosphate-based fertilizers.

From the German side, LUMA Managing Director Ralf Keller said his company is looking forward to more cooperation with JPMC and German companies in the field of phosphate-based fertilizers.

Herten-based LUMA-International is involved in project management in a variety of industrial segments.

Cooperation Agreement Inked to Support Uzbekistan Ammonia and Urea Project

Ammonia, Asia, Europe, News, News Briefs, Urea

A Cooperation Agreement was signed between Cyprus-based Ferkensco Management Ltd., Singapore-based Enter Engineering Pte., and Lugano, Switzerland-based Casale SA, on March 24 to support the construction of a new ammonia and urea plant in Uzbekistan.

According to a statement by Ferkensco, the agreement represents the foundation for future cooperation between the three companies that will bring to life this important complex with an estimated total investment of $500 million. The agreement was signed at the Tashkent International Investment Forum.

Following Casale’s award in 2021 to provide all licenses and front end engineering design for the ammonia, urea, and granulation facilities, and with the support of European funding, Ferkensco said this new agreement confirms Casale as a unique partner and its technology will ensure continuity in the plant’s design development and in the supply of critical equipment.

Casale, supported by the local design institute UzlitiEngineering, has been appointed as General Designer for the project.

Ferkensco and Russia’s Gazprombank inked two cooperation deals to finance the new plant last June (GM June 11, 2021).

The ammonia and urea plant will be built at Yangiyer, in Uzbekistan’s Syrdarya region. On completion, the plant will have capacity to produce up to 495,000 mt/y of ammonia and 594,000 mt/y of granular urea.

The project’s completion is expected to be in the first half of 2025 and the construction of the plant will create more than 500 new jobs locally.

Australia’s Leigh Creek Energy Changes Name

Australia, News, News Briefs, Urea

Leigh Creek Energy Ltd., Adelaide, South Australia, this week changed its name to NeuRizer. The rebranding was approved by shareholders at a general meeting last week and is believed by the company to be a better reflection of its vision and business.

NeuRizer plans to establish a 1 million mt/y urea facility utilizing in-situ gasification (ISG) at the formerly known Leigh Creek Energy Project, located some 550 kilometers north of Adelaide and overlaying the Leigh Creek coalfield (GM Jan. 22, 2021). The project is now known as the NeuRizer project.

“Neu” relates to a new way of producing urea using a net zero carbon footprint, while the “Rizer” is associated with the crops that are dependent on urea for their growth and which rise from the ground when adequately fertilized.

The company in February reported that its urea project had become the first large-scale fertilizer project in the world to achieve Carbon Neutral status (GM Feb. 11, p. 35).

Heringer Reports Record Financial Results; 4Q Volumes Off, FY21 Up

Brazil, Earnings, News, Specialty

Fertilizantes Heringer, Viana, Brazil, reported record financial results for the year ending Dec. 31, 2021, with several bests reported, including EBITDA, EBITDA margin, gross margin, and net income. It also reported on March 22 that the 2nd Civil Court of the Judicial District of Paulinia granted a request to close the judicial reorganization that was initiated in 2019 (GM Feb. 8, 2019).

In addition, EuroChem Group AG, Zug, Switzerland, has closed on its purchase of a majority stake in Heringer (see related story). As a result, EuroChem may opt to buy the remaining stock of the company and delist it, making this its last financial filing as a public company.

Full-year net earnings were R$667.2 million on net revenue of R$4.3 billion, up from 2020’s loss of R$199.2 million on R$2.2 billion, respectively. EBITDA was up 377 percent to R$870.1 million, up from R$182.5 million.

Full-year fertilizer volumes were up 8.1 percent, to 1.49 million mt from the year-ago 1.38 million mt. Specialty fertilizer volumes made up 51 percent of sales for 2021, up from 2020’s 46 percent. Specialty volumes were 760,000 mt, up 19.5 percent from 636,000 mt, while conventional tons dropped 1.6 percent, to 731,000 mt from 743,000 mt.

Fourth-quarter net earnings were up 835.4 percent to R$428.6 million on net revenue of R$1.67 billion, up from the year-ago R$45.8 million and R$821.1 million, respectively. EBITDA was up 312.3 percent, to R$403 million from R$97.7 million.

Fourth-quarter volumes, however, were off 9.9 percent, to 427,821 mt from the year-ago 474,567 mt. The company said volumes were impacted by high fertilizer prices and dry weather in some areas. Specialty tons represented 51 percent of volumes, up from the year-ago 48 percent. Specialty volumes were 218,000 mt, down 4.8 percent from 229,000 mt, while conventional were 210,000 mt, down 14.6 percent from 246,000 mt.

Currently, the company told analysts there is seasonally low demand in the regions that it serves. For 2021, Heringer said 30 percent of its sales went to coffee, 28 percent to other crops, 22 percent corn, 12 sugar cane, and 8 percent soybeans.

Florida DEP Reports Piney Point Milestone; Closure Completion Expected by End of 2024

Florida, News, News Briefs

The Florida Department of Environmental Protection (DEP), Tallahassee, on March 31 announced the issuance of an order approving the conceptual closure plan for the former Piney Point facility that was prepared at the direction of the site’s court-appointed receiver. It said the plan lays framework for ensuring the site’s potential threat to the environment and surrounding community is eliminated permanently.

“Nearly one year ago, in order to prevent a catastrophic collapse of the NGS-South compartment at the site, DEP issued an emergency final order requiring that HRK Holdings LLC take immediate action and implement all necessary steps to ensure the integrity of the stack system and its lined impoundments and prevent an uncontrolled discharge,” said DEP Secretary Shawn Hamilton.

“Today, as a result of ongoing efforts on the part of DEP, Manatee County, and the court-appointed receiver, we are in a significantly better place than we were then, and this approval marks a key milestone in ensuring this is the last chapter in the long history of Piney Point,” Hamilton continued.

Since that time, DEP said it has maintained stringent regulatory oversight of ongoing activities at the site, including work by the receiver that has focused on advancing water management, onsite repairs and cleanup work, site maintenance, and long-term preparations for closure.

DEP also said it has worked to ensure that HRK is held accountable. Last October it won a default judgment against the company, and said it is seeking the maximum allowable penalties and recovery of costs and damages.

DEP said the receiver’s approved plan addresses the environmental protection requirements for the closure work and includes a timeline and strategy for continued water management at the site that is essential to eliminate the current process water from the reservoir areas, as well as details on construction of a closed system that protects both ground waters and surface waters in the area.

DEP issued a permit to Manatee County for their planned underground injection control well for Piney Point last December (GM Jan. 14, p. 28). The injection location is beneath the underground source of drinking water, and the well will be constructed with five separate casings to ensure the integrity of the well and the proper confinement and separation for the protection of the overlying aquifer system, according to DEP. Local environmental groups, however, believe it would be safer in the long term to treat the water to advanced quality standards.

The closure plan outlines a phased approach to closure and puts the facility’s anticipated date for final completion of closure by December 2024, with interim dates for closure of each of the reservoirs as water is eliminated from the site.

Once all water is removed from the reservoir areas, the stacks will receive fill material and new liners as needed, as well as a two-foot-thick soil and vegetative cover system that will be sloped to ensure runoff of clean, non-contact rainwater into the existing stormwater management system. “Notches” will be incorporated into the walls of the reservoirs so that the reservoir areas, once closed, will no longer build up water and will only function to provide stormwater management and control stormwater discharge rates. This closure design will be integrated into the site’s existing stormwater management system.