All posts by mickeybarb@charter.net

Price Increases, Acid Sales Boost OCP’s 9M, Despite Lower Fertilizer Volumes

DAP/MAP, Earnings, Morocco, News, NPK, NPS, Triple Superphosphate

OCP SA, Casablanca, reported a 79 percent increase in EBITDA to MAD24.48 billion ($2.74 billion) for the nine months to Sept. 30, 2021, up from the year-earlier MAD13.68 billion ($1.42 billion).

Revenues grew 38 percent year-over-year in local currency and totaled MAD57.65 billion ($6.45 billion), up from MAD41.69 billion ($4.34 billion)

OCP attributed the revenue growth mainly to higher prices across all product categories, which it said more than offset lower fertilizer sales volumes compared to the same period last year.

Nine-month 2021 phosphate rock revenues in local currency were up 25 percent over a year ago, owing primarily to higher rock prices, which the group noted trended upward in line with fertilizer prices.

Higher prices and volumes boosted phosphoric acid revenues, which in local currency increased by 47 percent over the same previous year period. OCP cited “changing market dynamics” where demand was “very solid” during the nine months as driving the sales volumes increase.

Nine-month fertilizer revenues in local currency increased by 41 percent year-over-year, which the group said was due to higher fertilizer prices, which mitigated the effect of lower export volumes. The group cited the shift to phosphoric acid as behind the fall in fertilizer exports.

Fertilizer revenues accounted for 60 percent of total nine-month revenues.

Phosphoric acid and fertilizer export sales

  9M-2021 9M-2020 % change
Phosphoric acid (million mt P2O5) 1.507 1.319 +14
Fertilizers (million mt) 7.838 8.633 (9)
DAP/MAP 4.9 6.0 (18)
NPS 1.2 1.2 –
TSP 0.9 0.8 +13
NPK 0.9 0.6 +50

OCP highlighted that specialty “customized” fertilizer products represented 37 percent of total exports in the nine months to Sept. 30, 2021, up from 30 percent in the same year-ago period. Nine-month export sales volumes of NPK were up 50 percent year-over-year, while export sales of NPS in the reporting period were double their volume of five years ago.

Geographical Breakdown of Fertilizer Export Sales (percentage)

Region 9M-2021 9M-2020
Europe 16 19
Asia 18 15
South America 38 38
North America 7 10
Africa 21 18

For the third-quarter, OCP posted a 143 percent increase in EBITDA in U.S. dollar equivalent, to $1.34 billion, up from the year-earlier $552 million, while revenues increased by 83 percent to $2.8 billion from $1.53 billion.

“With the majority of fourth-quarter sales already priced, OCP is on a sound track to deliver robust results all key financial metrics for the full year 2021,” said OCP Chairman and CEO Mostafa Terrab.

OCP expects the current positive phosphate market fundamentals to continue into 2022. “Good consumption is expected across all regions, and imports continue to increase, driven by affordable inputs amid strong crop fundamentals and prices,” the group said.

It noted the good ongoing and expected U.S. fall application as a result of high corn and soybean prices and increasing acreage. OCP also expects “a new wave” of Indian imports in the first quarter of 2022 in light of low DAP availability during the Rabi season and the recent increase of subsidies.

The group also anticipates strong imports to continue in Brazil due to good farmers’ economics.

However, OCP believes the continued high prices in the fourth quarter and early next year “will test affordability metrics,” warning that some demand reduction/destruction could occur, namely in Europe and Africa.

On the supply side, the group sees China as “the game changer,” with the China government’s decision to impose export restrictions until June 2022 creating “a supply shock” and making supply/demand “very tight.” It believes the Russian caps on exports will exacerbate the supply shortage.

Terrab said OCP is moving forward with its investment program to streamline operations through accelerated digitalization and R&D and to ensure the sustainability of its supply chain and mass customize its production system.

The group’s capital expenditure increased by 20 percent in U.S. dollar equivalent in the nine months to Sept. 30, 2021, reaching $798 million, up from $666 million in the same year-earlier period.

N-7 Reports Contract Renewal

News, News Briefs, Urea

N-7 LLC (N-7), a joint venture between OCI NV, Dakota Gasification Co. (DGC), and Dyno Nobel Inc. (Dyno Nobel), a subsidiary of Incitec Pivot Ltd., on Nov. 29 announced a three-year renewal of the N-7 Marketing Agreement, under which N-7 is the exclusive marketer of Dyno Nobel’s industrial urea products, including diesel exhaust fluid (DEF), urea liquor, and automotive grade urea (AGU) in North America. The original agreement was executed in December 2019 (GM Dec. 6, 2019).

Dyno Nobel produces industrial urea at two sites – St. Helens, Ore., and Cheyenne, Wyo. Including OCI’s facility in Wever, Iowa, and DGC’s Beulah facility in North Dakota, N-7’s industrial urea presence in North America includes a total of four locations.

“This announcement reflects the success of OCI’s and N-7’s partnership with Dyno Nobel over the past two years, and N-7’s continued growth in the DEF and industrial urea markets in North America,” said Ahmed El Hoshy, OCI CEO. “DEF is a critical enabler of NOx emissions reductions from ground transportation, stationary equipment, marine, and other applications where diesel engines are employed, and supports OCI’s global sustainability strategy as a leader in tackling emissions.”

“We are pleased to be continuing the partnership between N-7 and Dyno Nobel,” said Todd Telesz, General Manager and CEO of Basin Electric (parent of DGC). “It provides our customers with a reliable supply of diesel exhaust fluid and urea liquor daily. This partnership accomplishes the need to meet the enduring North American market growth and to provide value to our membership and stakeholders.”

Yara Reports Return of Ammonia Production

Ammonia, Europe, Featured, News

Yara International ASA, Oslo, said this week that most of its idled ammonia production is back up or is in the process of returning to production.

“Following our European curtailments earlier this autumn, most of our ammonia production, including in the Netherlands, is now back on stream or preparing to start up,” the company told Green Markets on Nov. 30.

“Yara’s global production footprint gives it the flexibility to curtail temporarily unprofitable ammonia production in Europe and replace this with sourcing from our global production and trade system, enabling us to continue supplying customers. We continue to monitor the situation going forward,” the company said. The company noted that fertilizer prices have increased since it took its plants down.

Yara, along with CF Industries Holding Inc., Deerfield, Ill., jolted the nitrogen markets in September (GM Sept. 17, p. 1) when they announced that soaring natural gas prices in Europe were causing them to idle plants in the U.K. and Europe. At the time, Yara estimated that some 40 percent of its European ammonia production capacity was coming offline. CF has since brought one of its two U.K. plants back up with the help of both the government and higher CO2 prices, and has indicated that part of its second U.K. plant may soon come back up (GM Nov. 5, p. 32).

Yara CEO Svein Tore Holsether has been particularly outspoken on the impact of fertilizer shortages on crop yields and food production.

“It’s impacting food prices all over the world and it hits the wallets of many people,” he recently told BBC Today. “But for some people, especially in the developing world, this is not only a question about the wallet, but it’s a question of life or death.”

He called for support of the World Food Program, and noted that last year Yara donated some 40,000 mt of fertilizer to small-hold farms in East Africa (GM June 5, 2020).

Nutrien to Double Brazil Capacity

Brazil, Featured, News, Saskatchewan

Nutrien Ltd. will build four blending facilities in Brazil that will more than double its capacity in the nation, according to Bloomberg. Operations at the new plants will begin in 2023, according to Roberto Carlos Oliveira, Nutrien’s Head of Fertilizer for Latin America, in an interview. The firm is also boosting capacity at four other plants it already owns in Brazil.

The investment is part of the company’s expansion plan for Brazil, which is the world’s fourth-largest fertilizer consumer. The plants will be located in Cerrado and Southeast regions – close to farms, as opposed to competing suppliers who are based near ports, according to Oliveira. The proximity to farms has helped to prevent delivery delays, he said. Nutrien imports roughly 90 percent of the crop nutrients it sells locally.

Of the four existing blending plants, three are in the state of Goiás at Cristalina, Morrinhos, and Jataí, with one in Araxa, in the state of Minas Gerais (GM Jan. 31, 2020).

Nutrien delivered a record 1 million mt of fertilizer in Latin America so far this year, heading for 1.2 million mt total in 2021. In Brazil, the company expects a 40 percent increase this year, Oliveira said.

Nutrien just recently announced the launch of five new Experience Centers in Brazil, with seven more planned for later this year (GM Nov. 12, p. 1). In addition to the Experience Centers, the company has 42 retail branches in Brazil, 48 in Argentina, 12 in Chile, and six in Uruguay.

DOC Gives Affirmative Preliminary Determination on UAN Imports

Caribbean, Featured, News, Russia, U.S., UAN

The U.S. Department of Commerce (DOC) on Nov. 30 issued affirmative preliminary determinations that UAN imports from Russia are unfairly subsidized at rates ranging from 9.66-9.84 percent and UAN imports from Trinidad and Tobago are unfairly subsidized at a rate of 1.83 percent.

DOC made the determinations as part of countervailing duty (CVD) investigations that are being conducted in response to petitions filed by subsidiaries of CF Industries Holdings Inc., Deerfield, Ill. (GM July 2, p. 1).

“Commerce’s preliminary determinations are an important step towards leveling the playing field for the U.S. UAN industry and its workers,” said Tony Will, CF President and CEO. “We appreciate the hard work of the Commerce professionals who are handling these investigations, and look forward to participating in the post-preliminary phase.”

As a result of the determinations, DOC will impose preliminary cash deposit requirements on imports of UAN from Russia and Trinidad, equivalent to the rates of unfair subsidization.

DOC is conducting concurrent antidumping (AD) investigations of UAN from Russia and Trinidad. Preliminary determinations in the AD investigations are expected in late January, which could lead to the imposition of additional preliminary cash deposit requirements.

Both DOC and the U.S. International Trade Commission (ITC) must make final affirmative determinations in order for DOC to issue an AD/CVD order, which would remain in place for at least five years. DOC and the ITC are expected to make final determinations in the summer of 2022.

U.S. Treasury Puts Sanctions on Belarusian Potash Co.; Action Coordinated with Allies

Benelux, Featured, News, Potash, U.S.

The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) on Dec. 2 announced sanctions on the Belarusian Potash Co. (BPC) to limit the financial benefits that President Alexander Lukashenko’s regime derives from potash exports.

BPC markets potash from Belarus producer Belaruskali, which was sanctioned in August (GM Aug. 13, p. 1). BPC’s previous absence from the sanctions list had been seen by some as a loophole that allowed Belaruskali to continue to sell its potash via BPC sanction-free.

BPC has been given to April 1, 2022, to wind down transactions. According to the sanctions, BPC is not authorized to enter into new purchase contracts or the stockpiling of inventory that are not ordinarily incident and necessary to the winding down of transactions. Belaruskali’s own wind-down period expires Dec. 8, 2021.

Belarus controls about a fifth of the global potash market, or about 11 million mt, and supplies major consuming nations, including China, India, the U.S., and Brazil. While it is not yet clear to what extent the planned sanctions will affect trade, the market is already extremely tight, and prices for potash, along with other fertilizers, have soared.

“This is a more serious threat than the previous inclusion of Belaruskali,” Elena Sakhnova, an analyst at VTB Capital, told Bloomberg. “This news will further support the already elevated potash price.”

“Tighter sanctions on Belarus potash will further squeeze a market scrambling for tons,” said Alexis Maxwell, Green Markets Director of Research. “Belarus’s export options are shrinking as many regions finance trade with U.S. banks. Other financing options are dwindling. China’s state-owned bank froze funding for the Slavkaliy mining project in 3Q.”

Maxwell noted that Belarus supplies about 6 percent of U.S. potash imports. She expects the U.S. to increase potash purchases from Canada. Shares of the two largest Canadian producers of potash, The Mosaic Co. and Nutrien Ltd., closed up 3 and 2.2 percent, respectively, after the news on Dec. 2.

Potash is one of Belarus’s key exports, and its only abundant mineral resource. Separately, the U.S. also sanctioned Slavkaliy, a potash development project in Belarus that was started by Russian billionaire Mikhail Gutseriev, who transferred his stake to a family member after he was sanctioned by European Union this year.

In addition to prohibiting transactions and financing of Belarus’s sovereign debt sold on primary and secondary markets, OFAC also designated for sanctions 20 individuals and 12 entities, and identified three aircraft as blocked property.

The move represented the fifth time Treasury has levied a package of sanctions against Belarus since the country’s presidential election in August 2020, which the U.S. said was fraudulent. Treasury said that the action was taken in coordination with the E.U., the United Kingdom, and Canada. Those three also applied their own sanctions.

The allies have accused Lukashenko of orchestrating a migrant crisis by allegedly luring migrants to the country’s borders with Latvia, Lithuania, and Poland in retaliation for mounting sanctions the bloc imposed over his crackdown on opposition protests following last year’s disputed presidential election.

“The Lukashenka regime is luring migrants, including many families with small children, to travel to Belarus by coordinating the issuance of visas, increasing flights from the Middle East to Belarus, and then transporting people to the borders of E.U. member states,” the Treasury Department said in the statement. “Once at the border, Belarusian officials direct and force migrants across the border to facilitate their passage into the E.U. Belarusian authorities do not allow them to return to Minsk, so many migrants are now stuck at the border in Belarus, exposed to harsh winter conditions that have already claimed the lives of at least a dozen vulnerable individuals.”

The Belarus Foreign Ministry slammed the sanctions. “The depth of the absurdity of the E.U.’s decision on the latest sanctions against sovereign Belarus and its very content is by now difficult to comprehend,” it said in a statement, which also accused the West of “demonizing” Belarus, and vowed “tough” retaliatory measures. “The burden of responsibility is placed on Belarus while blatantly ignoring the true causes of the global migration crisis,” it said.

The J.R. Simplot Co. – Management Brief

Management Briefs, Pacific N.W.

The J.R. Simplot Co., Boise, Idaho, has named Karin Hart as Senior Vice President of Global Solutions. Hart will assume responsibilities for the vision, strategy, and functional model for the company’s global business solutions organizations, including leadership of sustainability, diversity, equity and inclusion, communications and brand, procurement, and its aviation and facilities services.

“Karin has proven her leadership capabilities in a number of areas over her career at Simplot,” said Garrett Lofto, Simplot President and CEO. “Her vision, strategic mindset, and incredible customer experience are all attributes we value as a senior leadership team, and each will serve her well.”

Hart joins the senior leadership team after more than 20 years leading numerous sales and marketing efforts for Simplot’s Food Group business, most recently serving as Vice President of International Business. Throughout her career Hart has dedicated time to community and industry impact, participating and leading in a number of non-profit, food industry, and women-in-business organizations.

Simplot’s announcement comes with the retirement of Sue Richardson as Senior Vice President of Global Business Transformation. Richardson joined Simplot in 2008 and held a variety of leadership roles within the organization. Her retirement is effective Dec. 31, 2021.

Elemental – Management Brief

Management Briefs, Specialty, United Kingdom

Elemental, Devon, U.K., announced on Dec. 1 that Paul Broster has been named its new Commercial Director. With over 30 years of experience in the meat and poultry industries, Elemental said he has expertise in developing OEM (Original Equipment Manufacturer) relationships that will be particularly valuable as the business promotes its Pure Protein Foods® products and organo-mineral fertilizer, Thallo®. He will also oversee the development of Elemental’s patented technology licensing.

Elemental said this senior level appointment, along with a recently secured £1.37 million investment, signifies the company’s commitment to growth and its mission to substantially lower the carbon footprint of global meat production by installing process technology that converts wastes into food ingredients (stocks, extracts, and edible fats) and phosphate-rich organo-mineral fertilizers.

Agricultural Retailers Association – Management Brief

Management Briefs, U.S.

At its 2021 Conference and Expo in San Antonio, Texas, on Nov. 30-Dec. 1, the Agricultural Retailers Association (ARA) presented several awards and announced both outgoing and incoming board members.

Winner of the 2021 Jack Eberspacher Lifetime Achievement Award was Alex McGregor of The McGregor Company, Colfax, Wash. This year’s Distinguished Service Award went to Anne Sheehy and Meg Steward of AGI Yargus, Marshall, Ill. The Retailer of the Year Award went to Valley Ag, Nampa, Idaho, and was accepted by Dave Holtom, CEO, and Richard Lloyd, General Manager. The 2021 AGCO Operator of the Year winner was Kolby Watson of Simplot Grower Solutions, St. Anthony, Idaho.

Outgoing ARA Board Chair Rod Wells, Chief Supply Chain Officer at Growmark Inc., announced incoming Board Chair Ian McGregor, President of The McGregor Company. ARA also welcomed incoming Board Members Dave Thomas, Helena Agri-Enterprises; Brent Nightingale, CF Industries; Gwyn Schramm, Bayer CropScience; David Webster, AGCO; and Darin Ebeling, Sackett-Waconia. Retiring ARA Board Members include Ward Bloodworth, Helena Agri-Enterprises; Lanny Fischer, CF Industries; Jason Minton, Bayer CropScience; Craig Jorgenson, AGCO; and Kelvin Feist, Sachett-Waconia.

ARA also used the conference venue to recognize a group of emerging ag retail leaders as part of its Rising Stars professional development program, sponsored by Atticus. This year’s members include Brandy Devader, J.B. Pearl Sales and Service; Ben Etsinger, Rantizo LLC; Mitch Fondell, Growers Edge; Erin Hardin, Southern States Co-op; Lindsay Hembree, CDMS Inc./Proagrica; Jeff Hunter, Buttonwillow Warehouse Company; Jamie Kimbles, Willard Agri-Service; Seth Landwehr, River Valley Cooperative; Kyle McClelland, Brandt; Kendra Meisgeier, River Valley Cooperative; Ben Sinele; AgVend; Cindy Warren, CommoditAg; Angie White, Farrell Growth Group; and Karl Wyant, Heliae Agriculture.

AmmPower Corp. – Management Brief

Green Ammonia, Management Briefs, Specialty, Vancouver

AmmPower Corp. , Vancouver, has announced the appointment of Eric Kelley as the Director of Marketing for its agricultural line of Green Ammonia Production Products, which includes portable agricultural units that will supply farmers. These units will be capable of producing up to 4 mt/d of green ammonia.

The company said Kelley has over 10 years of experience in all facets of agriculture crop production and equipment sales, and was the founder of Kelley Precision Ag.

“We are very pleased to have Eric join our team to assist us moving forward in the green fertilizer space,” said Gary Benninger, AmmPower CEO. “Eric brings a broad capability that includes both knowledge and experience regarding fertilizer use, its storage, application practices, and customer needs.”

“Moving AmmPower into the agricultural space positions it well to add an early revenue stream to go along with the potential partnerships with large port facilities currently in discussion,” said Rene Bharti, AmmPower President. The company is also seeking to serve the maritime industry. “Given that we are currently making green ammonia at our facility in Michigan, we will be able to start the sales cycle for these agricultural units in Q1 of 2022, which puts the company on a near path towards revenues. Having Mr. Kelley on board is vital to AmmPower establishing itself as a leader in the green agricultural world.”