Gazprom PJSC and the Belarusian government have agreed to the new price that Belarus will pay for deliveries of natural gas in 2022, Belarus state-run news agency BelTA reported on Dec. 1, citing the Belarus Energy Ministry.
According to the report, Belarus will pay $128.52 per 1,000 m3 for natural gas from Russia in 2022.
BHP Ltd., Melbourne, reported that its Board has given final approval to unify the group’s dual listed structure under its existing Australian parent company, BHP Group Ltd.
The Board believes unification is in the best interests of BHP shareholders, the mining group said in a Dec. 2 statement.
“It will result in a corporate structure that is simpler and more efficient, reduces duplication, and streamlines BHP’s governance and internal processes,” the group said.
“A unified structure will also improve flexibility for portfolio reshaping to maximize shareholder value over the long-term, including facilitating a simpler separation of the Petroleum business,” they added.
BHP announced its intention to unify the DLC structure in August (GM Aug. 20, p. 1). The mining group’s DLC structure has two parent companies (BHP Group Ltd. and BHP Group Plc) operating as a single economic entity, and was established with the BHP and Billiton merger in 2001.
Unification is expected to be complete by Jan. 31, 2022, subject to approval by the shareholders of both BHP Group Ltd. and BHP Group Plc, and the receipt of remaining regulatory approvals and U.K. Court sanction of the scheme.
BHP said it will retain listings in the U.K., U.S., South Africa, and Australia.
The European Commission (E.C.) last month opened an investigation into the antidumping measures currently in force on UAN imports into the European Union (E.U.) from Russia, the U.S., and Trinidad and Tobago.
The decision follows a complaint lodged with the Commission’s Directorate General for Trade in April by the European farmers’ organizations Copa-Cogeca, supported by the Irish Farmers’ Association (IFA).
Copa and Cogeca and IFA have welcomed “this first step” by the E.C., and are asking the Commission “to act swiftly.”
The investigation will assess the impact of these antidumping duties on E.U. farmers and whether fertilizer producers in the bloc would suffer “a threat of injury” should the current antidumping measures on UAN be suspended.
According to a Copa-Cogeca statement, since the beginning of 2021, nitrogen fertilizer prices have tripled and now represent 55 percent of the input costs of crop farmers in Europe. The farmers’ organizations noted that volumes offered in the off-season have been lower than usual, and already distributors are not sure they will be able to meet all farmers’ demands by the spring-use period in many Member States.
These conditions “greatly compromise” the production capacities of crop farmers, the farmers’ organizations said.
Copa and Cogeca believe the price of fertilizers, especially UAN, as well as being connected to rising global fertilizer demand and prices of gas and sea freight, is also down to insufficient competition in the E.U. domestic market.
” … customs barriers on nitrogen and antidumping taxes on UAN in place at E.U. level, have become a major obstacle for farmers and expose them to excessive prices and the real risk of supply shortages,” the farmers’ organizations said.
“With UAN prices of over €750/mt [approximately $849/mt at current exchange rates], there is a clear need for rapid action as the situation remains tense in several Member States,” said Copa Vice-President Tim Cullinan, who is also President of IFA. “We therefore hope that the investigation launched by the European Commission can be concluded within a timeframe that considers the critical situation on farms.”
Cullinan estimates that the annual cost to E.U. farmers from the UAN antidumping measures alone ranges from €545 million to €1.1 billion (approximately $617 million to $1.2 billion at current exchange rates).
Meanwhile, European fertilizer industries, who experience both high production costs and high selling prices, continue to make “excessive margins,” Copa and Cogeca said.
UAN imports originating in the U.S. and imports of UAN from Russia and Trinidad and Tobago into E.U. Member Countries have been subject to definitive antidumping duties since October 2019, and to provisional AD measures since April 2019 (GM Oct. 11, 2019; April 12, 2019). As the measures currently stand, they will remain in place for a period of five years.
The duty rates range from €22.24/mt up to €42.47/mt.
Definitive Duties
| Country | Company | Definitive Duty Rate (%)1 | Definitive Fixed Duty Rate €/mt |
| Russia | PJSC Acron and all other Russian companies except JSC Azot and JSC Nevinnomyssky Azot | 31.9 | 42.47 |
| Russia | JSC Azot and JSC Nevinnomyssky Azot (both part of EuroChem Group AG) | 20.0 | 27.77 |
| U.S. | CF Industries Holdings, Inc. | 23.9 | 29.48 |
| U.S. | All other U.S. companies | 23.9 | 29.48 |
| Trinidad and Tobago | Methanol Holdings (Trinidad) Ltd. | 16.2 | 22.24 |
| Trinidad and Tobago | All other Trinidad and Tobago companies | 16.2 | 22.24 |
1Expressed as a percentage of the CIF Union frontier price, duty unpaid
Acron Group, Moscow, swung to an IFRS net profit of RUB50.93 billion ($688 million) for the nine months to Sept. 30, 2021, against a year-ago net loss of RUB4.16 billion.
EBITDA increased 2.9-fold year-over-year to RUB69.19 billion, up from RUB24.12 billion. In U.S. dollar equivalent, EBITDA increased 2.7-fold to $935 million, from $341 million the previous year.
Nine-month revenue grew 59 percent to RUB137.2 billion, up from RUB86.09 billion. In U.S. dollar equivalent, revenue increased 52 percent, to $1.85 billion from the year-ago $1.22 billion.
Acron Group cited a 4 percent increase in sales volumes and higher selling prices during the current reporting period as one of several factors driving the revenue growth.
Nine-month sale volumes of key products were up 4 percent, to 6.188 million mt. Output of key products in the nine-months increased 6 percent year-over-year, to 6.315 million mt, while fertilizer output grew to 5.02 million mt, up from the year-ago 4.88 million mt (GM Oct. 22, p. 26).
The group made a net exchange profit of RUB1.99 billion from revaluation of assets, loans, and liabilities in the reporting period, against a loss of RUB15.76 billion a year ago. Financial derivatives generated a gain of RUB4.92 billion compared with a loss of RUB2.55 billion in the prior-year reporting period.
Net debt was down 26 percent to RUB74.022 billion as of Sept. 30, 2021, against RUB99.579 billion as of Dec. 31, 2019. In U.S. dollar equivalent, net debt was down 25 percent to $1.017 billion from $1.348 billion at the end of 2020.
Acron Chairman Alexander Popov said the group is taking advantage of the lower debt burden to gradually accelerate capital expenditures (see Projects Story in this issue).
The group’s Board has recommended the payment of dividends of RUB720 per share, which were up for approval by shareholders as an absentee vote at the EGM to be held Dec. 3.
Adelaide-based Leigh Creek Energy Ltd. (LCK) said it has inked a Heads of Agreement (HOA) with South Korea’s Daelim Ltd. for an offtake of a minimum of 500,000 mt of granular urea to be produced at its Leigh Creek Energy Project (LCEP) under development in South Australia for a minimum of five years.
Under the agreement, the parties will exclusively work through and finalize the detailed terms of the offtake agreement, LCK said in a Nov. 30 statement announcing the deal. The exclusivity period for the HOA expires in June 2022 if no agreement has been reached prior to that date.
Pricing under the offtake deal will be according to formula based pricing, i.e., index linked, LCK said.
The Australian company plans to establish a 1 million mt/y urea facility utilizing in-situ gasification (ISG) at LCEP, located some 550 kilometres north of Adelaide and overlaying the Leigh Creek coalfield (GM Jan. 22, p. 1).
LCK highlighted the agreement with Daelim is for all urea to be produced that is surplus to requirements for the domestic market. This provides the company greater opportunity to maximize revenue and the capability to develop its domestic distribution network, LCK said.
The company plans to announce early next year its marketing plan for total production from LCEP. It said in addition to the plan including the agreement with Daelim, the plan is also expected to include new low-cost urea distribution to the Australian market.
Daelim is the flagship company of the South Korean DL Group, another subsidiary of which (DL E&C Co., Ltd.) was awarded the engineering, procurement, construction, and commissioning (EPCC) contract for LCEP in late June (GM July 2, p. 31).
The contract with DL E&C Co. encompasses the bankable feasibility study, front end engineering design, final investment decision, and the EPCC. It also includes the sourcing of A$1.5 billion of finance (approximately US$1.07 billion at current exchange rates).
LCK and DL E&C Co. had inked a binding HOA for the feasibility study, front end engineering and design (FEED) stages, and EPCC in early May (GM May 7, p. 43).
Uralkali PJSC, Moscow, and its parent company, Uralchem, are ready to extend the price freeze for Russian farmers throughout 2022, according to a Bloomberg report, citing Russian state-news agency Tass. Tass in turn was citing Uralchem majority owner and Uralkali’s Co-Deputy Chairman Dmitry Mazepin.
Russian growers in recent months have enjoyed a freeze on fertilizer prices courtesy of the country’s biggest fertilizer producers. Last month, Russian producers agreed to extend the price cap for the domestic market until the end of May 2022, according to a Tass report, citing Russia’s Deputy Minister of Industries and Trade, Mikhail Ivanov (GM Nov. 19, p. 32).
Prices were first fixed in July, initially until the end of October, and both Uralkali and Uralchem may keep prices at this level, according to the report.
OCI NV, Amsterdam, announced Nov. 29 that its wholly-owned Iowa Fertilizer Co. facility in Wever, Iowa, has entered into an agreement with Navigator CO2 Ventures LLC, Dallas, to provide CO2 transportation and storage services on its carbon capture and storage (CCS) system, the Heartland Greenway. The move will allow the plant to produce blue ammonia. Ammonia capacity at the facility is approximately 880,000 mt/y.
“We are excited to partner with Navigator on this project, which allows for an effective and quick solution to reduce our CO2 footprint and offer low carbon products to our customers across the value chain from our world-scale facility in Iowa,” said Ahmed El-Hoshy, OCI CEO. “We are monitoring the ongoing discussions in Congress around enhancements to the 45Q program to support the project economics and potentially open the opportunity to widen the scope of this project to capture more CO2.
“This agreement follows the announcement earlier this year that we have the ability to produce up to 365,000 mt/y of blue ammonia at OCI Beaumont in Texas, and blue and green ammonia projects in Abu Dhabi and Egypt, and marks another milestone towards achieving our sustainability goals and progressing towards a greener future,” he continued.
Navigator will provide CO2 transportation and storage services under a long-term agreement for up to 1.13 million mt/y of CO2, equivalent to the carbon emissions of approximately 245,000 vehicles driven annually. The project will have two phases, with the first focused on process gas representing approximately 500,000 mt/y of CO2, and the second for the balance, subject to regulatory enhancements of the 45Q program to make installation of the required post-combustion capture equipment economically feasible.
When the new infrastructure is installed, the project has the capability to capture and store materially all of the CO2 emissions from the fertilizer plant. Start of operations for the first phase is expected at the end of 2024.
The project is backed by BlackRock’s Global Energy & Power Infrastructure Fund III, which invests in essential, long-term infrastructure assets, and is commercially anchored by Valero.
Navigator said that once fully expanded, the Heartland Greenway will be able to capture and sequester 15 million mt/y of CO2 annually, which, according to EPA estimates, is equivalent to eliminating the annual carbon footprint of the Des Moines metro area three times over.
Navigator received approval in October from its Board of Directors to proceed with the Heartland Greenway. It has commenced the process to obtain all the necessary permits to construct the project and start initial system commissioning during late 2024 and into early 2025.
Navigator CO₂ Ventures is a company developed and managed by the Navigator Energy Services management team. The company said it has safely constructed and operated over 1,000 miles of midstream infrastructure since being founded in 2012.
Croatian fertilizer producer Petrokemija said on Dec. 3 it has temporarily shut down its urea and ammonia production plants due to a technical failure, according to SeeNews. All of the company’s plants came back up in early November after shutdowns caused by technical problems and a rise in natural gas prices.
American Plant Food Corp. (APF), Galena Park, Texas, filed a Property-Other Property Fraud lawsuit against NeuAG LLC, The Woodlands, Texas, on Nov. 1, 2021, in Harris County District Court in Harris, Texas.
Other defendants listed included Joe Newcomb, The Woodlands, Texas; Jerry Newcomb, Richwood, Texas; Jason Kennedy, Wyandotte, Mich.; Gregory Caldwell, Freeport, Texas; Randall Hulvey, Jackson, Texas; and BASF Corp., Dallas, Texas.
APF also filed a motion for a proposed temporary restraining order. More details were not immediately available about the case at press time.
Ironically, the case was filed on Nov. 1, the day that NeuAG was slated to take over APF’s longstanding ammonium sulfate supply agreement from BASF. Since NeuAG announced the agreement in 2020 (GM May 15, 2020), it has constructed a $90 million Freeport, Texas, storage and distribution center (GM July 16, p. 1). In July, NeuAG told Green Markets that the project was ahead of schedule, under budget and expected to be fully operational on Nov. 1.
U.S. Gulf/Tampa:
Tampa anhydrous ammonia for December continued at $990/mt CFR, with the last NOLA barge business reported at $1,030/st FOB.
Eastern Cornbelt:
Sources reported ammonia running hard in parts of central and southern Illinois at midweek, although activity was slowed by wet conditions in northern areas of the state. Ammonia pricing continued to firm, fueled by short supply and heavy fall demand.
The ammonia market was quoted at $1,300-$1,400/st FOB regional terminals, up from the prior week’s $1,285-$1,350/st FOB, with the low confirmed at Lima, Ohio. Most Illinois and Indiana terminals were reported in the $1,350-$1,400/st FOB range where tons were still available, with the low confirmed for limited truck offers FOB East Dubuque, Ill.
Western Cornbelt:
Mild, dry weather conditions in early December allowed plenty of fall ammonia application in the region during the week. “The Western Cornbelt is still going hard, and this thing will continue until weather shuts us out,” commented one regional source.
“Fall volumes are very strong,” added another contact at midweek. “We are still running both ammonia and dries.”
Prompt ammonia pricing ranged broadly at $1,300-$1,450/st FOB in the Western Cornbelt during the week, with the low reported at Garner, Iowa, and the high at Wever, Iowa. The last business in Nebraska was pegged at the $1,325/st FOB level. Multiple locations remained out of product, however.
In the Southern Plains, new ammonia offers were confirmed at $1,300/st FOB Coffeyville, Kan., up $25/st from the previous week, with Oklahoma terminals at Pryor and Verdigris reportedly not taking orders. Pricing for truck tons FOB Gulf Coast terminals was pegged at $950-$1,000/st FOB, up from $850-$950/st FOB at last report.
Northern Plains:
The first spring prepay ammonia program came out on Dec. 2, with N-7 reportedly offering $1,575/st FOB Beulah, N.D., for limited tons. No other ammonia pricing was reported in the region, either for prompt or prepay, with expectations that a new delivered price may be out within the week.
The last prompt ammonia pricing in the Northern Plains fell in the $1,300-$1,400/st FOB range, but sources said those offers were no longer on the table and fall demand in the region is now over.
Black Sea:
Sources reported an ammonia sale late this week of 4,000-5,000 mt out of Yuzhnyy at $930/mt FOB. The reported buyer was Trammo. The source of the material was unclear.
One trader said the high prices seen in the ammonia market are making it possible for some Ukrainian plants to once again offer product on the global market. The high price of natural gas as a feedstock has kept the Ukrainian plants either shut down or supplying product only for the domestic market.
Looking after the domestic market will remain the focus of Ukrainian producers, sources said. However, when opportunities arise for smaller lots to be sold at a price sufficiently high enough, sources said the companies will take a chance on the global market.
Sources also said OCP may have contracted with Koch to pick up extra material in Turkey. The rumors also said the vessel booked may instead be getting in the queue early to clear the entrance to the Black Sea before heading to Yuzhnyy for a scheduled cargo pick up.
Middle East:
Sources confirmed a Saudi sale at $900/mt FOB. Reportedly, the sale of 15,000 mt was to Trammo for a December loading.The consensus is that the tons will be sent to Southeast Asia, where rumors of a deal at $975/mt CFR fit nicely with the Saudi deal.
The 15,000 mt sold was the exception to the accepted situation in the region. Sources said all the producers are up and running, but demand is so strong that they only have material to cover contracts or other long-term arrangements, leaving precious few tons for a spot sale. Even with spot material available, sources said few buyers are willing to pay the current high rates.
India:
The only reported movement into India involves tons purchased under contracts or other forms of formula-based pricing. The last spot deal showed a price into India at $670/mt CFR. Even buyers said this price is no longer available, and discussions are now at $800/mt CFR.
The problem both sides face, however, is that the large number of contracted tons is artificially keeping the price into India lower than many think it should be.
Occasional queries for spot tons from Indian buyers are right around $800/mt CFR. Suppliers, however, note that a couple of weeks ago even $800/mt FOB would have been too low to attract a counteroffer from a producer. With the latest SABIC sale at $900/mt FOB, sellers are now looking closer to $1,000 mt FOB.
No spot deals have been done for some time. Even FACT, which has depended on almost monthly tenders for its urea, has gone silent. Sources speculated that the company may be getting its ammonia from the ammonia supplies held by other Indian companies, and those companies most likely get their ammonia from formula-based deals.
Northwest Europe:
The announcement by Yara that its ammonia plants are back up and running came as prices in the area moved up. Sources reported that a deal from Yara to a German buyer at $1,100/mt CFR was more than enough to allow the plants to restart.
Sources said the Yara deal could have an equivalent netback from the Baltic at $950/mt FOB. From this calculation and another deal recently closed, sources said the Northwest Europe price would be $1,030-$1,040/mt C&F.
Reportedly, there is still no settled December price for ammonia out of the Baltic ports. Sources said, however, the Yara deal at $1,100/mt CFR would be a good indicator that the price might have to end up around $950/mt FOB.
Thailand:
January-October 2021 ammonia imports were reported at 355,000 mt, up 22.5 percent from the same period in 2020. The main suppliers, according to Trade Data Monitor, were Malaysia at 227,000 mt and Australia at 81,000 mt.
October imports this year were up a whopping 200 percent, to 49,000 mt from 16,000 mt in October 2020 The tonnage was divided between Malaysia at 30,000 mt and Indonesia at 19,000 mt.
