All posts by mickeybarb@charter.net

Seed Price Uptick Predicted

News, News Briefs

Seed pricing is likely to rise in the 2022 season as seed companies look to benefit from high corn and soybean prices, according to a Rabobank report on Nov. 8, as reported by Bloomberg. Farmers could see “an aggressive upward price movement for 2022 seed,” possibly as much as 8-14 percent.

In the meantime, quoted prices on some agrochemicals have increased 40-250 percent on freight increases, Chinese environmental protection initiatives, and weather events.

Rabobank thinks fertilizer prices could see further gains between now and spring 2022. The firm expects farmers’ margins in 2022 will be greatly reduced from 2020 and 2021.

Halliburton to Aid Teck Resources in Mineral Exploration

Houston, TX, News, News Briefs, Vancouver

Halliburton Co., Houston, announced on Nov. 10 that it has signed an agreement with Teck Resources Ltd., Vancouver, B.C., to grant Teck access to Neftex® Predictions to support their global mineral exploration efforts.

Teck is one of Canada’s leading mining companies, with major business units focused on copper, zinc, and steelmaking coal, as well as investments in energy assets, with operations in Canada, the U.S., Chile, and Peru.

Neftex® Predictions provides geoscience context, knowledge, and insight, and delivers integrated geological framework for subsurface evaluation and risk assessment. The cloud-deployed portfolio also provides access to a suite of predictive global models for exploration, tools for subsurface visualization, and analytical capabilities.

Emmerson Secures $46.8 M Investment

Isle of Man, Morocco, News, News Briefs, Potash

Emmerson PLC, Isle of Man, reported on Nov. 10 that it has secured a strategic investment of up to $46.8 million from investors for the development of the Khemisset Potash Project in Morocco. The primary investor is Global Sustainable Minerals Pte Ltd., a Singapore-based company backed by a significant Southeast Asia investor.

Emmerson expects to invest some $500 million in the project, which would produce 800,000 mt/y and have a 19-year mine life.

EPA Penalizes Iowa Cooperative

News, News Briefs, Western Cornbelt

The U.S. EPA reported on Nov. 5 that it will collect a $52,221 penalty from Postville, Iowa, fertilizer distributor Farmers Union Cooperative to resolve alleged violations of the federal Clean Air Act’s Risk Management Plan Rule. EPA said the company stores 457,000 pounds of anhydrous ammonia and failed to comply with regulations intended to protect workers and the surrounding community from accidental releases of regulated substances.

After reviewing facility records, EPA determined that the company failed to update its plans for preventing the release of anhydrous ammonia and responding to a release. Violations also included the company’s failure to update a hazard review, failure to maintain operating procedures, and failure to perform and maintain compliance audits.

In response to EPA’s findings, Farmers Union Cooperative took the necessary steps to return the facility to compliance.

New Saskatchewan Facility Near Completion

News, News Briefs, Saskatchewan, Specialty

A new C$2.5 million, 1,600 mt fertilizer plant at the Lake Lenore Agro Co-op in Lake Lenore, Sask., is near completion, according to the Toronto Star, which reported that the new 16 mt scale and blender is expected to triple speed and capacity.

The upgraded blend system will also allow for better utilization of micronutrients and nitrogen stabilizers. The new facility was built with eye toward further expansion. It replaces an older plant that was deconstructed in June.

Belarus Threatens E.U. Gas Flow; Russian Buildup on Ukrainian Border Reported

Belarus, Europe, Featured, News, Poland, Russia, Ukraine

Belarusian President Alexander Lukashenko late this week threatened to shut down a key pipeline carrying Russia gas to the European Union (E.U.) if Poland closes the border as thousands of migrants seek to cross into the European bloc.

About 20 percent of Russian gas flowing to the E.U. crossed Belarusian territory this year, mainly via the Yamal-Europe pipeline, according to a Bloomberg report.

“We’re heating Europe and they are threatening us that they will close the border,” Lukashenko said at a meeting with Belarus government officials on Nov. 11, the country’s state-owned news agency BelTA reported, as cited by Bloomberg.

Lukshenko’s threat comes as gas prices in Europe have surged to record levels in recent weeks, forcing several major nitrogen fertilizer producers to curtail their European ammonia production, and in some cases, their downstream production.

Benchmark European next-month gas futures – on the Dutch TTF – rose 7.1 percent to €75.2 a megawatt hour by 4.59 pm (GMT) on Nov. 11.

Natural gas prices in Europe had eased back late last month following Russian President Vladimir Putin’s order to Russian state-run gas producer Gazprom PJSC to start refilling European gas-storage facilities in November (GM Oct. 29, p. 1). Gazprom is Europe’s biggest gas supplier.

Poland estimated that 4,000 migrants may be in the forests along the border, and even more on route to the frontier area from Belarus’s capital. Neighboring Lithuania, facing a similar problem, called on the United Nations to open a humanitarian corridor in Belarus.

E.U. countries accuse Lukashenko of luring Middle Eastern migrants to his country so he can send them across the border in retaliation for existing sanctions. At the E.U.’s request, on Nov. 11 Turkey agreed to monitor flights to Belarus, including the suspension of sales of one-way tickets, according to Bloomberg. Turkish Airlines agreed to restrict ticket sales from Istanbul to Minsk for citizens of countries that have been among the primary ones involved in the migrant flows, particularly Iraq, Syria, and Yemen.

The E.U. currently is considering more sanctions against the Lukashenko government over the migrant crisis. In June, the E.U. put sanctions on Belarus potash soon after Lukashenko’s crackdown on domestic opposition and the grounding of a Ryanair flight to detain an activist (GM June 25, p. 1; Oct. 22, p. 33).

If the recent Belarus/E.U. dust up was not enough, the U.S. has warned the E.U. about a Russian buildup on the Ukraine border, according to a Bloomberg report.

With Washington closely monitoring a buildup of Russian forces near the Ukrainian border, U.S. officials have briefed E.U. counterparts on their concerns over a possible military operation, according to multiple sources familiar with the matter.

The assessments are believed to be based on information the U.S. hasn’t yet shared with European governments, which would have to happen before any decision is made on a collective response, sources said. They are backed up by publicly-available evidence, according to officials familiar with the administration’s thinking.

A White House official said Thursday evening that the U.S. was consulting with allies over the buildup, considered Ukraine a partner, and denounced any and all aggressive acts by Russia.

Russia said military deployments on its territory are an internal matter and it denies any aggressive intentions, while accusing the U.S. of provocation by sailing warships in the Black Sea close to its territory this week.

Similar tensions erupted in the spring, when the U.S. and the North Atlantic Treaty Organization accused Russia of massing as many as 100,000 troops, tanks, and warplanes near the border with Ukraine. The crisis eased after U.S. President Joe Biden called Russian President Vladimir Putin and offered a summit that took place in June.

Russia’s latest movement of troops and tanks toward Ukraine spurred CIA Director Bill Burns to visit Moscow this month, where he spoke by phone with Putin. German Chancellor Angela Merkel also asked Putin in a call on Wednesday to use his influence with Russia’s ally Belarus to defuse a crisis over thousands of Middle East migrants seeking to cross the border with Poland into the E.U. Putin declined.

Merkel and Putin spoke again on Thursday about Ukraine and Belarus, the Kremlin said in a statement. The Russian leader criticized Ukraine’s alleged use of combat drones in violation of a previous agreement and American military activity in the Black Sea, according to the statement.

The U.S. warning over Ukraine comes on top of the more recent standoff between Poland and Belarus, a close Russian ally. And it is playing out amid uncertainty over increased Russian gas supplies to Europe despite Putin’s pledge to ramp up deliveries from this week to ease an energy crunch. He is pushing for European regulators to give swift approval to operate the Nord Stream 2 gas pipeline from Russia to Germany, a project the U.S. and Ukraine opposed as a security risk.

Russia does not intend to start a war with Ukraine now, though Moscow should show it is ready to use force if necessary, one person close to the Kremlin said. An offensive is unlikely, as Russian troops would face public resistance in Kyiv and other cities, but there is a plan to respond to provocations from Ukraine, another official said.

October Revenues Up Across the Board for Mosaic; Brazil Volumes Increase

Earnings, News, Phosphate, Potash, Tampa

The Mosaic Co., Tampa, reported that revenues for the month of October increased for all major business segments – Phosphates, Potash, and Mosaic Fertilizantes. However, volumes were off in both the Phosphates and Potash segments, while they were up in the Brazil-based Mosaic Fertilizantes.

Mosaic reiterated that it expects fourth-quarter Phosphates sales volumes to be in the range of 1.8-1.9 million mt, with average realized prices rising $55-$65/mt over prices realized in the third-quarter 2021.

In Potash, Mosaic continues to expect fourth-quarter sales volumes of 2.0- 2.1 million mt, with average realized prices rising $110-$130/mt over third-quarter realized prices.

Beyond the fourth quarter, Mosaic said it is seeing strong demand for nutrients, having already committed and priced 40 percent of the Phosphates segment’s expected sales volumes for first-quarter 2022.

  Oct. 2021 Oct. 2020
Phosphates    
Sales Volumes (000 mt) 569 712
Sales Revenues ($/M) 437 294
     
Potash    
Sales Volumes (000 mt) 665 855
Sales Revenues ($/M) 258 180
     
Mosaic Fertilizantes    
Sales Volumes (000 mt) 842 818
Sales Revenues ($/M) 500 271

Incitec Pivot to Cease Production at Gibson Island; Inks Partnership to Assess Green Ammonia Exports

Ammonia, Ammonium Sulfate, Australia, Featured, Green Ammonia, News, Specialty, Urea

Incitec Pivot Ltd. (IPL), Southbank, Victoria, will cease manufacturing at its Brisbane, Queensland-based Gibson Island plant at the end of December 2022. The company said “despite extensive efforts” it has been unable to secure “an economically viable” long-term gas supply to its plant beyond its current supply contract.

“After 50 years of continuous production and re-investment at Gibson Island, IPL was disappointed it was unable to secure affordable gas for the plant,” said IPL Managing Director and CEO Jeanne Johns in a Nov. 8 statement announcing the decision.

IPL has been under pressure from a sharp rise in the price of Australian East Coast gas over recent years, and in the past has warned a production closure at Gibson Island could not be ruled out if affordable gas could not be secured. As recently as last month, the company said that international competitive gas pricing is required to continue operations at Gibson Island after the current gas contract expires

The current contract with Australia Pacific LNG started in April 2020 and expires on Dec. 31, 2022. It replaced a temporary one-year gas contract that expired on Dec. 31, 2019.

Responding to an analyst’s question at a company Business Update call on Nov. 8 following the closure announcement, Johns said the company had been looking for a gas contract to run from 2023 until 2027, given that complex manufacturing sites need to do a thorough turnaround every four years. She said the Gibson Island plant was faced with an investment of A$60 million to A$70 million that would need to be remunerated over that period of time.

Johns revealed the earnings of the Gibson Island operation are “slightly underwater” with the current gas supply contract, but by the end of the contract, it will be “slightly above water.”

IPL’s Gibson Island site is currently Australia’s sole urea producer. The site has capacity to produce 340,000 mt/y of granular urea, according to Green Markets data. It also produces ammonia and ammonium sulfate, with nameplate capacity of 300,000 mt/y and 200,000 mt/y, respectively, according to IPL’s website.

The company said urea, ammonium sulfate, and other specialty products will be sourced from its existing international import supply chains to replace these manufactured products, and that its Brisbane fertilizer distribution center operation will continue beyond the closure of the manufacturing operations.

Johns emphasized that the earnings of IPL’s distribution business are not expected to be adversely impacted by the closure of the Gibson Island plant.

She said IPL has an existing supply chain for imports to replace the supply of most of the products produced at the Gibson Island plant, including urea and granulated ammonium sulfate. But as the facility is moved to an import model, the company will discontinue its ‘Big N’ manufactured product.  Johns said the latter product on an import basis given the current market and ammonia pricing does not make economic sense.

However, she said that IPL does have urea in Easy Liquids that are available as “good replacements.”

IPL’s Dyno Nobel Asia Pacific subsidiary will make alternative arrangements for ammonium nitrate (AN) production at its Moranbah, Queensland, plant that utilizes around 20,000 mt/y of ammonia currently supplied from Gibson Island.

Johns said IPL is looking at different options for that – both the import of ammonia and ammonia supply from domestic manufacturers – and is also looking at replacing the AN production at Moranbah through domestic and import options. The company is looking at use of existing storage infrastructure if it were to go down the ammonia import route. But if that was not possible, Johns said the economics would point to importing AN before investing in new ammonia import infrastructure.

The company said it currently is in advanced negotiations with third parties to source ammonia or AN to replace the volume from Jan. 1, 2023

IPL expects the financial impact of these alternative arrangements for the Moranbah plant to range between A$5-A$10 million per year.

IPL’s wholly-owned subsidiary, Incitec Fertilizers Pty Ltd. (IPF), this past May inked a 20-year offtake agreement with junior producer Perdaman Chemicals and Fertilisers Pty Ltd. with a commitment to take up to 2.3 million mt/y of granular urea from Perdaman’s proposed urea plant at Karratha on Western Australia’s Burrup Peninsula (GM May 7, p. 1). But the agreement is subject, among other conditions, to the Perdaman plant being built, and first production is not expected before the first quarter of 2025.

Johns told participants at the Business Update call that the Perdaman supply contract “would be a good substitute in time” for some of the imports IPL currently source internationally. She is hopeful there will be more certainty on the Perdaman plant in the coming months, but added that the facility is not yet fully approved.

IPL said the cash costs of closing the Gibson Island plant would be about A$83.5 million, including employee redundancies and costs associated with plant decommissioning. The decision to close the production facilities is expected to impact up to 170 employees.

The company will write down the value of assets by about A$102.5 million, representing the cost of the last turnaround and other maintenance. But proceeds from land sales could range from A$0-A$45 million, depending on final decisions about future use opportunities, including the use of the site for a green ammonia plant.

In addition to the cost of the alternative ammonia sourcing arrangements for Dyno Nobel Asia Pacific, the impact of the Gibson Island manufacturing closure on IPL’s earnings from January 2023 will include zero earnings contribution from the site’s domestically manufactured products. Stranded Corporate and insurance costs are expected to be about A$10 million per year.

“Despite the decision to cease manufacturing with natural gas at Gibson Island at the end of 2022, the feasibility study into industrial-scale production of green ammonia at the site will be progressed to potentially re-purpose the facility,” said Johns.

IPL announced last month that it will partner with global green energy company Fortescue Future Industries Pty Ltd. (FFI) on a feasibility study into industrial-scale production of green ammonia at the Gibson Island fertilizer manufacturing facility (GM Oct. 15, p. 1).

The building of a new water electrolysis facility at the Gibson Island site to produce around 50,000 mt/y of renewable hydrogen, which would then be converted into green ammonia for Australian and export markets, is being investigated, the company said.

“By investigating the re-purposing of Gibson Island, we can make use of the existing manufacturing plant infrastructure, our established production capabilities, and our highly skilled workforce,” said Johns.

Preliminary results from the feasibility study are expected to be available at the end of this year.

In an associated development, IPL said on Nov. 5 it had signed a Memorandum of Understanding (MOU) with Singapore’s Keppel Infrastructure Holdings Ltd. and Singapore-based investment company Temasek to investigate the feasibility of producing green ammonia in Queensland and New South Wales (NWS) for export.

IPL said the three parties will work closely with the Queensland and NSW governments to explore the feasibility of essential infrastructure, licenses, and approvals to facilitate the production and export of green ammonia.

“Both our Kooragang Island, NSW, site and a potential greenfield site in Gladstone, Queensland, have the advantage of being nominated by the Australian government as locations identified as clean hydrogen hubs under Australia’s ‘National Hydrogen Strategy,'” IPL said.

PhosAgro: Higher Prices Boost 3Q, 9 M Profit; Export Quotas Won’t Impact Group, Says CEO

DAP/MAP, Earnings, News, Nitrogen, NPK, Phosphate, Russia

PhosAgro PJSC, Moscow, swung back to profit in the third quarter compared with a year-ago, reporting an IFRS net profit of RUB39.19 billion (approximately $552.4 million at current exchange rates), versus the year-ago net loss of RUB1.33 billion. Adjusted for non-cash foreign exchange gains/losses, adjusted net profit for the quarter more than doubled, to RUB39.74 billion, up from RUB18.97 billion a year earlier.

Third-quarter EBITDA also doubled, reaching RUB57.2 billion, up from the year-ago RUB27.93 billion, while revenue increased by 64 percent, to RUB116.3 billion compared to RUB70.99 billion a year ago.

PhosAgro cited the main revenue growth driver as the rise in global prices for phosphate and nitrogen fertilizers against the backdrop of high demand and low inventory levels in its main sales markets. It said EBITDA was “greatly supported” by the increase in sales prices, but was negatively affected by lower sales volumes.

As previously reported, third-quarter fertilizer sales volumes fell 3 percent to 2.63 million mt, and by 2 percent in the nine-months period, to 7.79 million mt compared with a year-ago (GM Oct. 29, p. 27).

The group highlighted the improving efficiency at its key production facilities following upgrades, and growing self-sufficiency in key feedstocks for lifting the EBITDA margin for the third quarter to 49.2 percent, up from 39.3 percent in the same-year earlier period.

PhosAgro’s Phosphate fertilizer business segment posted a third-quarter EBITDA of RUB47.5 billion ($646 million), a nearly two-fold increase year-over-year. The group said higher profits were recorded for all products, mainly due to farmers’ record-high purchasing power on the back of high prices for agricultural products.

Third-quarter EBITDA for the Nitrogen fertilizer business segment came in at RUB9.4 billion ($128 million), which the group said was almost 2.5 times the result for 3Q 2020.

PhosAgro recorded a big jump in nine-month net profit to RUB87.84 billion, up from the year-ago $3.96 billion. Adjusted for foreign exchange gain/loss, adjusted net profit for the period more than doubled, to RUB85.07 billion versus the year-earlier RUB41.21 billion.

Nine-month EBITDA came in 92 percent higher on the year, reaching RUB130.29 billion, up from RUB67.79 billion, while revenue increased by 50 percent to RUB292.56 billion, compared with RUB194.99 billion a year ago.

PhosAgro’s net debt as of Sept. 30, 2021, stood at RUB123.3 billion ($1.7 billion), down RUB33.6 billion on the net debt of RUB156.9 billion ($2.1 billion) as of Dec. 31, 2020. The group’s net debt/EBITDA ratio decreased to 0.83x as of the end of third quarter of 2021, versus 1.86x at the end of 2020.

PhosAgro Chairman and CEO Andrey Guryev told participants at an earnings call on Nov. 8 that the Russian government’s decision to impose export quotas on nitrogen and complex fertilizers will not have a negative impact on the group’s operational and financial results.

Last week, the Russian government moved to limit the volume of nitrogen fertilizers and DAP, MAP, and complex fertilizers for a period of six months, starting from Dec. 1, 2021, through to May 31, 2022, in a bid to safeguard local supplies and stabilize pricing for the country’s farmers (GM Nov. 5, p. 1).

Guryev believes that a temporary restriction on the export of fertilizers from Russia could act as a factor supporting prices in global markets, and ensure higher profitability of supplies of Russian fertilizers to foreign markets.

“The level of the quotas is comfortable; it is based on the level of consumption on the domestic market,” said Guryev.

PhosAgro Senior Marketing Expert Andrey Ryabinin confirmed the non-tariff quotas are half of Russian producers’ export volumes last year. For the six-month period specified by the government – Dec. 1, 2021- May 31, 2022 – the export quotas for nitrogen fertilizers will be 5.9 million mt, and 5.35 million mt for phosphate fertilizers such as MAP/DAP and NPKs.

Commenting on the domestic fertilizer market, which is a priority market for PhosAgro, Guryev noted the season of phosphate-based fertilizer application for field work has ended, and that there currently is increased demand for ammonium nitrate.

He added that Russian producers have voluntarily extended the price freeze on mineral fertilizers to domestic users, and said “as a priority, Russian producers are meeting increased domestic demand for nitrogen fertilizers.”