All posts by mickeybarb@charter.net

Mitsubishi Plans U.S. Gulf Ammonia Plant, Smaller Hydrogen/NH3 Plant in Alberta

Ammonia, Featured, Japan, News

Mitsubishi Corp., Tokyo, said on Sept. 21 it plans a 1 million mt/y blue fuel ammonia plant that will supply product to the Japanese market. The plant, which will be located somewhere near Denbury Inc.’s Green CO2 pipeline between Donaldsonville, La., to west of Houston, is expected to start up in the late 2020s.

Mitsubishi said it is taking steps to introduce fuel ammonia to Japan and develop a fuel ammonia supply chain to the country. The Japanese Ministry of Economy, Trade, and Industry this year released a Road Map for Fuel Ammonia introduction that assumes fuel ammonia imports of 3 million mt/y in 2030, with demand rising to 30 million mt/y in 2050.

Plano, Texas-based Denbury will supply CO2 transport and storage options for the ammonia plant. The estimated CO2 volume to be captured from the ammonia facility is a maximum 1.8 million mt/y. The captured CO2 will be either sequestered underground via Denbury’s enhanced oil recovery or go into carbon capture and storage (CCS), which Denbury plans to develop in the future.

The CO2 term sheet contemplates an initial period of 20 years, with the ability to extend further. Denbury said its CO2 capabilities and assets rank among the world’s largest, and that it has been active in the U.S. Gulf region for two decades.

Earlier this month, Mitsubishi and Shell Canada Products, Calgary, signed a Memorandum of Understanding (MOU) relating to the production of low-carbon hydrogen through the use of CCS near Edmonton, Alberta. Mitsubishi aims to build and start up a blue hydrogen facility near the Shell Energy and Chemicals Park Scotford towards the latter half of this decade, with Shell providing CO2 storage via the proposed Polaris CCS project. The hydrogen would be produced via a natural gas feedstock and exported mainly to the Japanese market to produce clean energy.

The first phase of the project aims to produce approximately 165,000 mt/y of hydrogen with an upside to increase production, depending on considerations over future phases. The hydrogen would be converted to blue ammonia for export to Asian markets.

The project would be built near the Edmonton region, which this year was announced as Canada’s first hydrogen hub. The location was chosen due to availability of abundant natural gas resources, proven CO2 storage capacity, and shared infrastructure opportunities. By co-locating next to Shell Scotford, both companies will explore potential synergies such as land use and utilities integration.

Westlink Ag – Management Brief

Management Briefs

Westlink Ag, a national distribution/retail buying group for primary crop inputs, on Sept. 17 announced the appointment of Kyle Grant as Executive Vice President, reporting to the office of CEO Jeff Pritchard. Grant will focus on the management of Westlink’s fertilizer, micronutrient, and bio-stimulant operations across the U.S., effective Oct. 1, 2021.

“I’m excited to get going with Westlink Ag,” said Grant. “The ag retailer space has been my passion throughout my career, and that is where Westlink Ag has embedded their vision and established their mark. Aligning my passion and experience with Westlink’s purpose-driven, independence-focused business model will hopefully propel stronger, more sustained success for our members, strategic suppliers, and the growers we all serve.”

Grant is an industry veteran with more than two decades of management and sales experience. He has been with International Raw Materials for the past six years as U.S. Sales Manager, and before that served for nearly a decade in various leadership roles with The J.R. Simplot Co. A graduate of Boise State University, Grant also serves on the boards of the Far West Agribusiness Association and Western Plant Health Association. 

“In Kyle’s prior roles, he has been instrumental in working with Westlink Ag and our member,” said Pritchard. “As the ag industry faces very dynamic challenges going forward, we will count on Kyle’s excellent network, strong leadership skills, and intuitive guidance to help us cement a more positive, sustainable impact within and outside our company.”

Formed in January 2000, Westlink Ag is based in Meridian, Idaho, and is comprised of 45 independent agricultural retailer/wholesalers with more than 250 satellite locations covering the U.S. and Canada. Westlink said its primary role is to procure fertilizer, agri-chemicals, micronutrients, organics, and bio-stimulants for its members, and provide strategic direction, grower financing, vehicle leasing, insurance, data management, regulatory guidance, and targeted technology transfer.

OCP Back to Black in 1H: Higher Pricing, Acid Exports Offset Lower Rock, Fert Sales

DAP/MAP, Earnings, Morocco, News, NPK, NPS, Phosphate Rock, Phosphoric Acid, Triple Superphosphate

OCP SA, Casablanca, reported a first-half net profit of MAD4.698 billion (approximately $517 million at current exchange rates), versus a year-ago net loss of MAD573 million. Revenues increased by 19 percent, to MAD32.48 billion ($3.65 billion), up from the year-ago MAD27.40 billion ($2.8 billion).

Six-month EBITDA increased by 48 percent, to MAD12.53 billion ($1.41 billion), up from MAD8.49 billion ($868 million) the previous year.

OCP released preliminary revenues and capex figures for the reporting period at the beginning of this month (GM Sept. 3, p. 25).

“OCP’s industrial flexibility enabled us to shift a portion of our export volumes to phosphoric acid to accommodate changing demand trends. This, combined with favorable pricing and our streamlined cost structure, resulted in a 19 percent year-on-year increase in revenues in local currency and an 800 basis-point increase in our EBITDA margin to 39 percent [1H 2020: 31 percent], the highest level in the past decade,” said OCP Chairman and CEO Mostafa Terrab.

“These strong results were achieved as OCP’s processed phosphate production increased from first-half 2020 levels, representing higher demand for phosphoric acid, while fertilizer production volumes were lower,” he said.

First-half phosphate rock revenues in local currency were up 11 percent on the prior year, while phosphoric acid and fertilizer revenues increased 27 percent and 20 percent, respectively. In U.S. dollars, rock revenues increased 21 percent, acid revenues were up 39 percent, and fertilizers revenues rose 31 percent.

OCP revenues breakdown

$ million 1H-2021 IH-2020 % change
Total Revenue1 3,650 2,800 +30
Of which:      
Phosphate rock 455 551 +21
Phosphoric acid 402 559 +39
Fertilizers 1,653 2,165 +31

1 Includes other revenues sources

The group said the improved prices across all three product categories, as well as the higher acid export volumes, helped mitigate lower rock and fertilizer sales volumes compared with a year ago.

OCP attributed the lower fertilizer volumes as primarily due to the group’s depleted inventory levels at the start of 2021 – given, it said, the high production and export volumes achieved in 2020, which included 11 million mt of fertilizers. The shift of a portion of its exports to phosphoric acid to match demand also impacted fertilizer sales volumes.

OCP selected export volumes1

  1H-2021 IH-2020 % change
Phosphoric acid million mt P2O5 0.962 0.814 +18
Fertilizers million mt 5.2 5.7 (9)
Of which:      
DAP/MAP 3.1 3.7 (16)
TSP 0.6 0.5 +20
NPS and NPK 1.6 1.5 +7

1  Excludes phosphate rock exports

OCP said it saw a 0.2 million mt increase in its first-half fertilizer exports to Africa, but a 0.4 million mt decrease in fertilizer exports to North America and a 0.3 million mt fall to South America, compared with the same year-ago period.

The group posted a 20 percent rise in second-quarter revenues to MAD18.19 billion ($2.05 billion), up from the previous year’s MAD15.13 billion ($1.53 billion). Second-quarter EBITDA came in 39 percent up, at MAD7.2 billion ($809 million), versus the year-ago MAD5.17 billion ($523 million).

OCP expects market conditions to remain “very favorable” in the second half of 2021.

“Strong agricultural fundamentals, a balanced supply/demand position, and increased raw materials prices will drive further pricing improvement, particularly in the third quarter ahead of primary application season in most countries,” Terrab said. “Specifically, we expect high demand in the Americas, supported by solid corn and soybean prices and in India, where inventories remain low.”

OCP reported its capital expenditure in the first-half of 2021 totalled MAD4.3 billion ($482 million), 15 percent lower in local currency terms than the year-ago spend of MAD5.09 billion ($520 million).

New Cooperative Hit by Ransomware Attack; Vilsack Calls for Ag Co-ops to “Harden” Defenses

Featured, News, Western Cornbelt

New Cooperative Inc., Fort Dodge, Iowa, was struck by a ransomware attack and had to shut down its computer systems as it tried to mitigate the assault, according to Bloomberg. The attack occurred on or around Friday, Sept. 17, according to Allan Liska, Senior Threat Analyst at the cybersecurity firm Recorded Future Inc. He said the ransomware gang, which goes by the name BlackMatter, is demanding a $5.9 million ransom.

New Cooperative confirmed that they had been attacked and said they had contacted law enforcement and were working with data security experts to investigate and remediate the situation.

“New Cooperative recently identified a cybersecurity incident that is impacting some of our company’s devices and systems,” according to a statement from the cooperative. “Out of an abundance of caution, we have proactively taken our systems offline to contain the threat, and we can confirm it has been successfully contained.”

New Cooperative has communicated with its feed customers and is working to create workarounds to get feed to animals while its systems are down, a person familiar with the matter said. Farmers told Bloomberg that grain delivery, normally a digital process, has gone old school. Workers are using paper tickets to take down truck weight and grain moisture content by hand, slowing down the process considerably.

Agriculture Secretary Tom Vilsack urged U.S. agricultural cooperatives to “harden” defenses against cyber-attacks after the New Cooperative attack. “We want to make sure during this harvest that we don’t have any additional disruptions as a result of systems being hacked,” he said Sept. 22 in a speech to the National Association of State Departments of Agriculture’s annual meeting.

The Cybersecurity and Infrastructure Security Agency and the Federal Bureau of Investigation “are in close contact with New Cooperative and have offered assistance in supporting the company’s response and recovery,” said CISA Executive Assistant Director for Cybersecurity Eric Goldstein. “The company is engaging proactively with CISA as the investigation progresses.”

It is unclear to what extent New Cooperative’s systems have been affected. BlackMatter is believed to be linked to the ransomware group DarkSide, which attacked Colonial Pipeline Inc. earlier this year, triggering fuel shortages along on the East Coast.

According to a post on BlackMatter’s website, the ransomware group has stolen New Cooperative’s financial information, human resources data, research and development information, and source code for its “SoilMap” product, a technology platform for agricultural producers. A message on SoilMap’s website said the product is currently unavailable. The cooperative disabled the platform as a precautionary measure to protect customers from hackers, according to Dow Jones, which also saidBlackMatter claimed to have stolen 1,000 gigabytes of information and gave the cooperative until Sept. 25 to pay the ransom.

In July, President Joe Biden presented Russian President Vladimir Putin with a list of 16 critical infrastructure sectors that should be off-limits to ransomware groups. The list included the “food and agriculture sector.”

BlackMatter sent a message to Bloomberg saying it didn’t believe that New Cooperative constituted critical infrastructure. “The volumes of their production do not correspond to the volume to call them critical,” said BlackMatter. “We don’t see any critical areas of activity. Also this company only works in one state. They will pay or have nothing.”

New Cooperative has over 60 locations in Iowa offering grain, agronomy, energy, and feed products and services. It merged with MaxYield Cooperative, West Bend, Iowa, in August (GM July 9, p. 1).

Fertiglobe to Close $1.1 B Bridge Loan to Refinance Debt, Pay Dividends

ADNOC - Abu Dhabi, Europe, Middle East, News, News Briefs

OCI NV, Amsterdam, has announced its Middle Eastern Fertiglobe joint venture is closing a $1.1 billion bridge financing facility as part of a capital structure reset to refinance debt and pay dividends to the jv’s two shareholders.

OCI currently owns a 58 percent stake in Fertiglobe and Abu Dhabi National Oil Co. (ADNOC) a 48 percent stake, but the two partners are planning to list the joint venture in an initial public offering (IPO), which could come as soon as October (GM Sept. 17, p. 28). Investors could be offered around a 10-15 percent stake in Fertiglobe through the IPO, sources with knowledge of the matter told Bloomberg.

Abu Dhabi-based Fertiglobe will use around $250 million of the bridge loan to refinance existing debt at the company and at EFC, and the remaining $850 million will go to pay a dividend to the jv’s two shareholders, OCI said in a Sept. 20 statement.

The 30-month facility carries an interest rate starting at 1.05 percent over Libor, with a 0.25 percent increase per quarter from the second year of the loan term. In addition, a new five-year, $300 million revolving credit facility will be put in place to provide ample liquidity.

The new capital structure helps OCI optimize its balance sheet further, gives flexibility to lower cash interest, and supports future growth opportunities in clean ammonia and other decarbonization initiatives for OCI as a whole and Fertiglobe, OCI said.

“As this partnership with ADNOC develops, the benefits we anticipated at the time of formation continue to materialize, and Fertiglobe is increasingly becoming the ideal platform to capture the opportunities offered by the hydrogen economy, while benefiting from a strong sustained recovery in nitrogen markets and generate strong cash flows,” said OCI NV CEO Ahmed El-Hoshy.

“The rightsizing of Fertiglobe’s capital structure marks another milestone in the joint venture company’s growth journey since its creation in 2019, unlocking various strategic avenues of growth.”

In addition to the new capital structure, Fertiglobe intends to adopt a semi-annual dividend distribution policy, with first-half dividends to be paid out in October of the same year and the second-half dividend to be paid out in April of the following calendar year, subject to general meeting approval.

Fertiglobe is targeting at least $315 million in dividends for financial year 2022. It also plans a dividend payout of at least $150 million for the period covering the second half of 2021, which will be paid in April 2022. Dividends will be paid in cash.

“Going forward, Fertiglobe intends to maintain a robust dividend policy designed to return to shareholders substantially all of its distributable free cash flow after providing for growth opportunities and while maintaining an investment grade credit profile,” OCI said.

Russia Targets Fertilizer Companies Among Others in Tax Increase Plan

News, News Briefs, Russia

Russia’s Finance Ministry is proposing to increase the multiple that is applied to the base rate of mineral extraction tax (MET) for potash and phosphate fertilizers, Bloomberg reported, citing unnamed sources familiar with the current draft of the proposal.

The Finance Ministry proposes to raise the multiple to 8.75 in 2022 from the current 3.5 coefficient. The coefficient is the multiple that Russian companies are required to pay on top of the base tax rate, and is set annually.

The ministry has sent a draft of the bill to the government for discussion, where it could be modified, according to Russian daily newspaper Vedomosti.

An increase in the mineral extraction tax for potash and phosphate fertilizer producers by 2.5 times is unlikely to have a significant impact on their production, according to Otkritie Broker commodity markets analyst Oksana Lukicheva, cited in the newspaper report. She said fertilizer prices are now quite high and will compensate for the increase in production costs.

Russia’s government also has been looking at how to implement “a floating” mineral extraction tax rate for producers of fertilizers and metals linked to global prices (GM Sept. 3, p. 31).

In another move to increase the fiscal returns from Russian minerals and metals companies, the government is also considering a differentiated profit tax (GM Sept. 17, p. 30).

The profit tax will be higher if the company’s dividend payout over five years exceeds investments for the period, with a link to amortization, according to a Bloomberg report this week. Thus, the profit tax will be higher for companies who prioritize dividend payouts over capital investments.

According to the report, the differentiated profit tax may be applied to all Russian companies, except for state-owned concerns and companies that pay less than RUB5 billion ($68 million) in the five-year period.

A Lot Riding on Australian AN Import Tariffs Appeal Decision, Analyst Says

Ammonium Nitrate, Australia, News, News Briefs, Russia

Australian explosives maker Orica Ltd. would likely be the most affected of the country’s domestic ammonium nitrate (AN) industry players should an appeal fail against the Australian government’s decision not to renew antidumping tariffs on AN imports from the Russian Federation.

Jefferies Group LLC believes the efforts by a joint venture owned by mining giant Glencore and Yancoal to build an emulsion plant in the Hunter Valley in NSW, which would use AN imported from Russia, would present “a material threat” as it would lead to meaningful overcapacity” in the country, according to a Dow Jones report, citing the New York-headquartered investment bank and financial services company.

Jefferies said if the emulsion plant were to be built, it would directly impact the economics of the domestic AN industry, and Orica in particular.

Melbourne-based Orica, Perth-based Wesfarmers Ltd., and others launched an appeal against the government decision announced in June not to renew tariffs (GM June 25, p. 31). Wesfarmers, among other domestic producers, argued that Russian AN continues to benefit from low-cost natural gas subsidized by the Russian government, while Australian producers have been impacted by high domestic natural gas prices.

The antidumping duties have been in place since 2001, but Australia’s Minister for Industry, Science, and Technology Christian Porter signed off on the decision by the country’s Antidumping Commission that removed duties on AN from Russia.

The Commission had said it was not satisfied that the expiration of the measures would likely lead to any exports of Russian AN being exported to Australia at dumped prices. However, it did add that lower-priced AN would likely affect spot sales, which it said account for only five percent of the Australian AN market. It said it also accepted that low-priced imports would have some price effect on the contract examples provided by producer Orica Australia.

A decision on the appeal is due no later than Oct. 22.

Strike Expects to Nail Down Term Sheets for Urea Project in 4Q; Completes Pre-Feed

Australia, News, News Briefs

Thebarton, South Australia-based Strike Energy Ltd. said it expects to progress and formalize a binding term sheet for the entire 1.4 million mt/y production volume at its proposed Project Haber granular plant adjacent to Geraldton Port, Western Australia, in the final quarter of this year.

Strike on Sept. 20 said it is in negotiations with its short-listed offtake partners. It drew up the short list of parties after closing the second round of its urea offtake process in early August (GM Aug. 6, p. 38). According to the company, it had received some 4.75 mt/y of firm proposals with attractive pricing formulas, with the offers up to 15 years in length.

The Australian company this week also reported it has completed the Pre-Feed study for Project Haber. The Pre-Feed work began in April (GM April 16, p. 1). Pre-Feed capital estimates put the base cost estimate for the project at US$1.64 billion, which includes the engineering, procurement, and construction of the Haber urea plant and an 800,000 mt/y ammonia plant delivered on site.

This estimate is a 6 percent reduction on the expected capital cost compared to the original estimate by French engineering firm Technip Energies’ feasibility report completed in January 2021 (GM Jan. 15, p. 1).

Strike said it will now progress FEED early works scopes, which include geotechnical and environmental surveys and impact assessments, among other activities, and expects to conclude these in the fourth quarter of this year. The company then will look to formally enter FEED at Project Haber, which it expects to last less than one year and provide sufficient engineering and definition to award an EPC contract to an appropriate contractor at Final Investment Decision.

OCP, Ethiopia Advance JV Fertilizer Project

Africa, Featured, Morocco, News

OCP SA, Casablanca, and Ethiopia have signed an agreement for a $6.1 billion joint fertilizer project in Dire Dawa in eastern Ethiopia, according to the state-owned Ethiopian News Agency, citing Ethiopia’s Ministry of Finance.The two parties first proposed a joint-fertilizer project back in 2016 (GM Nov. 23, 2016), and at one point had hoped to start construction in 2020 (GM July 12, 2019).

The initial proposed investment is put at some $2.4 billion, and includes a capacity of 2.5 million mt, primarily for the production of urea and NPS products. Natural gas is readily available in the Dire Dawa region, and the project will also benefit from the region’s other established local facilities, including power plants and underground water resources.

OCP in turn will provide imported phosphoric and sulfuric acid and potash for the project.

The Joint Development Agreement was inked in Morocco on Sept. 18, and is based on feasibility, conceptual, environmental and social impact, and hydro and geotechnical studies that have been concluded, according to the report, citing Ethiopia’s Finance Ministry.

A proposed $3.7 billion second phase of the project could take production capacity at the proposed plant to 3.8 million mt/y.

The project is aimed at reducing Ethiopia’s fertilizer import bill, which is expected to reach some $1 billion next year, according to the report, and help strengthen the country’s food security. The country currently imports all of its fertilizer requirements, with demand variously put at between 1.2-1.5 million mt/y and rising.

Uralchem Plans Nigeria Office, Future Plant

News, News Briefs, Nigeria, Russia, Urea

Uralchem JSC, Moscow, said it is preparing to open a representative office in Nigeria in the near future, and is also looking to build a plant in the West African country at some point in the future.

Plans for the development of cooperation between Russia and Nigeria were discussed in Moscow this week at a meeting of the Russian Chamber of Commerce and Industry, attended by Uralchem JSC Chairman Dmitry Konyaev, Chamber President Sergey Katyrin, and Nigeria’s Ambassador to Russia Abdullah Y. Shehu.

Uralchem’s Chairman said the Nigerian agricultural market has “great potential” for the supply of fertilizers. The country’s agriculture needs to meet the ever-growing demand for food, for which it must use modern fertilizers and advanced technologies, he said.

The Russian company has previously shown its interest to beef up connections in Africa. In 2019, the company reported it was mulling a 1 million mt/y urea production project in Angola (GM March 29, 2019) and the previous year had talked about its ambitions to establish a Russian hub in Zimbabwe, and possibly also in Zambia, in possible cooperation with Uralkali, for the direct supply of mineral fertilizers to the two African nations and potentially their neighbors (GM Feb. 9, 2018).