All posts by mickeybarb@charter.net

Argentina’s Potash Mine Revival Plans Draws Interest from Major Producers

Argentina, Featured, News, Potash

Argentina’s Mendoza province is reported to be in talks with some of the world’s top fertilizer producers to revive its stalled Rio Colorado potash project.

Province officials have spoken to several would-be partners to get the half-completed Rio Colorado into production, and have inked non-disclosure agreements with five of the biggest potash producers, according to a Bloomberg report, citing the Director General of the now Mendoza province-owned PRC SA, Emilio Guinazau.

Mendoza wants to find an investor that would take a majority stake and get the mine operating within 18 months. According to the report, citing Mendoza Governor Rodolfo Suarez on Twitter, the province recently called for bids from banks to advise it in its search.

Mendoza took over the project last year after Brazil’s Vale SA completed the handover of the asset to the provincial government, after years of wrangling between the two parties. Vale had pulled the plug on the Rio Colorado potash project in 2013 after spending some $2.2 billion to build almost half the mine (GM Jan. 28, 2013). It acquired the potash project in February 2009 from Rio Tinto Plc (GM Feb. 9, 2009).

The original plans for the project envisaged an initial 2.1 million mt/y capacity, with a second phase increasing that to 4.35 million mt/y, as well as the construction of a railway spur of 350 km to transport the potash to Argentina’s Bahia Blanca port.

However, according to this week’s Bloomberg report, citing Guinazau, a more likely scenario for the project would be for an annual output of 1 million mt, which could be transported by truck. This scenario would need an investment of some $1 billion, he said.

According to the Bloomberg report, Mendoza is prepared to scale down the project still further, simply to get it operational. According to Guinazau, an investment of $200 million would produce enough potash for the Argentinian market and nearby neighbor Uruguay.

Vale also looked at scaling down the potash project. Under the terms of a deal with Mendoza province in September 2016, which gave the Brazilian mining major six months to re-engineer the project, Vale in late 2016 hired Canadian engineering company Hatch to conduct a new prefeasibility study on the project, aimed at scaling down the development. The new proposal also included potentially abandoning the plan for the rail line to Bahia Blanca, and using trucks to transport the potash (GM Jan. 9, 2017).

Argentina has struggled to attract new mine investment to the country in recent years due to stiff environmental opposition to new mining development and onerous business rules, including capital controls, which have scared off potential investors.

However, Guinazau believes “a window of opportunity” has begun to open because potash prices are rallying along with other fertilizers on the back of strong demand from farmers and a raft of supply disruptions, according to the Bloomberg report.

Bolivia’s Bulo Bulo Plant Restarts, Targeting 590,000 Mt Output

Ammonia, Featured, News, Nitrogen, South America, Urea

Bolivia’s Bulo Bulo ammonia and urea plant restarted production on Sept. 6 after an almost 22-month hiatus. The plant is targeted to produce 44,000 mt of urea this month, according to a BNAmericas report, citing the plant’s operator, state-run oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos (YPFB).

YPFB’s Industrialization Manager Henry Lapaca reported that the Bulo Bulo facility, located in Bolivia’s central Cochabamba province, is producing 1,470 mt/d of urea, and is working at a 70 percent capacity utilization.

The oil and gas company estimates the plant will produce 590,000 mt of urea by September next year, according to a separate BNAmericas report this week.

Bulo Bulo is Bolivia’s only nitrogen fertilizer production facility. It has a nameplate capacity of 2,100 mt/d of granular urea.

According to the initial BNAmericas report, citing YPFB’s Manager of Derived and Industrialized Products Gabriela Delgadillo, of the September output, around 7 percent will go to the domestic market, while the balance will go to foreign markets.

Bulo Bulo urea has previously been exported to five countries, including Brazil, Argentina, Paraguay, Peru, and Uruguay. Delgadillo said the company is working to recover from “the loss of credibility” in markets given the length of time production has been stopped. However, the executive said some 10,000 mt of urea already is awarded to the Brazilian market, and the contract for the sale – with a previous Brazilian customer – is in the process of being signed.

Bolivia exported 305,040 mt of urea in 2019 and 21,769 mt in 2020, according to Trade Data Monitor statistics. The 2020 export volumes are understood to have come from inventory.

In the domestic market, before the plant stoppage, YPFB had succeeded in replacing imports of urea, but now faces the challenge of displacing those imports, according to the report, citing Delgadillo. He estimates the sale of up 150,000 mt of urea from Bulo Bulo during the remainder of 2021. Of that volume, around 125,000 mt is targeted for export sale, while the balance will go to the domestic market.

As noted earlier, in the 12 months to September 2022, YPFB is targeting to produce 590,000 mt of urea. Of the targeted output, some 46,000 mt is expected to be sold domestically, while about 544,000 mt will be exported. Brazil is expected to be the recipient of over 70 percent of the export volume and Argentina around 23 percent, with the remaining volume expected to be sold to Paraguay and Peru, according to the company’s plans.

The Bulo Bulo plant began operations in September 2017, but has suffered a series of operational problems since start-up.

This latest production stoppage – arguably the most serious and far-reaching – began in November 2019 (GM Jan. 31, 2020). According to comments in March 2021 by YPFB Executive President Wilson Zelaya, the shutdown of operations at the plant was not done according to proper procedures, and resulted in some damage to equipment. He said an adequate hibernation of the plant was not undertaken, nor was proper maintenance performed during the 12 months and more to date of its shutdown (GM March 26, p. 35).

Many blamed the alleged use of unqualified personnel for the damage at the plant amid the country’s political crisis in November 2019, which saw the resignation of controversial President Evo Morales and the assumption to the presidential role of Jeanine Áñequalz Chávez, which also was not without controversy.

After a landslide win for the Movement for Socialism the following year and the installment of new President Luis Alberto Arce Catacora on Nov. 8, 2020, work began on rehabilitating and reactivating the Bulo Bulo plant.

A probe at government level was launched in March into the alleged mishandling of the Bulo Bulo facility. However, little has been heard about its findings to date. According to the BNAmericas report this week, “the economic injury” to the Bolivian state exceeds $428 million.

California Firm Buys Nebraska Ammonia Plant

Ammonia, California, Featured, News, Western Cornbelt

Rocky Mountain Resources (RMR), Beverly Hills, Calif., on Sept. 7, using the tradename Nebraska Nitrogen, announced the acquisition of Fortigen Geneva LLC’s 36,000 st/y ammonia plant. Fortigen Geneva was owned by Fortigen LLC, which in turn was owned by Tetrad Corp., Omaha.

“Domestic nitrogen facilities are fortress assets; this chemical business intersects strategically with our industrial complex throughout the West,” said Chad Brownstein, Chairman of both Nebraska Nitrogen and RMR. “The Nebraska Nitrogen team is positioned to manage a profit-driven operation from today forward. We are fortunate to acquire a significant capital asset at this point in the commodity cycle.”

“We are dedicated to supporting the regional farming community,” said Heidi Kelly, Chief Operating Officer. “Nebraska Nitrogen is focused on implementing operational improvements on a daily basis that will maintain production reliability. We have enacted measures commensurate with our culture of performance excellence, dedicated to safety first.”

The terms of the deal were not revealed, however, RMR told the Lincoln Journal Star that the plant was valued at $130 million. At commissioning in 2017, the plant was valued at $75 million (GM June 2, 2017) and took up some 20 acres, with a total of 120 for future expansion. In addition to production, the complex included a 20,000 st storage unit.

Also in 2017, total production from the plant was to go to Farmers Cooperative, Dorchester, Neb. Neither the cooperative nor RMR responded to inquiries this week, though RMR said the plant serves farmers of the Western Cornbelt.

From its website, RMR appears to be involved in several diverse businesses, including a Colorado rail center and limestone quarry; an Alaska cold storage facility; Western Meadowlark Energy, with oil and natural gas production and acreage in Colorado, Wyoming, and Montana; and investment in Varo Bank, an all-digital nationally chartered bank. Company principals were reported to have partnered in renewable assets, with historical assets including fruit date, almond, and alfalfa farms, water sources, and associated storage.

Brazil’s Regulator Okays Yara-EuroChem Salitre Deal

Brazil, Europe, Featured, News, Phosphate

Brazil’s Administrative Council for Economic Defense (CADE), the antitrust regulator, has given the green light for the Yara International ASA-EuroChem Group AG deal for the Serra do Salitre phosphate project. CADE approved the deal without restrictions, according to a Bloomberg report on Sept. 6, citing the Official Gazette and CADE’s website.

Yara and EuroChem announced in early August that they had signed a Share Purchase Agreement for EuroChem to buy Yara’s Serra do Salitre phosphate project in Brazil’s southeastern Minas Gerais state for a cash consideration of US$410 million, subject to final purchase price adjustments (GM Aug. 6, p. 1).

The Serra do Salitre assets comprise phosphate mining operations at an open pit, including a tailings dam, with an annual production capacity of approximately 1.2 million mt/y of phosphate rock, and an ongoing project to construct phosphate fertilizer operations with a projected production capacity of approximately 1.0 million mt/y at completion.

According to EuroChem, the phosphate fertilizer plant is 50 percent complete and is expected to come on stream in 2023, reaching full capacity in 2024. The plant will have capacity to produce MAP/NP and SSP/TSP products.

EuroChem said the acquisition will strengthen its production and distribution capabilities in one of the world’s most important crop nutrient markets, and will allow the group to reduce its dependency on third-party phosphate supplies.

Yara said the Salitre divestment supports Yara’s transformation by reallocating capital and risk appetite in the coming years towards Yara’s strategic focus areas.

Perdaman Urea Plant Recommended for Environmental Approval

Australia, News, News Briefs, Urea

Western Australia’s Environmental Protection Authority (EPA) has recommended for environmental approval Perdaman Chemicals and Fertilisers Pty Ltd.’s proposal to construct and operate a urea plant within the Burrup Strategic Industrial Area, subject to conditions including air quality.

The $4.5 billion Perdaman urea project is located about 20 km northwest of Karratha and proposes to produce some 2.14 million mt/y of granular urea.

EPA Chair Professor Matthew Tonts said EPA’s conditions reflected the authority’s commitment to ensuring the projection of the Murujuga Peninsula’s unique environmental values, including the nearby rock art, according to an EPA statement on Sept. 6.

Tonts said the project proponent will need to demonstrate that the project has no adverse impact that accelerates the weathering of the rock art. The Murujuga petroglyphs had deep meaning for the Traditional Owners and were recognized as having immense state, national, and international significance.

Perdaman currently is targeting first production in the fourth quarter of 2025 (GM May 7, p. 1).

Tonts said EPA believes there is sufficient time before Perdaman operations begin for monitoring associated with the Murujuga Rock Art Strategy to be undertaken to develop detailed air quality standards that ensure this level of protection.

EPA’s report to the Minister for Environment is now open for a two-week public appeal period, closing Sept. 20.

Perdaman in May signed a 20-year offtake deal with Incitec Fertilizers Pty Ltd., a wholly-owned subsidiary of Incitec Pivot Ltd. (IPL), for up to 2.3 million mt/y of granular urea from the proposed plant.

Uralchem, Uralkali No Plans for IPO to Cut Debt, CFO Says

News, News Briefs, Russia

PJSC Uralkali and JSC Uralchem have no plans for an initial public offering (IPO) as a way to cut debt, Bloomberg reported on Sept. 7, citing Uralchem CFO and Deputy CEO Igor Bulantsev, who was speaking with reporters in Moscow.

Industry multiples would not make an IPO an attractive move, the CFO said.

According to the report, Bulantsev stressed the group’s (Uralchem and Uralkali combined) debt is not an issue, although there is still a target to reduce it. Favorable fertilizer market conditions should help the group’s 2021 EBITDA exceed $3 billion, while net debt should decline to below $10 billion, he said.

According to the CFO, the group’s consolidated first-half 2021 EBITDA was $1.16 billion, and net debt as of end-June was $10.7 billion.

Uralkali separately reported a first-half IFRS EBITDA of $748 million, while its net debt as of June 30, 2021, stood at $4.488 billion (June 30, 2020: $4.634 billion), according to its financial statements published in late August (GM Sept. 3, p. 25).

Uralchem, via its majority owner Dmitry Mazepin, has owned 81.47 percent of Uralkali since the end of November 2020 (GM Dec. 4, 2020). The balance shareholding in Uralkali is a quasi-treasury stake, so the potash company is effectively fully controlled by Uralchem and is fully consolidated by Uralchem. Mazepin is also Uralkali’s Co-Deputy Chairman.

Morocco Okays OCP JV in Romania

Eastern Europe, Morocco, News, News Briefs

Morocco’s government has given its approval for OCP SA’s fertilizer joint venture with Abu Dhabi-based Al Dahra Agriculture LLC in Romania.

OCP and Al Dahra will each hold a 50 percent stake in the new firm’s $5 million capital, plans for which were revealed in January 2020 (GM Jan. 24, p. 20).

The new company, named South East European Fertilizer Co. (SEEFCO), aims to extend the Moroccan fertilizer group’s activities in Romania, but also will use the country as a hub to expand into Central Europe and Eastern Europe, including Hungary, Serbia, Bulgaria, and Ukraine, for the distribution and sale of fertilizers.

Romania’s Competition Council gave the green light in July last year for setting up the joint venture company (GM July 24, p. 20).

However, it is not clear if Bulgaria’s Commission for Protection of Competition (CPC) has given its okay. OCP and Al Dahra were reported in late July to be seeking CPC approval to set up the jv.

The establishment of the jv could affect the Bulgarian market for the distribution of fertilizers, according to a SeeNews report, citing Bulgaria’s CPC.

OCP currently sells phosphate rock and fertilizers directly from Morocco to wholesalers in Bulgaria. Al Dahra is not active on the Bulgarian market.

PhosAgro Welcomes E.U. Decision to Further Cut Cadmium in Foodstuffs

Europe, News, News Briefs, Russia

PhosAgro, Moscow, said it welcomes the decision by the European Commission (E.C.) to further reduce cadmium limits in a range of foodstuffs in the European Union (E.U.).

The E.U. on Aug. 10 amended its 1881/2006 regulation that set maximum levels of cadmium in a range of foodstuffs, reducing by at least half the previously established maximum level. The expanded list of food products affected by the new restriction on cadmium content includes 66 items, and came into effect at the end of August.

The listed foodstuffs include baby formula and baby food, fruit and vegetables, nuts and fungi, pulses and seeds, cereals, chocolate and cocoa products, meat and fish, salt, and certain food supplements

The Commission made the decision to amend the original regulation following an analysis of the long-term data on cadmium content in food products in the E.U., as well as the accumulating data pointing to the negative impact of cadmium on health.

In its Official Journal, the E.C. referred to the conclusion of the European Food Safety Authority (EFSA) that cadmium accumulates in the body over time and is primarily toxic to the kidneys.

Under the original regulation, the Commission had established a tolerable weekly intake for cadmium of 2.5 μg/kg body weight. However, in its latest analysis, referring to the EFSA findings, it concluded that the mean exposure for adults across the E.U. is close to, or slightly exceeds, the tolerable weekly intake. It further concluded that subgroups, such as children and people living in highly contaminated areas, may exceed the tolerable weekly intake by about two-fold.

The E.C. said foodstuffs that do not comply with the new maximum cadmium levels that were placed on the E.U. market before the new regulation came into force may remain on the market until Feb. 28, 2022.

PhosAgro said it was pleased to see the global community and the agricultural industry paying increasing attention to issues of food security and human health protection.

“Our fertilizers easily meet the most stringent environmental and quality requirements for applying the E.U. green label,” said PhosAgro in a Sept. 6 statement. “This enables European agricultural producers to make an informed choice in favor of eco-efficient mineral fertilizers so that the crops they grow and the food they produce are safe for consumers.”

PhosAgro developed its own Green Label for its fertilizers, whereby the cadmium content – it states – is less than 5 mg/kg P2O5.

The E.U. Council in May 2019 adopted new rules for placing fertilizer products on the E.U. market (GM May 24, 2019). The new rules include obligatory maximum contaminant levels, including a maximum limit for cadmium content of 60 mg/kg P2O5. A review clause requires the Commission to review the limit values, with a view to assessing the feasibility of reducing them, four years after the date of application of the new rules (i.e., seven years after their entry into force). The new fertilizer regulation, which replaces the previous 2003 fertilizer regulation, comes into force on July 16, 2022.

While the new rules will not apply to imported raw materials such as phosphate rock, without a specific decadmiation treatment the final fertilizer product retains most of the original cadmium content of the rock feedstock.

PhosAgro and other Russian fertilizer producers that mine their own phosphate rock supply benefit from the natural low cadmium content of Russia’s igneous phosphate rocks.

ICL Secures €250 M Sustainability Linked Loan

Israel, News, News Briefs

ICL Group Ltd., Tel Aviv, said it has agreed a new €250 million (approximately $296 million at current exchange rates) sustainability linked loan (SLL) agreement with a five-year term, that includes three sustainability performance targets.

As part of the SLL agreement, ICL is targeting an annual 4-5 percent reduction in direct and indirect Scope 1 and Scope 2 CO2e emissions resulting from the group’s global operations. It said third-party monitoring will begin this year.

The Israeli group is also planning to expand its participation in “Together for Sustainability” (TfS), a global initiative dedicated to developing and implementing a global supplier engagement program that assesses and improves sustainability sourcing practices. ICL said it is committed to adding “a significant number” of TfS-qualified vendors each year through 2025.

ICL additionally will continue to focus on inclusion, equality, and expanding the representation of women among its senior management, executive, and board of director roles. As part of the SLL, the group has set a target for women to hold at least 25 percent of senior management roles by the end of 2024, compared with 19 percent in 2021.

The loan runs through 2026 and carries a fixed annual interest rate of 0.8 percent, and has been secured with a group of five leading global lenders.

Acron Board Recommends Dividend Amount

News, News Briefs, Russia

Moscow’s Acron Group Board on Sept. 7 recommended a dividend payment in cash of RUB30 (approximately $0.409 at current exchange rates) per share from retained earnings – a total allocation of RUB1.103 billion.

The dividend payment will be put up for approval by shareholders at an extraordinary general meeting to be held as an absentee vote on Sept. 29.

Acron Group last month reported a first-half net profit of RUB26.68 billion, up from the year-ago loss of RUB986 million (GM Aug. 27, p. 26). In U.S. dollar equivalent, first-half 2021 net profit was $400 million.