All posts by mickeybarb@charter.net

Ostara, Taurus Ag Ink New Long-Term Agreement for Western Canada

Alberta, News, News Briefs, Specialty, Western Cornbelt

Phosphate producer Ostara, Richmond Heights, Mo., and Taurus Agricultural Marketing, Calgary, Alta., a Canadian distributor of agricultural products, announced on April 27 a new long-term partnership in which Taurus Ag will exclusively distribute Ostara’s Crystal Green® and Crystal Green Synchro™ 50 fertilizers into Western Canada.

“Taurus Ag and Ostara share a commitment to bringing proven, sustainable, and more efficient innovative products to the market,” said Ron Restum, Ostara Chief Commercial Officer. “We have successfully partnered with Taurus Ag the past several years, and our new long-term partnership is focused on jointly supplying Western Canada with significantly more tonnes of Crystal Green fertilizers.”

“Over the years we learned that Crystal Green fertilizers fit our marketplace agronomically and economically on a high percentage of farmland in Canada,” said Craig Davidson, Taurus Ag President. “Today, progressive growers have used these technologies successfully on millions of acres, and we fully expect that will scale immensely in the coming years with additional production coming from Ostara’s new facility in St. Louis.”

Davidson noted that Crystal Green fertilizers have already been used in North America and Europe for many years with great success, and that Taurus Ag is excited to bring significantly more product to farms in Western Canada.

Crystal Green (5-28-0 with 10%Mg) is a sustainable, granular phosphate fertilizer and Crystal Green Synchro 50 (5-40-0 with 5%Mg) is a fully homogeneous phosphate fertilizer replicating a 50:50 physical blend of Crystal Green and MAP.

Major 1Q Results Expected to Drop from Year-Ago Levels, Easily Exceed 1Q-21

Eastern Cornbelt, Featured, News, Saskatchewan, Tampa

The intense fertilizer price volatility of first-quarter 2022, which included the start of the Russia-Ukraine War, has long abated and has given way to much lower prices in the fertilizer industry for first-quarter 2023, with that downturn reflected in the Bloomberg Consensus, the average estimate of major analysts.

While CF Industries Holdings Inc., The Mosaic Co., and Nutrien Ltd. are all expected to post much lower results for first-quarter 2023 than for the same quarter in 2022, their performance will still far exceed first-quarter 2021.

CF’s first-quarter results are to be released May 1, Mosaic’s on May 3, and Nutrien’s on May 11.

CF 1Q-23* 1Q-22 1Q-21
Adj. EBITDA .867 1.65 .398
Revenues 1.87 2.9 1.05
Net Income .477 .883 .151
Mosaic 1Q-23* 1Q-22 1Q-21
Adj. EBITDA .805 1.45 .560
Revenues 3.24 3.9 2.3
Net Income .435 1.18 .157
Nutrien 1Q-23* 1Q-22 1Q-21
Adj. EBITDA 1.69 2.6 .806
Revenues 6.4 7.7 4.6
Net Income .833 1.4 .133

*Bloomberg Consensus; Financials in billions.

Andersons-Related Ethanol Plant Placed into Receivership

News, News Briefs

The Andersons Inc. on April 21 announced that on April 18, ELEMENT LLC, a joint venture with ICM Inc., in which The Andersons is a 51% owner, was placed into receivership pursuant to the Agreed Order Granting Application for Appointment of Receiver.

The ELEMENT ethanol plant, located in Colwich, Kan., is currently in an extended maintenance shutdown, and future operating decisions will be made by the court-appointed receiver.

The plant, which opened in 2019, has faced operational and market-based challenges, according to The Andersons, which said these have been exacerbated by a shift in the California Low Carbon Fuel Standard credit markets and high western corn basis. As previously disclosed, these challenging conditions led to the failure by ELEMENT to make a required debt payment and receipt of a default notice in February 2023.

This debt of ELEMENT is non-recourse to the company. The company expects to record a non-cash pretax impairment charge on long-lived assets related to ELEMENT of approximately $85-$95 million, 51% of which will be attributable to the company. This range is preliminary, and will be finalized as part of the company’s ongoing normal quarterly close process.

The Andersons said these events are not expected to impact the company’s previously communicated long-term EBITDA target.

Yara, Germany’s VNG Sign Clean Ammonia Cooperation Agreement

Ammonia, Germany, Hydrogen, News, News Briefs, Norway

Yara Clean Ammonia (YCA) and VNG, a Leipzig-based gas company, announced on April 24 they plan a close collaboration in the field of clean ammonia that will actively support the ambitious implementation plans outlined in the German Hydrogen Strategy.

Ulf Heitmüller, VNG CEO, and Magnus Ankarstrand, YCA President, on April 24 signed an official cooperation agreement at the Yara plant in Poppendorf, near Rostock. It is a first step toward a future supply agreement between both parties and can eventually enable further projects to facilitate clean ammonia as a hydrogen and energy carrier into the German market, with Rostock as point of import.

Clean ammonia can be supplied from Yara to VNG, with the hydrogen and ammonia infrastructure in the Rostock plant used and with possible further development.

In line with its strategy “VNG 2030,” VNG wants to implement the transformation from today’s natural gas to renewable gases such as biogas or hydrogen, which also includes their storage and transport. It said the collaboration between both parties will strengthen its efforts to make clean hydrogen available to customers in the industry and the power sector in Germany.

In addition, both parties wish to intensify and develop the collaboration with the city of Rostock, and specifically Rostock port, to turn the port into a hub for clean ammonia imports. They said a perfect starting point is Yara’s expertise and existing and potentially extendable infrastructure, as well as the proximity to the extensive pipeline network of ONTRAS Gastransport GmbH, a subsidiary of VNG.

They said the collaboration would significantly promote and facilitate the ongoing work related to “Green Port Rostock” expanding capacity, initiating new industry activities connected to clean ammonia and hydrogen, and thus contributing to the development of the city and port of Rostock, the surrounding region, and the Federal State of Mecklenburg-Western Pomerania.

“The German Energiewende and the Hydrogen Strategy makes Germany a CenterPoint for development and implementation of the low carbon hydrogen and ammonia value chains,” said YCA’s Ankarstrand. “Yara is already well positioned to take part in this development with our import terminals in Rostock and Brunsbüttel, and we see the collaboration with VNG as a very important step to help developing the low carbon hydrogen value chains in Germany.”

Itafos Receives Green Light on Mine Development

Featured, News, Pacific N.W., Phosphate

Itafos Inc. on April 24 announced the Record of Decision for the Husky 1/North Dry Ridge (H1/NDR) mine development project, which will allow the company to work to continue to serve the North American fertilizer market through 2037. The company plans to break ground on the project this summer.

Itafos expects mineral resources from the mine in 2026, which will provide an uninterrupted supply as the Rasmussen Valley Mine reaches the end of its useful life. The company said the project will be internally funded.

“The Itafos team has taken several steps to unlock stakeholder value, including reducing leverage, extending debt maturities, and establishing an industry leading safety culture,” said David Delaney, Itafos CEO. “The Record of Decision is another important step toward achieving our strategic goal of extending Conda’s mine life with H1/NDR. This supports over five hundred jobs in southeast Idaho, where we mine and manufacture phosphate ore and fertilizers in support of North American agriculture.

“Itafos, and the Conda community, would like to thank the Bureau of Land Management, the US Forest Service, and all the other regulatory agencies for their diligent and collaborative work on this project,” he added. “The permit will allow us to work to continue to serve the North American fertilizer market through 2037, with potential to further extend the resource life through leases and third-party arrangements. Itafos is excited about this next chapter, and will begin breaking ground this summer.”

Borealis AG – Management Brief

Austria, Management Briefs

Vienna-based Borealis AG reported that its Chief Financial Officer (CFO), Mark J.S. Tonkens, will leave the Executive Board by mutual agreement, effective May 31.

The Board appointed Daniel Turnheim, 48, as Borealis’ new CFO, as of June 1. The appointment spans a three-year period, with the option to extend by two years, subject to mutual consent.

Turnheim, an Austrian citizen, has had a long-standing career in Austrian oil and gas and petrochemicals group OMV AG, which owns a 75% controlling stake in Borealis. Since joining the OMV group in 2002, Turnheim has held various senior management functions in OMV Finance. He is currently Senior Vice President Finance & Tax at OMV AG.

Perdaman Breaks Ground on Burrup Urea Plant, Agrees to Deal for Equity Stake

Australia, Featured, News, Urea

A ground-breaking ceremony was held on April 26 marking the start of construction of the long planned Perdaman Fertilisers and Chemicals Pty Ltd.’s 2.3 million mt/y granular urea plant some 20 kilometers north of Karratha on Western Australia’s Burrup Peninsula.

On completion – expected by mid-2027 – the plant will provide Incitec Pivot Fertilisers Ltd. (IPF) with a secure, long-term supply of Australian urea.

The event followed last Friday’s reveal by IPF’s parent company, Incitec Pivot Ltd. (IPL), that Perdaman had finally achieved financial close for the A$6 billion (approximately $3.96 billion at current exchange rates) project (GM April 21, p. 1), pre-empting the official announcement by the junior producer itself.

In an April 26 statement, Perdaman revealed that to achieve financial close it had agreed to a strategic equity investment in the project of “over A$2.1 billion” with the US-based Global Infrastructure Partners (GIP) in return for GIP taking a 49% interest in the urea development. Perdaman did not disclose the terms of the deal with GIP.

The junior producer said the remainder of the funding is being provided by “a strong group of debt providers,” as well as the previously announced loans by Northern Australia Infrastructure Facility (NAIF) and Export Finance Australia (EFA). NAIF is providing a A$220 million loan (GM Oct. 7, 2022) and EFA Export Finance Australia will provide a A$269 million loan to the project.

NAIF has also committed another A$255 million toward key infrastructure servicing the project, namely A$160 million to the Pilbara Ports Authority for a new multi-user wharf and facilities at the Port of Dampier, and A$95 million to the Western Australia Water Corp. for the expansion of the Burrup seawater supply and brine disposal scheme (GM Feb. 11, 2022).

The Engineering, Procurement, and Construction (EPC) contractors for the Karratha plant, Italian firms Saipem SpA and Webuild Group SpA (who took over from the liquidated Australian firm Clough), confirmed on April 21 they had reached full contractual effectiveness by the achievement of the commencement date for the development of the project.

The two contractors, in an equally shared (50/50) joint venture, reached an agreement with Perdaman in May last year to revise the contract price to US$2.7 billion, a 12.5% increase on the original contract price. The upward revision reflected changes in market conditions and logistical challenges faced in recent times, and provided for further risk and reward provisions to afford flexibility to manage any potential further deterioration in market conditions (GM June 3, 2022).

The plant will incorporate Topsøe’s SynCOR ammonia technology and Saipem’s proprietary Snamprogetti urea technology to produce urea.

In an ASX statement last Friday, IPL confirmed the previously announced 20-year offtake agreement of 2.3 million mt/y of granular urea from Perdaman’s Karratha plant, stating that the offtake agreement is “unconditional” now that Perdaman has obtained financing for construction of the new plant.

The Karratha plant will utilize natural gas feedstock from Woodside Energy’s under-development Scarborough Gas project. The finalization of a 20-year agreement to supply 130 terajoules per day once the plant is commissioned was also announced on April 26.

However, there are concerns that industrial pollution from the Perdaman plant could accelerate the weathering of nearby World Heritage indigenous rock art. Murujuga traditional custodians, representing the five traditional owners of the land in Western Australia, have been campaigning against the project because they fear it will damage the sacred rock art.

The Western Australian Environmental Protection Authority concluded that “there may be a threat of serious or irreversible damage” to the rock art from the plant’s emissions, such as nitrous oxides, Australia’s Sydney Morning Herald reported.

According to a report by Australia’s The Age newspaper last year, the Perdaman plant initially will emit 650,000 mt of greenhouse gases a year (GM Oct. 7, 2022).

The Western Australian government, however, gave environmental approval to the plant on the condition that Perdaman commits to a gradual reduction in emissions and makes the urea plant net carbon zero by 2050.

In its April 26 statement, Perdaman said the plant has been designed to “minimize both industrial emissions and the carbon footprint of fertilizer production.” The company said it is implementing global best practices at the facility with respect to greenhouse gas emissions.

As part of its efforts to decarbonize its urea project, Perdaman plans to construct a 100 MW solar power facility and associated transmission infrastructure at the Maitland Strategic Industrial Area, some 24 km west of Karratha. Land has been allocated by the Western Australian government in the industrial area for the project, the company said on April 26.

The junior producer said the construction of the Karratha plant would generate an average of 2,000 jobs over four years, and the plant, when operational, will employ 200 people.

The urea offtake agreement with IPL will start from the date the new urea facility is fully commissioned, and firms up on an offtake deal signed between IPL’s wholly owned subsidiary, Incitec Fertilizers Pty Ltd. (IPF), and Perdaman in May 2021, which was subject to certain conditions precedent, including financial closing (GM May 7, 2021).

IPL expects up to 50% of the urea to be marketed within Australia, including through IPF’s existing East Coast Australian distribution business, with the remainder marketed to key international export destinations.

Australia last year imported some 2.8 million mt of urea, a similar total to the previous year, and up from 2.4 million mt in 2020, according to Trade Data Monitor.

According to Minister for Resources and Northern Australia Madeleine King MP back in September last year, Australia currently imports around 2.4 million mt/y of urea for agricultural use.

IPL was Australia’s sole urea producer, but ceased production at its only urea plant – at Gibson Island, Brisbane – around the end of last year after it had unable to secure “an economically viable” long-term gas supply to its plant beyond the prevailing supply contract. The plant had urea production capacity of 340,000 mt/y, according to Green Markets data.

Perdaman’s Karratha plant is also expected to produce the diesel emissions reduction additive AdBlue, which was in short supply in Australia in late 2021 (GM Dec. 17, 2021; Dec. 10, 2021).

Teck Split Falters, Glencore Takeover Attempt Continues, Politicians Weigh In

Canada, Europe, Featured, News

Canadian commodity giant Teck Resources Ltd., Vancouver, which is known for its metals and coal, and to a much lesser extent ammonium sulfate and sulfuric acid, spent four years deciding what to do with its sprawling coal business, as was noted by a Bloomberg report. In roughly the same amount of hours, everything came crashing down on April 26.

Teck asked shareholders to approve a plan splitting the business in half: one producing metals, the other coal. But just three weeks before the vote, another commodity giant, Swiss-based Glencore Plc, emerged, offering a $23 billion takeover along with its own version of a coal and metal split.

Glencore’s aggressive lobbying was enough to sway investors against Teck’s proposal, and the Vancouver-based company pulled the vote before Wednesday’s planned shareholder meeting.

Now Teck must go back to the drawing board.

Teck continues to rebuff Glencore’s approaches, with CEO Jonathan Price saying it was the wrong offer at the wrong time. Instead, Teck will come up with a better plan for separating the businesses, he said.

While Teck previously moved at its own pace – rejecting ideas such as a spinoff or selling a stake in the coal unit – this time it must find a Plan B with Glencore, perhaps the industry’s most aggressive deal maker, circling in the water.

Glencore said on April 27 its offer remains on the table, and it would improve the bid if Teck agrees to engage. But the Swiss company also reiterated the alternative: going straight to Teck’s shareholders.

Any attempt to circumvent the board would face significant hurdles without support from Teck’s founding family, the Keevils, who have a blocking vote because they dominate the company’s “supervoting” Class A shares.

Glencore is betting that Teck’s shareholders will apply enough pressure to the board that Price will be forced back to the negotiating table.

That means the clock is ticking for Teck to come up with a plan more appealing than Glencore’s paper and cash.

Waiting in the wings, however, is the Canadian government. The Conservative Party, Canada’s main opposition party, called for the government to block Glencore’s takeover. It said thousands of jobs would be at risk if the Swiss commodities firm were to succeed in its unsolicited bid. Conservative Leader Pierre Poilievre warned that it would also mark the loss of Canada’s last remaining major diversified base-metals miner owned and headquartered in the country.

“Canada needs a government that is committed to creating and supporting Canadian jobs,” Poilievre said. “Glencore’s attempted hostile takeover will ship thousands of jobs out-of-country and threaten thousands more Canadians who work for Teck.”

Poilievre’s announcement ups the pressure on Prime Minister Justin Trudeau to take a stand on the issue. His finance and natural resources ministers have said in recent weeks that the government is watching the deal closely.

British Columbia Premier David Eby opposes the Glencore proposal, and in an April 24 letter to Vancouver’s Board of Trade, Deputy Prime Minister Chrystia Freeland said the nation needs companies like Teck in Canada as it prepares for the future of mining critical minerals key to the energy transition.

Any takeover of Teck would require the approval of the government. After a review, which could be lengthy, the final decision would most likely fall to Industry Minister Francois-Philippe Champagne, who signed Freeland’s letter alongside Natural Resources Minister Jonathan Wilkinson.

Canada blocked BHP Group’s proposed takeover of Potash Corp. of Saskatchewan in 2010, when Stephen Harper was Prime Minister. Poilievre was a member of that government.

At last report, Teck has ammonium sulfate capacity of approximately 250,000 mt/y. Teck had not responded to inquiries for further confirmation. The sulfate is marketed by International Raw Materials Ltd.

EU Council Greenlights Carbon Market Reforms

Europe, News, News Briefs

The Council of the European Union (EU) has given the final legislative approval of establishing the bloc’s Carbon Border Adjustment Mechanism (CBAM) for imports of products in carbon-intensive industries and the revision of the bloc’s carbon market, known as the Emissions Trading System (ETS), after the European Parliament formerly adopted the legislation on April 18 (GM April 21, p. 27).

The Council on April 25 voted on three other key carbon tax policy laws in addition to the CBAM and ETS reforms. Some 23 of 27 Member States of the EU Council voted in favor of the reforms.

The reforms, in addition to establishing a CBAM, and changes to the EU ETS, including shipping under the ETS, were: the creation of a separate EU ETS (ETS II) for the construction industry and road transport fuel sector and specific changes to the aviation sector under the ETS, and the creation of a Social Climate Fund to help governments compensate vulnerable households and small businesses.

A CBAM transitional period ends in January 2026, after which companies are liable to pay carbon tax.

Until the end of 2025, the CBAM will apply only as a reporting obligation, starting from Oct. 1 this year. CBAM will be phased in gradually, in parallel to a phasing out of the free carbon allowances, once it begins under the revised EU ETS for the sectors concerned over a nine-year period between 2026 and 2034.

The CBAM measures under the initial scope of the legislation will apply to the fertilizers, cement, iron and steel, aluminium, electric energy production, and hydrogen sectors, as well as some precursors and a limited number of downstream products.

As of May 2022, there were nearly 1.45 billion allowances in circulation on the EU carbon market, according to a Dow Jones report, citing its Oil Price Information Service (OPIS). With this week’s approval of the EU legislation, nearly 420 million emission allowances will be removed from the EU carbon market by 2030. According to OPIS estimates, that is almost a 30% reduction in EUAs by 2030 from the EU’s 2021 carbon market supply.

The vote in the Council is the last step of the decision-making procedure. The laws will now be signed by the Council and the European Parliament and published in the EU’s Official Journal before entering into force.

The laws are part of the EU’s flagship “Fit for 55” climate policy package, which sets the EU’s policies in line with its commitment to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.

Grant Awarded to Sollio CRF Plant in Ontario

Canada, News, News Briefs

Montreal-based Sollio Agriculture announced that its new controlled-release fertilizer (CRF) AgriTech plant in St. Thomas, Ont., has received a C$154,000 grant to accelerate production as part of the Bioenterprise Fertilizer Accelerating Solutions and Technology Challenge.

Provided by the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA), the grant will help boost production and industry adoption of the CRF products made at the plant. Bioenterprise selected Ontario-based alternative fertilizer projects and products based on their potential to address risks in the fertilizer supply chain while delivering economic and environmental benefits back to the Ontario ecosystem.

Sollio said it will use the grant to train retailers and growers, research coatings for various nitrogen, phosphate, potash, and other fertilizers, and ensure product quality control, with production set to begin in May.

In 2021, Sollio partnered with Pursell Agri-Tech LLC, Sylacauga, Ala., to build and operate the C$20 million dedicated fertilizer-coating plant in southwestern Ontario (GM Sept. 2, 2021). The facility applies Pursell’s proprietary materials and processing techniques to the production of advanced CRFs, providing an environmentally beneficial fertilizer supply to the region’s agriculture industry.

The two companies broke ground on the project in the fall of 2021. When it begins operation in May, Sollio said the plant’s patented technology will enable the addition of micronutrients and temperature-sensitive additives to fertilizers, such as biologicals, growth enhancers, and soil health promoters.

At the time of its launch in 2021, Sollio and Pursell said the new facility would serve farmers in Eastern Canada and the Northeastern US. The companies said the CRF AgriTech plant will also generate economic benefit for the St. Thomas region with local jobs for facility staff, trucking companies, and suppliers.