All posts by mickeybarb@charter.net

OCI’s 1Q Returns to Black; EBITDA Boost Surprises Analysts

Ammonia, Ammonium Sulfate, Calcium Ammonium Nitrate, Earnings, Europe, Methanol, News, UAN, Urea

OCI NV, Amsterdam, posted a first-quarter adjusted net income attributable to shareholders of the company of $94.4 million versus an adjusted net loss of $82 million a year ago. The net income before adjustments for the quarter came at $98.6 million, against the prior year’s $81.4 million net loss. Diluted earnings per share was $0.468 versus a year-ago negative $0.388.

Adjusted EBITDA increased 134 percent to what the company described as a record $451.8 million, up from $193 million, while revenue increased 38 percent, to $1.12 billion, up from $811.1 million.

OCI shares jumped as much as 8.4 percent to the highest intraday level since November 2019 after the company posted “a surprise EBITDA beat” for the quarter, and sees an even better second quarter, according to a Bloomberg report, citing a note to investors by Brussels-based Bank Degroof Petercam.

The report cited Degroof Petercam analyst Frank Claassen, who wrote that the consensus underestimated the rally in several nitrogen fertilizers prices so far this year, which boosted OCI’s EBITDA. OCI’s management outlook for a stronger second quarter shows higher nitrogen fertilizer and methanol prices have a greater impact than seen earlier, he wrote.

“We have benefited from our diverse stream of global revenues and our competitive position on the global cost curve, with around half of our total global gas requirement at fixed gas prices. This has benefited Fertiglobe in particular, which has more than doubled its EBITDA year-on-year,” said OCI NV CEO Ahmed El-Hoshy in the company’s May 5 earnings statement.

“The outlook for OCI remains positive for the second quarter and beyond, supported by strong underlying demand for nitrogen fertilizers driven by healthy farm economics, and a continued recovery in our industrial markets for ammonia, methanol, melamine and DEF,” he said.

El-Hoshy highlighted that despite downtime and lost volumes during extreme cold weather conditions in the first quarter, the company was able to increase its sales in March and April, which he said bodes well for second-quarter results.

“Based on current visibility on volumes and pricing, we expect a stronger second quarter with higher adjusted EBITDA than in quarter one, and expect further deleveraging during the second quarter,” he said.

The CEO noted that the company’s U.S. Midwest operations are benefiting from a combination of higher prices and sales volumes in the second quarter. In Europe, a significantly better performance is also expected in the second quarter compared to quarter one, when OCI had some downtime at its plants, and as the company benefits from higher ammonia and melamine prices in particular.

For Fertiglobe, robust import demand in Latin America, Australia, and India is driving healthy urea volumes in the second quarter, said El-Hoshy.

Looking to the remainder of 2021, the CEO noted that nitrogen fundamentals are healthy and that OCI expects to remain in a demand-driven environment, with strong agricultural demand continuing to drive corn prices to higher levels, supporting farm economics and nitrogen demand and prices.

OCI Nitrogen Segment

$ million Nitrogen U.S. Europe  Fertiglobe Elim. Total Nitrogen
1Q-2021
Total Revenues 103.9 220.2 543.4 (17.9) 849.6
EBITDA 79.7 26.4 233.0 0.2 339.3
Adjusted EBITDA 79.7 26.4 233.0 0.2 339.3
1Q-2020
Total Revenues 118.7 162.4 363.3 (11.9) 632.5
EBITDA 41.1 25.3 110.1 1.0 177.5
Adjusted EBITDA 41.1 25.3 113.6 1.0 181.0

First-quarter OCI-produced sold volumes increased 9 percent to 2.99 million mt, up from 2.74 million mt the previous year. Total own-produced nitrogen product volumes were up 6 percent, to 2.48 million mt, driven by strong growth in Fertiglobe, DEF, and CAN volumes, offsetting production losses from weather-related downtime in the U.S.

Traded third-party volume sales dipped 4 percent in the quarter compared with a year ago, to 532,200 mt. The company’s total sales volumes rose 7 percent to 3.52 million mt. The company highlighted selling prices improved year-on-year for all products.

OCI Product Sales Volumes

‘000 mt 1Q-2021 1Q-2020 % change
Own product      
Ammonia 587.0 541.5 +8
Urea 1,103.2 1,116.2 (1)
CAN 328.4 170.2 +93
UAN 279.9 340.0 (18)
Total fertilizer 2,298.5 2,167.9 +6
Melamine 34.2 30.5 +12
DEF 150.8 140.4 +7
Total nitrogen products 2,483.5 2,338.8 +6
Methanol1 507.1 399.0 +27
Total own products sold 2,990.6 2,737.8 +9
Traded third party      
Ammonia 41.1 74.3 (45)
Urea 220.5 158.1 +39
UAN 13.6 5.8 +134
Methanol 78.7 99.8 (21)
AS 118.5 158.6 (25)
DEF 59.8 55.6 +8
Total traded third party 532.2 552.2 (4)
TOTAL   3,522.8 3,290.0 +7

1 Including OCI’s 50 percent share of Natgasoline volumes

ICL Reports Higher 1Q Earnings; Raises FY2021 Adjusted EBITDA Guidance

Earnings, Israel, News, Phosphate, Potash

ICL Group, Tel Aviv, posted a 125 percent rise in first-quarter net income attributable to shareholders, to $135 million, up from $60 million a year ago. Adjusted earnings per share were $0.11, up from $0.05 per share.

Sales for the first quarter were up 14 percent to $1.51 billion, from the year-ago $1.32 billion. EBITDA increased 18 percent to $295 million, versus the previous year’s $250 million.

ICL’s shares climbed as much as 3.7 percent to the highest level since November 2018 as its adjusted earnings per share beat the average analyst estimate of $0.07 (range $0.04 to $0.08, Bloomberg consensus), according to a Bloomberg report.

“ICL delivered quarterly sales of $1.5 billion for the first time since 2014. We executed our growth strategy, which resulted in record results across all our specialty businesses,” said ICL President and CEO Raviv Zoller.

The company cited in particular record sales and EBITDA for its Industrial Products division, as it continued to grow, due to a shift to long-term contracts, and saw strong demand returning to most end-markets.

It said Phosphate and Food Specialties also helped to deliver record sales and EBITDA, which was up more than 60 percent following 18 months of steady growth driven by product innovation and cost efficiencies as the business continued to shift to specialties.

ICL also highlighted “the double digit” growth and higher margin for its Innovative Ag Solutions (IAS) business.

“For the first quarter, IAS profitability was greater than for all of 2019, and we are poised for further growth as we expand our footprint in Brazil,” said Zoller.

Due to the improved market conditions, combined with prompt execution in the first quarter, ICL has raised its full-year 2021 adjusted EBITDA guidance. It said the probability of the company achieving the high-end of its previous guidance range has risen “considerably,” and it now expects FY2021 adjusted EBITDA of $1.09 billion to $1.18 billion, compared with the previous guidance of $1.02 billion to $1.12 billion.

Selected Segment Results

  1Q-2021 1Q-2020 % Change
Potash      
Segment sales1 $m 385 314 +23
Segment profit $m 29 14 +107
       
Phosphate Solutions      
Segment sales1 $m 545 502 +9
Segment profit $m 40 9  
       
Innovative Ag Solutions      
Segment sales1 $m 241 199 +21
Segment profit $m 22 14 +57

  1 Includes sales to internal customers

For its Potash division, ICL saw a 23 percent rise in first-quarter sales to $385 million, while the segment profit was up 107 percent from a year-ago, at $29 million. The company said it achieved record potash production at ICL Dead Sea for the quarter, with more than 1 million mt produced in the first quarter. The annual one-week shutdown at the Sdom site was completed in April.

ICL said in February it expected potash production at Sdom to be between 3.9-4 million mt in full-year 2021 (GM Feb. 12, p. 31), but it provided no update in its first-quarter earnings report.

At ICL Iberia in Spain, the company said the ramp between the Cabanasses mine and the Suria plant is now operational, following a three-week shutdown beginning in late March. The project is expected to increase the mine’s capacity, with the annual run rate projected to reach approximately 1 million mt by the end of 2021, which is expected to lower the cost per ton.

In April, the company inked a new supply contract with Indian Potash Ltd. (IPL) to supply 600,000 mt firm of potash, with mutual options for an additional 50,000 mt, through December 2021, at $280/mt CIFFO (GM April 9, p. 17).

ICL did not provide any potash sales volume figures for the quarter.

The ICL Boulby polyhalite operation in northeast England achieved a 3 percent rise in production of polysulfate – the marketed form of polyhalite – in the first quarter compared with a year-ago, with output reaching 183,000 mt. Polysulfate sales were up 38 percent from first-quarter 2020, at 188,000 mt.

ICL CFO Kobi Altman, responding to an analyst’s question at a first-quarter earnings call on May 6, conceded the Boulby polysulfate business is not profitable yet. “We are still producing at a little lower than 1 million mt, and we need to get to over 1 million mt, but we believe that will happen this year,” he said.

“The other side of it is that we need to demand a higher premium on the selling price than currently is happening. We see we are getting those premiums in Europe, but not so much in other territories. But we are making advances in that respect.”

ICL’s Phosphate Solutions business segment recorded a 9 percent increase in first-quarter sales to $545 million, which the company described as “a record.”

Within the division, sales of phosphate specialties were up 5 percent from a year-ago, at $294 million, while phosphate commodities sales rose 13 percent to $251 million. ICL noted the commodity price improvement in the first quarter as contributing to the latter sales increase, along with increased prices for raw materials, including sulfur, and higher freight rates.

The company highlighted higher phosphate fertilizer sales in the quarter, with continued recovery across all markets, as well as higher phosphate salts sale, with an improvement in food grade phosphates sales partially offset by lower sales of industrial salts. White phosphoric acid sales were up significantly, driven by increased volumes in China and South America.

ICL reported its YPH phosphate joint venture in China had its “best quarter ever,” and cited higher prices, increased volume and improved product mix, as well as procurement and production efficiencies.

For its Innovative Ag Solutions business, the company reported a record sales of $241 million in the first quarter, up 21 percent on the year. It said the business benefited from unified sales and marketing organization, with strong demand in Europe, the U.S., and Asia, as well as higher volumes, and improved product mix.

The company highlighted a “double-digit” sales increase in the division’s Specialty Agriculture due to higher volumes in most regions and a positive exchange rate impact in Europe.

Turf and Ornamental sales were up 25 percent on the year, following a soft first quarter 2020. The company cited a continuation of positive gardening and landscaping trends as helping drive volume as well as geographical expansion into Eastern Europe and Asia. Profitability benefited from high margin product sales, which were boosted by new product launches, as well as the aforementioned unified sales and marketing organization, the company said.

As previously reported, ICL in March announced an agreement to acquire Compass Minerals’ South American Plant Nutrition business for total potential gross cash proceeds of approximately $418 million (GM March 26, p. 1).

The Israeli company said the transaction, when combined with existing ICL operations in Brazil and the acquisition of Fertiláqua, which was completed in (GM Jan. 8, p. 30), is expected to position ICL as Brazil’s leading specialty plant nutrition company, and will allow ICL “to deliver the critical mass” it has been seeking in the country.

ICL’s board has declared a dividend of 5.25 U.S. cents per share, or about $67 million in the aggregate, which will be payable on June 16, 2021.

Ma’aden: 1Q Production, Sales Downturn for DAP, Ammonia; Updates on Projects

Ammonia, DAP/MAP, Earnings, News, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden) reported a 1 percent fall in first-quarter DAP production compared with the same prior-year quarter, to 1.07 million mt, according to a first-quarter earnings presentation to analysts and investors on May 3. Ammonia output was down 14 percent downturn to 498,000 mt.

Sales were also lower in the first quarter, with DAP sales down 10 percent, to 1.08 million mt, while ammonia sales fell 22 percent to 269,000 mt.

Ma’aden 1Q DAP & Ammonia Production & Sales

‘000 mt 1Q-2021 1Q-2020 % change
DAP production 1,071 1,081 (1)
DAP sales 1,080 1,197 (10)
Ammonia production 498 577 (14)
Ammonia sales 269 347 (22)

Ma’aden expects completion of its new 1.1 million mt/y capacity ammonia-3 plant under construction at Ras Al-Khair on the Kingdom’s East Coast in the fourth quarter of this year, with the facility to be fully operational in the first quarter of 2022.

The Saudi company said it expects to produce 20,000 mt at ammonia-3 in fourth-quarter 2020.

The company had reported in February the plant was “north of 55 percent completed” and was likely to start up at the end of 2021-the beginning of 2022 (GM Feb. 12, p. 37).

Construction of ammonia-3 began in October 2018 (GM Oct. 26, 2018), and is being built adjacent to the Ma’aden Phosphate Co. and Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC) DAP/MAP plants and their associated facilities. Ma’aden last week put the total budget for the ammonia-3 plant at $1.113 billion.

Ammonia-3 is the first unit under construction as part of Ma’aden’s ambitious plans for a third large-scale phosphate complex, “Phosphate 3,” which upon completion will add a further 3 million mt/y of phosphate fertilizer production capacity to Ma’aden’s portfolio.

Ammonia from ammonia-3 looks likely to be sold initially on the market. In February, local media, citing the company, reported output from the ammonia-3 plant would add 1.1 million mt to the Saudi producer’s sales (GM Feb. 12, p. 33). However, this could not be confirmed with Ma’aden by Green Markets’ press time.

In February, Ma’aden’s then CEO Mosaed bin Suliman Al Ohali confirmed to analysts that the company was looking at developing Phosphate 3 in two phases: Phase 1, half of the capacity, 1.5 million mt/y, and then another phase of 1.5 million mt/y.

This week, the company indicated it was targeting completion of Phase 1 in 2025, but provided no details on what Phase 1 comprised. It confirmed the budget for the entire Phosphate 3 project remained at $4.219 billion

Ma’aden said remediation work continues at the majority-owned Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC) facilities. Al Ohali confirmed to analysts in February that MWSPC’s ammonium phosphate production was operating at around 60 percent to 70 percent capacity. The CEO had confirmed the technical issues at MWSPC was not in one specific location.

On the progress to achieve full capacity operation, the company last week said phosphate fertilizer production at MWSPC would reach 3.1 million in 2025 from 2.8 million mt in 2021. MWSPC’s phosphate fertilizer design capacity is some 3 million mt/y.

MWSPC commenced “commercial” production of DAP in December 2018. The Mosaic Co. and SABIC own 25 and 15 percent stakes, respectively, in the company.

Mosaed bin Suliman Al Ohali resigned from the position of Ma’aden CEO, effective April 25 (GM April 30, p. 29). Abdulaziz bin Asker Al Harbi has been appointed acting CEO until further notice.

Ma’aden posted a net profit after zakat and tax for the first quarter of SAR761.2 million (approximately $202.9 million at current exchange rates) versus a net loss of SAR353.3 million for the same prior-year period (GM April 30, p. 27).

K+S Closes Sale of Americas Salt Business

Germany, News, News Briefs

K+S Group, Kassel, on April 30 completed the sale of its Americas salt business consolidated in the Operating Unit Americas to the U.S’.-based Stone Canyon Industries Holdings LLC (SCIH), Mark Demetree and partners.

Late last month, the U.S. Department of Justice gave the go-ahead for the sale (GM April 23, p. 34). U.S. antitrust clearance of the deal was seen as “the main step K+S had to take between signing and closing”(GM Nov. 13, 2020).

K+S put the Americas unit enterprise value at $3.2 billion corresponding to 13.4 times the 2020 EBITDA of $239 million

It said taking into account debt and cash, the purchase price is now approximately €2.6 billion (approximately $3.1 billion at current exchange rates), and that this payment was made April 30 entirely in cash.

The Americas operating unit mainly comprises Morton Salt (USA), acquired by K+S in 2009 for $1.675 billion (GM April 6, 2009), and K+S Windsor Salt (Canada), also acquired in 2009. The unit also comprises K+S Chile, formerly known as the Chilean company SPL, acquired by K+S in 2006.

With the completion of the sale of the Operating Unit Americas, K+S said it has implemented the most important component of the package of measures announced in December 2019 (GM Dec. 13, 2019) and is an important milestone in the company’s planned reduction of its debt.

K+S said the net proceeds equivalent to around €2.6 billion will be entirely used to successively reduce company debt, and, accordingly, the level of debt (net financial debt/EBITDA) will “improve significantly,” it said.

K+S’ net debt-to-EBITDA ratio had deteriorated to 7.2x as of Dec. 31, 2020, compared with 4.9x at the end of 2019.

Yara, ENGIE Secure ARENA Grant for Renewable Hydrogen and Ammonia Production

Australia, Europe, Hydrogen, News, News Briefs

Yara International ASA, Oslo, and French energy and service major ENGIE said on May 5 they will receive an A$42.5 million (approximately US$32.9 million at current exchange rates) in Australian government funding for their proposed renewable hydrogen plant with a 10-MW electrolyser. The plant will support the production of renewable ammonia at Yara’s existing facility in the Pilbara, Western Australia.

The grant is being provided as part of the ARENA Renewable Hydrogen Deployment Funding Round.

The project comprises the development, construction, and operation of a renewable hydrogen plant within the existing Yara Pilbara ammonia plant to deliver green ammonia to customers for decarbonizing emissions from power generation, shipping, fertilizer, or mining explosives.

Scheduled to commence production in 2023, the first concrete phase of the project will produce up to 625 mt/y of renewable hydrogen and 3,700 mt/y of renewable ammonia.

This initial first phase would be key to enable the facility to become the “Pilbara Hydrogen Hub,” building on the existing export infrastructure, said Yara.

This latest financial support from ARENA follows ARENA funding for the project’s feasibility study (GM Feb. 22, 2019) and the Western Australian government’s ongoing support for the project with a A$2 million grant and assistance with site selection, permitting and stakeholder engagement.

EuroChem Subsidiaries Challenge E.U. AD Duties on Russian AN

Ammonium Nitrate, News, News Briefs, Russia

A EuroChem Group AG spokesperson early this week confirmed to Green Markets that EuroChem subsidiaries Nevinnomyssky Azot and JSC Azot have brought an action with the European Union General Court contesting the E.U.’s decision last December to maintain antidumping duties on imports of Russian ammonium nitrate (AN) (GM April 30, p. 32). However, the spokesperson was unable to provide further comment at this time due to the case ongoing.

Acron Updates on CAN Project

Calcium Ammonium Nitrate, News, News Briefs, NPK, Russia, Specialty

Acron Group, Moscow, provided further details on its 100,000 mt/y capacity granulated calcium nitrate unit under development at its Veliky Novgorod site in northwest Russia. The group reported the launch of the new project (GM March 19, p. 1).

The CAN unit will be the group’s first with production expected to start in 2022.

Acron said it plans to produce different calcium nitrate brands for both agricultural and industrial needs. The agricultural brands will include products for open-ground application and water-soluble fertilizer for greenhouse facilities.

Feedstock for the CAN unit will be liquid calcium nitrate, a semi-finished by-product of apatite concentrate processing at the group’s NPK units. Total investment is estimated to be about $22 million.

Acron Extends $750 M Syndicated Structured Pre-Export Finance Facility

News, News Briefs, Russia

Acron Group, Moscow, has executed an amendment agreement to extend its up to $750 million syndicated structured pre-export finance facility originally signed with a group of relationship banks in May 2017, for another two years with new final maturity date in May 2026.

“By closing this transaction, we have almost completely covered our refinancing needs for 2021, and it significantly improves our liquidity profile,” said Acron Group Vice President for Finance and Economics Dmitry Balandin.

Australia’s Leigh Creek Energy Inks Binding HOA with South Korean Firm for Urea Project

Australia, News, News Briefs, South Korea, Urea

Adelaide-based Leigh Creek Energy (LCK) said it has inked a binding Heads of Agreement with South Korean engineering and construction company DL E&C Co., Ltd. to exclusively negotiate the terms of a proposed agreement for the feasibility study, front end engineering and design (FEED) stages, and engineering, procurement, construction, and commissioning (EPCC) for  its Leigh Creek Energy Project (LCEP) in South Australia.

The two companies have until May 31 to negotiate the terms and conditions of the proposed agreement. If they reach an agreement, LCK said finance for the feasibility study, FEED, and EPCC contract will be arranged either by itself and/or by DL E&C.

LCK plans to establish a 1 million mt/y urea facility utilizing in-situ gasification (ISG) at LCEP, located some 550 kilometres north of Adelaide and overlaying the Leigh Creek coalfield (GM Jan. 22, p. 1). The company’s board in March made the final investment decision (FID) to proceed with Stage 1 of  the project comprising drilling of up to five initial gasification wells to provide feedstock syngas and the construction of a 5 MW power plant (GM March 19, p. 1) .

Once the agreement with DL E&C is finalised, LCK said it will retain 100 percent ownership of the LCEP.

K+S Reports Closing of Public Prosecutor’s Probe into Saline Wastewater Permits

Germany, News, News Briefs

The public prosecutor’s office in Meiningen, Germany, has closed an investigation against representatives of K+S as well as against certain German authorities and ministries “due to lack of suspicion”, K+S said in a statement on May 3.

K+S reiterated that it “strongly rejects” the allegations made by the Meiningen public prosecutor’s office. The allegations were that “the company intimidated employees and the authorities and deliberately falsified measurements to obtain permits under water law for saline wastewater injection.”

“Since the allegations are completely unjustified and in no way supported by the facts, the proceedings had to be discontinued due to a lack of suspicion,” said the German company.

The case had been ongoing for a number of years before the investigation finally was discontinued in April this year, during which time K+S said representatives of authorities, ministries, and the company were exposed to accusations of unlawful conduct in the disposal of saline wastewater from potash production.

K+S said the Meiningen public prosecutor’s office investigation continued even after the initiation of the main proceedings were rejected by the Meiningen Regional Court in 2016 (GM Sep. 16, 2016),  a ruling subsequently upheld by the Thuringian Higher Regional Court of Jena (GM May 26, 2017).

“In its business operations, K+S acts exclusively in accordance with the law. Both the alleged illegality of water law permits as well as the claimed intimidation of public authority employees lack any factual basis and arise solely from the imagination of the investigating public prosecutor,” said the German company.

K+S at the end of 2021 will discontinue the injection of saline wastewater into the plate dolomite. At the beginning of 2022, the underground storage of saline solutions in the Springen mine field will be used as a new local disposal route.

The company said it is working “intensively” to obtain the necessary permits during the course of this year after the state parliaments of Hesse and Thuringia approved the amendment of the state treaty on the cross-border mining of potash salts at the end of 2020. Securing the permits is an important prerequisite for the future disposal concept at K+S’ Werra plant.