All posts by Steve Seay

Heringer Files for Reorganization

Brazil, Breaking Industry News

Brazil’s Fertilizantes Heringer SA, Viana, told investors Feb. 4 that it has filed for judicial reorganization in the Judicial District of the City of Paulinia, in the State of Sao Paulo. It said the filing is a matter of urgency. The measure has the approval of the board of directors and the company’s controlling shareholder.

Heringer said despite efforts to optimize company’s liquidity situation and indebtedness profile in recent months, including seeking potential investors, the company’s situation has deteriorated. It said the filing is an appropriate measure to enable the continuity of activities and preserve company value.

The company says it has suspended activities in Rondonopolis, Dourados, Tres Coracoes, Uberaba, Rio Verde, Porto Alegre, Rio Grande, Paranagua and Rosario do Catete, “with the consequent termination of some of its employees,” according to a Bloomberg report.

The company announced the closure of three facilities in late 2018 and more last week (GM Feb. 1, p. 1), with the exit of its CFO and director of supply/logistics.

Petrobras Initiates Mothballing Process for Camaçari N Plant

Brazil, Breaking Industry News, Nitrogen

Petróleo Brasileiro SA, Rio de Janeiro, said it has initiated the mothballing process of the nitrogen fertilizer plant at Camaçari, Sergipe (Fafen-SE) in northeast Brazil. It said it continues with the lease bidding process for this unit and for the nitrogen fertilizer plant at Laranjeiras, Bahia (Fafen-BA), also in northeast Brazil, awaiting proposals from potential interested parties.

Last month, the oil and gas group announced it had initiated the leasing process for both facilities (GM Jan. 11, p.25).

Petrobras since March last year has been discussing the mothballing of the two plants with authorities and representative bodies, so that the potential negative effects on the Bahia and Sergipe economies are minimized. It had said it opted for mothballing as there was “no manifestation of interest” by potential buyers for the two units.

In early November, it pushed back the planned mothballing to Jan. 31, 2019, and revealed that leasing of the facilities to third parties was an option under consideration (GM Nov. 2, 2018). Earlier last year, it had said it would idle the plants at the end of June, and then later, on Oct. 31, 2018 (GM July 20, 2018; March 30, 2018).

“Currently, more than 80 percent of Brazil’s urea market, the main product of the nitrogenous segment, is already served by imports,” Petrobras said. “With respect to the ammonia market, where Petrobras accounts for about 30 percent of the supply, the group is investing in logistics infrastructure in the port of Aratu, Bahia, to enable the customer services located in Polo de Camaçari and will continue to meet demand by selling its remaining inventories in the short term.”

The group said it has offered Fafen-SE employees opportunities for internal reallocation. A minimum staff will remain in operational routine with the objective of guaranteeing the integrity and security of the facilities.

Heringer Execs Step Down; Major Cuts Reported

Breaking Industry News

Brazil’s Fertilizantes Heringer, Viana, said Jan. 31 that Ms. Rodrigo Bortolini Rezende, chief financial and investor relations officer and controller and Pedro Augusto Lombardi Ferreira, director of supplies and logistics, both have submitted their resignations. On an interim basis, CEO Dalton Carlos Heringer will serve as chief financial and investor relations officer and controller and Alfredo Fardin will serve as director of supplies and logistics.

In other news, Reuters reported Jan. 31 that the company sent an e-mail to employees Thursday indicating that at least 10 locations, including plants and regional offices were to be closed as the company restructures to lower debt. The company had already told analysts late last year that it would be closing at least three of its 19 mixing plants in 2019 (GM Dec. 14, 2018), citing lower volumes in third-quarter and year-to-date 2018.

 

IPL Reports Unplanned Ammonia, Phosphate Outages

Ammonia, Breaking Industry News, Phosphate

Incitec Pivot Ltd. reported Jan. 28 that unplanned outages at its Louisiana and Phosphate Hill plants are expected to have a combined earnings before interest and tax (EBIT) impact of approximately A$45m for the financial year ending Sept. 30, 2019.

The Louisiana ammonia plant has been impacted by downtime caused by issues in the plant’s CO₂ removal system. Following an inspection of the equipment, repair work has commenced. IPL said the repair work is expected to fully resolve the issues. The outage is expected to result in a reduction in production for FY19 of approximately 80,000 mt. The EBIT impact of the outage (including repair costs) is estimated to be approximately A$25 million.

In addition, the Phosphate Hill facility in Australia has been affected by a leak in its phosphoric acid plant. The facility has resumed operation. The estimated impact of the outage is a reduction of approximately 50,000 mt of ammonium phosphates for the financial year ending Sept. 30, 2019 and the revised production target for FY19 is 950,000 mt. The EBIT impact is estimated to be approximately A$20 million.

MMTC Calls Urea Tender

Breaking Industry News, Urea

The much-anticipated urea tender from India was announced by MMTC. The tender will close Jan. 16 with the last cargo to be shipped by Feb. 28.

International traders are expecting to see softer prices in this tender compared to the $333-$335/mt CFR awarded in the Nov. 2018 tender. Estimates of the tonnage MMTC will take range from 700,000 mt to 1 million tons. Sources said the final take will depend on the final price.

For a further discussion of the tender and the urea market, see the Jan. 11 issue of Green Markets.

Sinochem to Buy Phosphates, Premiums from Mosaic

Breaking Industry News, Phosphate

The Mosaic Co., Plymouth, Minn., said Jan. 8 has entered into a memorandum of understanding (MOU) with Sinochem, China’s largest agricultural inputs company. Sinochem intends to purchase phosphate rock and phosphate fertilizers, including premium products, from Mosaic.

“We are pleased to build on our promising relationship with Sinochem,” said Mosaic President and CEO Joc O’Rourke. “Sinochem is developing a Modern Agriculture Platform for China, and we at Mosaic look forward to partnering with Sinochem to contribute to this important progress for Chinese farmers.”

The MOU establishes a mutually beneficial relationship through which Mosaic could contribute to Sinochem’s success by providing both expertise and products. Terms and conditions of the purchases are to be outlined in a separate contract between the two parties.

“We believe this agreement can lead to meaningful value for Mosaic, Sinochem and China’s farmers,” he added.