All posts by Steve Seay

OCI Seeks All of LP

Breaking Industry News

OCI NV, Amsterdam, said June 4 that its affiliate, OCIP Holding II LLC, has commenced a tender offer to purchase all publicly held common units of OCI Partners LP (OCIP), Nederland, Texas, not currently owned by OCI NV for $11.00 per common unit in cash. OCIP owns an ammonia and methanol complex in Beaumont, Texas. The offer represents a 10.0 percent premium over OCIP’s closing price June 1, 2018, a 16.4 percent premium over OCIP’s 90 trading day volume-weighted average unit price, and a 5.3 percent premium over OCIP’s two-year high unit price.

OCI currently owns approximately 88.25 percent of the issued and outstanding OCIP common units. The tender offer will expire July 2, 2018, unless the offer is extended in accordance with its terms.

OCI believes that this transaction is attractive for minority investors of OCIP to address concerns over the low trading liquidity of the units and the attractiveness of Master Limited Partnerships (MLPs) as an asset class, particularly in light of the latest change in federal income tax law. It said for OCI NV shareholders, the proposed transaction allows for simplification of the group’s corporate structure, including the elimination of public listing costs.

After the completion of the tender offer, OCI currently intends to purchase all of the outstanding common units not tendered pursuant to the tender offer (other than any common units already owned by OCI or its affiliates) pursuant to Section 15.1(a) of the First Amended and Restated Agreement of Limited Partnership of OCIP, as amended at a price per common unit equal to the Offer Price, net to the holder in cash, without interest thereon and less any applicable tax withholding. However, OCI said it may change its intent and there can be no assurance that OCI will consummate the buyout.

OCI has sought to buy out all of the OCIP shares in the past, but eventually pulled the proposal.

CP Workers Strike

Breaking Industry News

More than 3,000 Canadian Pacific Railway Ltd. workers walked off the job Tuesday night, according to Bloomberg. The strike by conductors and locomotive engineers began at 10 p.m. eastern time, Teamsters Canada Rail Conference said in an emailed statement late Tuesday. Negotiations with the company are ongoing, Teamsters said minutes after Canadian Pacific reached a tentative three-year agreement with a smaller union, the International Brotherhood of Electrical Workers.

While the railroad has pledged a smooth wind down of operations, “we can’t imagine that shippers will take these assurances in stride following the subpar rail service this past winter — particularly those in the grain, oil and lumber industries,” Allison Landry, a Credit Suisse Group AG analyst said in a note to clients shortly before the stoppage. “We wouldn’t be surprised to see swift government action.”

Nutrien Realigns Senior Staff

Breaking Industry News, Saskatchewan

Nutrien Ltd., Saskatoon, has realigned some of its senior staff. Raef Sully. executive vice president, Potash will be taking over as the executive vice president, Nitrogen and Phosphate and will be relocating to the Loveland, Colo. office in 2019.

Susan Jones, the executive vice president, Nitrogen & Phosphate will be taking over as the executive vice president, Potash and will be relocating to the Saskatoon office later this year.

Chris Reynolds, vice president, sales will become senior vice president, sales. Kevin Graham, formerly executive vice president, sales, has left the organization.

OCI, DGC Form JV

Ammonia, Breaking Industry News, Nitrogen

OCI NV, Amsterdam, has announced that it has signed a definitive agreement with Dakota Gasification Co. (DGC) to sell nitrogen fertilizers, industrial ammonia and diesel exhaust fluid (DEF) in North America through a newly formed joint venture, N-7 LLC (N-7).

The jv will market and distribute more than 4.5 million mt/y of product from Iowa Fertilizer Co., OCI Partners in Texas and DGC’s Beulah facility in North Dakota. In addition, N-7 will market any imported product from OCI’s operations outside North America.

The venture is expected to bring a number of benefits to OCI, DGC and their customers, including enhanced utilization of truck and rail logistics infrastructure and improved security of supply to customers.

Paul Sukut, Chief Executive Officer of Dakota Gas, said: “We expect that this new partnership will provide many benefits for marketing the fertilizers produced at the Great Plains plant. Through N-7, we will be able to better serve the North Dakota market and the local agricultural economy, and it makes good business sense as well. We have a large customer base in the 250-mile radius around the Synfuels Plant, and achieving transportation and selling cost synergies through N-7 enables us to more efficiently serve the local farming community and be a dependable local source of fertilizer for area farmers.”

Nassef Sawiris, Chief Executive Officer of OCI N.V., said: “We are delighted to join forces with Dakota Gasification Co. The jv allows us to extend our reach throughout North America, expand our product offering and customer base, and better serve our existing customers.”

Nutrien, Tianqi Ink SQM Deal

Breaking Industry News

Nutrien Ltd. and Tianqi Lithium Corp. said May 17 that they have signed an agreement, whereby Tianqi Lithium has agreed to purchase 62,556,568 “A shares” of SQM Inc. held by Nutrien for consideration of $65 per share in cash. The announced transaction represents the entirety of Nutrien’s “A shares” at a gross valuation of approximately US$4.07 billion.

Nutrien still retains ownership of 20,166,319 SQM “B shares” and expects to divest these shares in due course.

Nutrien’s sale of its SQM holdings was required by the Competition Commission of India and Ministry of Commerce in China in providing their clearance for the merger of Agrium and PotashCorp which formed Nutrien. The agreement is subject to customary closing conditions, including regulatory approvals and Tianqi Lithium shareholder approval, and is expected to be completed by the fourth quarter of this year.

 

Simplot Names New CEO

Breaking Industry News

The J.R. Simplot Company, Boise, has named Garrett Lofto as president and CEO. Lofto has been the president of the company’s AgriBusiness group since 2009 and has spent 26 years working for Simplot. He succeeds Bill Whitacre who announced his retirement in April after nine years at the helm.

 

Karnalyte Eyes N Plant for Saskatchewan

Breaking Industry News, Nitrogen, Saskatchewan

Junior potash mining firm Karnalyte Resources Inc., Saskatoon, has announced plans to diversify into nitrogen and is looking to build a small nitrogen plant in Saskatchewan.

“Karnalyte is now actively exploring the possibility of developing a small-scale ammonia/urea plant to be located in Central Saskatchewan,” said Karnalyte President Frank Wheatly. “Karnalyte has undertaken preliminary work on this opportunity, and intends to capitalize on the competitive advantages Saskatchewan provides for nitrogen fertilizer production. We also believe that the local Saskatchewan market provides an opportunity for a new, small scale, independent nitrogen fertilizer producer that will provide direct benefits to the local Saskatchewan farming community.”

The proposed nitrogen fertilizer plant will have a nameplate production capacity of approximately 700 mt/d of ammonia and approximately 1,200 mt/d urea.

The company said the project, called Proteos Nitrogen Project, has the support of its largest shareholder, Indian nitrogen producer Gujarat State Fertilizers & Chemicals Ltd., which has some five decades of nitrogen production experience.

Karnalyte is currently conducting additional research on the project, including market studies, as well as engineering and site procurement.

The company says its Wynyard Potash Project remains a construction ready project, and is poised to be developed once potash prices recover to a point where it becomes economically viable and can be financed, constructed and profitably operated.

Mosaic to Move Headquarters to Florida

Breaking Industry News, Florida

The Mosaic Co. said May 14 that it intends to move its corporate headquarters, including senior executives and related functions, to Hillsborough County, Fla. Details of the move, including timing, the exact location of the corporate office and the number of employees to be relocated, remain under consideration.

“Mosaic is among the largest employers and most significant corporate economic drivers in Central Florida,” said President and CEO Joc O’Rourke. “We believe locating our corporate office there will give us opportunities to amplify Mosaic’s presence and engage more closely with communities where we operate. With the cost savings we expect to achieve and the closer proximity to our Mosaic Fertilizantes business in Brazil, this move will drive improved efficiency and good value.”

The company said the move will allow it to reconsider its U.S. office footprint, including its spaces in Plymouth, Minn., as well as its FishHawk and Highland Oaks locations in Florida. As a result of the company’s transformation over the past several years, excess capacity exists at those locations.

“We will execute this move with as little disruption as possible and with sensitivity to our employees’ personal situations,” said O’Rourke. “Mosaic is fortunate to have a deeply talented workforce, and we fully intend to maintain that competitive advantage.”

OCP, ADNOC to Develop a Global Fertilizers JV

ADNOC - Abu Dhabi, Breaking Industry News

OCP SA and The Abu Dhabi National Oil Co. (ADNOC) have agreed to explore the phased creation of a new global fertilizers joint venture, in a move that will accelerate the execution of both companies’ international strategies, OCP announced earlier today.

The proposed partnership will comprise two fertilizer production hubs, one in the UAE and one in Morocco (utilizing both existing and new assets), giving the proposed jv global market reach.

“The proposed jv will build on both companies’ competitive advantages, namely ADNOC’s world-scale sulfur production, ammonia and gas expertise, and shipping and logistics network, and OCP’s access to large phosphate resources, its century-long fertilizers know-how and its marketing network, to develop a new global fertilizers producer,” said the Moroccan phosphate group.

OCP said the proposed project extends the partnership already established through the existing long-term sulfur offtake agreement that was announced by the two firms in December 2017. The two companies will work on developing capabilities that will support this venture, as they expand their partnership, leveraging their respective strengths and building their human capital.

The agreement aligns with ADNOC’s announced plans to increase production by at least 50 percent from its current levels of 7 million mt/y, as it looks to increase gas production by tapping into vast gas caps and scaling up sour gas production. OCP has engaged in a large-scale development program that will enable it to capture its share of growing demand for fertilizers. The first phase of this program was completed this year and has brought the group’s existing fertilizer capacity to 12 million mt/y, and rock export capacity to over 18 million mt/y.

The agreement comes as ADNOC, at its Downstream Investment Forum, which took place May 13-14 in Abu Dhabi.