Saskatoon-PotashCorp on June 25 announced revised earnings guidance for second quarter 2009, shifting from its initial target of $1.10-$1.50 per share to the current expectation of approximately $.70 per share. The company said the change reflects substantially lower than forecasted potash sales volumes due to deferral of purchases by customers around the world, and lower realized prices for phosphate fertilizers. PotashCorp said any necessary revisions to annual guidance will be addressed in the second quarter earnings news release. Earlier projections had been that major potash contracts with China and India would be concluded by the end of June. Those projections have now been deferred to July and August. PotashCorp announced another 400,000 mt potash curtailment just last week, and major German competitor K+S Group announced a 2 million mt production cut for the second half, as well as a price cut (GM June 22, p. 1). China significantly held up negotiations three years ago, but finally settled toward the end of July (GM July 31, 2006). PotashCorp reported record earnings for the second quarter 2006, even with a drop in potash volumes (GM July 31, 2006), though that year phosphate and nitrogen stepped up to take up the slack.
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Terra to temporarily idle Donaldsonville
Sioux City-Terra Industries Inc. said June 25 that on July 1, 2009, it will temporarily idle production at its Donaldsonville, La., ammonia manufacturing facility due to current market economics. Terra plans to restart the facility when market conditions improve. The Donaldsonville facility has the capacity to produce 500,000 st of ammonia per year. Industry sources attributed the market conditions to three factors – an ongoing slump in industrial demand, the end of the spring agricultural season, and lower ammonia prices. As Green Markets went to press, sources were predicting July import ammonia prices of $175/mt. Even with low natural gas prices, sources say NOLA production economics would be hard pressed to compete with imports.
Australian authority gives nod to Viterra/ABB deal
Regina-Viterra Inc. and Australia’s ABB Grain Ltd. have been informed that Australia’s Foreign Investment Review Board has no objections to the proposed Viterra acquisition of ABB. The transaction remains subject to other regulatory, shareholder, and court approvals, as well as other conditions.
Viterra picking up fertilizer market share
Regina-Viterra Inc. recently told analysts that in addition to a good second quarter for its fertilizer business (GM June 15, p. 13), the company is also picking up market share. Viterra Agri Products Senior Vice President Doug Wonnacott told analysts that the company share in the entire Western Canada region is about 30-35 percent, and that it expects it will pick up a couple of points. While nitrogen volumes have been relatively flat through the first half, he expects the company to see a 100,000 mt upside versus year-ago levels as the company looks toward the end of the year. Responding to questions about severe phosphate and potash downturns in the U.S. Corn Belt, he reminded analysts that a different product mix is used in Western Canada. While he expects phosphate to be off 10-15 percent and potash by up to 40 percent, he noted that Viterra’s product mix is 70 percent nitrogen, 20 percent phosphate, and only 10 percent potash. As a result, the impact to Viterra of less phosphate and potash would not be so substantial. As for pricing, Wonnacott said in Western Canada the spring season has finished up with relatively stable pricing. However, he said it is a different matter on wholesale pricing, which has been reflecting a downward trend on urea and phosphates as has been seen on a global basis, with potash remaining reasonably stable. Wonnacott said Viterra does not expect any future write-downs on fertilizer for the balance of the year. A fertilizer inventory write-down of C$28.1 million helped move Viterra into the loss column for the first quarter ending Jan. 31, 2009 (GM March 16). On inventories, he expects the company to be effectively empty by the end of June. Due to a late spring, Wonnacott said he expects the glyphosate market to be down about 30 percent; however, he expects this will be offset by increases for grass and broadleaf products.
Lara acquires Sergipe potash targets in Brazil
Vancouver-Lara Exploration Ltd. said that it has been granted potash exploration licenses totaling approximately 14,000 hectares in Sergipe State, northeast Brazil. It says the claims are adjacent to and cover the extensions of the potash-bearing sedimentary basins of Vale’s Taquari-Vassouras mine, which produced 607,000 mt of potash in 2008. These basins have been explored extensively for oil and gas in the past, and a database of seismic surveys and exploration drilling is available through the Brazilian National Petroleum Agency. Lara plans to access and review the available exploration data in the coming months. Brazil is a major consumer of potash, mostly as a feedstock for fertilizers. Taquari-Vassouras is the only operating potash mine in Brazil, which currently imports 90 percent of its potash needs. The exploration licenses are held through Lara Alianca Ltda., a Brazilian company owned 100 percent by Lara Alliance BVI Ltd., which is in turn owned 50 percent by Lara and 50 percent by Sprott Resource Corp. Lara says it is a well-funded prospect generator with a multi-commodity exploration portfolio focused on Brazil, but with significant holdings in Colombia and Peru. Lara’s common shares trade on the TSX Venture Exchange under the symbol LRA.
Poultry plant ammonia release kills 1, hurts 4
Lumber Bridge, N.C.-A high-pressure line that ruptured during maintenance is being blamed for the ammonia release June 20 at the Mountaire Farms poultry processing plant here that killed one person and injured at least four. The victim was identified as a company mechanic who may have been working on the system at the time. One worker was in critical condition last week at a burn center in Chapel Hill, and another was still hospitalized in nearby Lumberton. Two were treated and released from the same hospital. As many as 40 people were evacuated because of concerns about the gas causing burning and swelling of the air passages in the nose, throat, and lungs. No one was available to speak for the company, but reports were that the plant, which employs about 2,500, reopened early last week after undergoing an inspection.
TFI testifies on climate change as House vote nears
Washington-House Speaker Nancy Pelosi has scheduled a vote for Friday, June 26, on the Waxman-Markey climate-energy bill, and agriculture interests have been stepping up pressure to exert their influence on the final product. House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) said June 23 that he had reached an agreement with Agriculture Committee Chairman Collin Peterson (D-Minn.) allowing the Agriculture Department to oversee farm carbon sequestration initiatives instead of the Environmental Protection Agency. The compromise also specified that agriculture will not be required to reduce greenhouse gas emissions under the bill. The Fertilizer Institute President Ford B. West testified June 11 before the House Agriculture Committee at a hearing held to examine the Waxman-Markey bill, and once again took aim at the bill’s cap and trade language. “The fertilizer industry has gone to great lengths to advocate environmental stewardship,” West said in his testimony, highlighting greater natural gas efficiency in the production of ammonia and related reductions in GHG emissions. West said that in order for the domestic fertilizer industry to remain competitive under the proposed cap and trade policy in the Waxman-Markey bill, however, the industry will need to achieve even greater efficiencies. “While our industry is committed to additional energy efficiency projects, there will come a point where, due to the constraints of chemistry, the U.S. fertilizer industry will not be able to achieve additional efficiency gains,” he said. Noting that the U.S. nitrogen industry has closed 26 nitrogen fertilizer production facilities since 2000 due primarily to the high cost of natural gas, West cautioned that the remaining domestic nitrogen production cannot stay operational through any transition period of a cap and trade system where utilities switch to natural gas and fertilizer producers are forced to buy emission credits on the open market. “What Congress needs to understand is that this cap and trade proposal may place our industry at a serious competitive disadvantage compared to global fertilizer production and could force the domestic fertilizer industry overseas to countries that have no carbon reduction policies in place,” he said. “Congress must tread cautiously and consider the fact that without dramatic changes, the current climate change bill will render the U.S. nitrogen industry uncompetitive and result in a loss for the economy and for the cause of reducing CO2 emissions.”
Mitsubishi to cut caprolactum production
Tokyo-Mitsubishi Chemical Corp. recently reported that it has decided to withdraw from the caprolactum and styrene monomer businesses in the course of restructuring its petrochemicals businesses. It plans to shut down caprolactum production (60,000 mt/y) at its Fukosaki plant in March 2010, and styrene monomer production in Kashimi by March 2011.
Organic debate continues as Obama garden grows
Washington-The recent dust-up over First Lady Michelle Obama’s organic garden has continued as pesticide groups have entered the frey and organic proponents have stepped up their support. “Pardon the metaphor,” said a recent article in the liberal blog dailykos, “but by planting an organic garden, Michelle Obama acted like Toto, pulling back the curtain to reveal the little man pretending to be the almighty wizard. That man – or men – behind the curtain are the biotech, pesticide, and fertilizer industries, who desperately want the American people to believe that they are absolutely necessary to prevent our starvation.” The blog article entitled “You’ve been told a lie,” which said it is a lie, among other things, to say organics can never feed the world and that pesticides/fertilizers/biotech are needed to feed the world. The article cited a 2007 study, “Organic Agriculture and the Global Food Supply,” which said organics can do as good a job as synthetics. TFI Vice President of Scientific Programs Bill Herz told Green Markets last week that the study is flawed, that in many cases the products being called organic are not. And a larger point, noted Herz, which has been suggested in some of these articles, is the erroneous assumption that no nutrients inputs are needed at all. If you want high yields, you need nutrient inputs, he said. TFI Vice President of Public Affairs Kathy Mathers added that saying a product is organic does not mean it is environmentally friendly, noting that manure suffers from volatilization. Mathers said TFI is not one of the men behind the curtain. Back when Mrs. Obama’s garden was planted (GM March 30) Nutrients for Life President Ford West sent her a letter pointing out that all fertilizers are good – organic and synthetic. Mathers reiterated that point last week, saying TFI welcomes everyone to the table, both synthetic and organic. In the meantime, Michelle Obama’s gardening has spread across the Atlantic as she and Queen Elizabeth are now sharing garden tips and the Queen has authorized an organic garden for Buckingham Palace, the first time vegetables have been grown there since World War II.
Management Briefs
Kelvin Ayers will be joining Wilbur-Ellis Co. in July to take the position of western region fertilizer director. His responsibilities will be to manage fertilizer purchasing and procurement for the two western business units of Wilbur-Ellis, California and Pacific Intermountain. He is leaving Agrium U.S., where he has held various positions for the past 26 years. He will remain in the Denver area and will report to Gene Gauss, vice president, fertilizer and nutrition, for Wilbur-Ellis.
Athabasca Potash Inc. (API) said June 25 that Dawn Zhou, president and CEO of the corporation, has been removed from her executive positions with the corporation. It said Ms. Zhou remains a director of the corporation. The company said Zhou’s entrepreneurial expertise and experience in geotechnical matters surrounding exploration was key in the formation and early development of API. However, it said API has now reached a stage where the skills required of its CEO, in addition to familiarity with potash and the related chemicals processing industry, must include mining project finance and development, and building completion and operations experience. A new CEO will be sought who brings to the corporation strong management and administrative skills required from an internal governance perspective, as well as externally with respect to the marketplace.
The API board has established a special executive committee that will be responsible for the general exercise of powers and authority of the board in managing the business. It will also manage the transition process with respect to search and retention of a new CEO. The committee consists of three directors – J.G. (Jim) Gardiner, who will act as chairman; Leo Bingleman, and John King Burns. Gardiner is the former president and CEO of Fording Canadian Coal Trust; Bingleman is chairman of the corporation’s audit committee and has 25 years experience as a finance executive in the mining industry. King Burns, managing director of NuCoal Energy Corp., a Saskatchewan based energy company, will continue as interim chairman of the board.
The committee expects to work closely with the corporation’s Chief Operating Officer, Terry Walbaum, in advancing the preliminary feasibility study with respect to its Burr Project, which the board continues to believe has the potential to be developed as a low cost conventional potash mine.
BASF Crop Protection announced the appointment of Paul Rea to director, U.S. Crop Business, effective July 1. The announcement was made by Rea’s predecessor, Nevin McDougall, who was promoted to group vice president of BASF North America Crop Protection in February. Rea most recently served as director of BASF Specialty Products business within BASF North America Crop Protection, where he led the December 2008 acquisition of Whitmire Micro-Gen to form BASF Pest Control Solutions. Prior to that post, Rea held various global and regional marketing positions for BASF North America. He joined the company in 2001 as a national sales manager at BASF Australia, Ltd., in Sydney. Prior to joining BASF, Rea served as national product manager and director of Graintrust Venture for Combined Rural Traders in Sydney. In his new role, Rea will be responsible for all aspects of the U.S. Crop commercial business, and will spearhead initiatives to deepen BASF’s customer relationships.