Martin Midstream Partners LP (MMLP) said March 3 that its new ammonium sulfate plant at Plainview, Texas, should be up and running in two weeks. The company said the new facility should help it increase overall fertilizer margins and production quality. The cost of bringing this online is put at just over $5 million.

The capacity of the new AS plant is expected to be 400 st/d, according to knowledgeable sources, who said one goal was to make the granular size more consistent. MMLP had not returned calls by March 11.

In the second quarter, MMLP will begin construction of a third priller at its Beaumont, Texas, facility at a cost of $4 million. It said the extra capacity is needed as a new prill contract will start with another major refiner Jan. 1, 2012. MMLP already has the capacity to prill 4,000 mt/d at Beaumont. Capacity at its Port of Stockton facility is 1,000 mt/d.

MMLP also confirmed that it has recently added two more refiners for prill contracts at Beaumont. The two will add $2.5 million of cash flow on an annual basis. The company processes molten sulfur into prilled sulfur on a take-or-pay fee contract basis.

MMLP also noted that it restructured its most significant sulfur supply contract, which is with CF Industries Holding Inc., effective Jan. 1, 2011, due to the volatile sulfur market. The contract is now tied to its actual supply costs of sulfur plus a margin. As a result, MMLP says it no longer has any inventory or lag time exposure. “So it’s basically a straight pass-through and we charged them for the system that we utilized to get the product to us,” Ruben Martin, MMLP chairman and CEO, told analysts.

Operating income from MMLP’s sulfur services segment, which includes both fertilizer and sulfur, was up 66 percent for the year ending Dec. 31, 2010, to $15.9 million on sales of $165.1 million from the prior year’s $9.6 million on sales of $79.6 million. The increased revenues were attributed to higher prices. Annual sulfur volumes were up slightly, to 1.13 million lt from the prior year’s 1.11 million lt. Fertilizer volumes were 274,900 lt, up from 238,000 lt.

MMLP’s annual fertilizer and industrial sulfur product sales have gone from 62,000 tons in 1997 to 275,000 tons in 2010.

As reported last week, MMLP reported a significant boost to company earnings in the fourth quarter (GM March 7, p. 13), though full-year income was down.

The only significant impact of the cold weather this winter was sulfur-related, according to Martin. He said the company had to scramble to make sure sulfur got to its sulfuric acid plant in Plainview. The facility processes molten sulfur into about 500 st/d of sulfuric acid.

MMLP has had ongoing production problems at the acid plant, with electrical problems a major issue. In 2010, such an outage caused by a winter storm took the plant offline for 65 days. Martin believes a new $3.5 million co-generation plant at Plainview will be a significant insurance policy against future outages (GM May 17, 2010).

With LSB Industries Inc.’s Pryor Chemical Co. nearing targeted rates for both anhydrous ammonia and UAN, the company is looking at tweaking current Pryor ammonia production to produce more tons than originally expected. And the company is eyeing the possibility of bringing up additional ammonia and nitric acid plants.

LSB told analysts March 3 that Pryor ammonia production is at a sustained rate, close to the targeted rate. The targeted rate has been 325,000 st/y of UAN and 35,000 st/y of excess ammonia.

LSB said it is shooting for an additional 30,000-55,000 st/y of ammonia from Pryor, above the initial target. It said this would bring market ammonia up to approximately 60,000-90,000 st/y, as opposed to 35,000 st/y.

LSB also hopes to pull the trigger in 2011 on a decision to bring two additional plants up at the Pryor site. These include 60,000 st/y of ammonia and 66,000 st/y of nitric acid. Barry Golsen, LSB vice chairman, president, and chief operating officer, said these are independent decisions and one could come up without the other, and that they are still subject to permitting as well as the company’s financial justification process. Beyond these two units, he said further facilities being brought up at Pryor are not short- or medium-term goals.

Jack Golsen, LSB chairman, CEO, and founder, said that just because 325,000 st of UAN is the target does not mean it will necessarily be produced. “It may be more profitable to maintain just 325,000 UAN and have all your increase in the sale of ammonia, because that’s where the market is, or maybe that the market for UAN drops and we have more ammonia to sell, but the market for ammonia is higher, then we’ll take that extra ammonia.”

He noted that the 325,000 st/y of UAN is the plan, but you steer down the road based on what the market is doing. So the company could wind up producing more ammonia and less UAN, depending on market conditions.

Jack Golsen said the company continues to ramp up UAN production at Pryor and is producing a significant amount of UAN each month at that location. He said the plant averaged 500 st/d of production from November 2010-January 2011. “So we don’t have any fundamental issues. We’re continuing to ramp up, it’s increasing daily and we’re averaging for the last three months 500 st/d, which is below target, but we’re moving in that direction.” He thinks the plant will be at the target rate of 325,000 st/y shortly. The plant is currently satisfying all orders.

LSB is eyeing tentative turnarounds at Pryor in July and Cherokee, Ala., in August.

LSB is expecting robust demand for fertilizer this spring. LSB said it is not doing a lot of forward selling right now because it believes prices are going to continue going up. Tony Shelby, LSB CFO and head of investor relations, said at the end of February in the three different plants it had about $20 million committed to forward selling. However, he said the company is not actively pushing forward sales right now because the demand is strong and it believes prices will be higher going forward.

As for the diesel exhaust fluid (DEF) market, Jack Golsen said the company has been conservative and remains so, but that there is a lot of potential going forward. He noted that eventually, as it is phased into the trucking industry, over a billion gallons of DEF will be sold.

LSB began producing DEF at its Cherokee, Ala., plant in January 2010 and sells it under the trade name EarthPure DEFâ„¢. It says its DEF production is currently relatively small, as the market is still in the early stage of development.

CVR Energy Inc. is very bullish about the long-term prospects for fertilizer. “You don’t recover from ending stocks worldwide in one harvest or two,” Stanley Riemann, CVR chief operating officer, told analysts March 3. “I think it is a general opinion of most economists that cover the ag market that 2011 will be a very good year, and 2012 looks very good, too. And it will be several harvests, two or three, before you get the ending stocks back into a reasonable level. So we are looking at a good 18-to-36-month run in my opinion and others as far as strength of fertilizer pricing worldwide.”

As a reflection of the current fertilizer market, John Lipinski, CVR chairman, president, and CEO said March 3 that within the past 24 hours the company had taken orders for June delivery at prices that were higher than end-of-season delivery ones.

CVR said it took $10.5 million to repair its nitrogen complex, which was damaged when a high-pressure vessel ruptured Sept. 30, 2010. The company has a $2.5 million deductible, and by the end of 2010 CVR had recovered $4.5 million in insurance. No one was injured, and damage was localized with no significant outside impacts. CVR noted at the time that it was preparing for its biannual turnaround at the nitrogen plant, and this minimized downtime.

The anhydrous ammonia complex came back up Oct. 29, and UAN followed Nov. 16.

The outage did significantly impact fourth-quarter results, which were detailed last week (GM March 7, p. 10). CVR’s nitrogen business reported a $9.7 million operating loss for the fourth quarter ending Dec. 31, 2010, compared to a year-ago operating income of $7 million. Fourth-quarter nitrogen sales were $39.4 million, versus the year-ago $39.3 million. Fourth-quarter UAN production dropped to 77,800 st, versus the year-ago 176,600 st. Fourth-quarter ammonia production was 37,700 st, down from the year-ago 39,300 st.

The company said it is no longer a controlled company, as both Goldman Sachs and Kelso & Co., the former majority stakeholders, have sold down their stakes. In fact, Goldman Sachs no longer holds shares in the company. The company is in the process of spinning off its nitrogen business as a separate company.

CVR is in the midst of an initial public offering to spin off its nitrogen unit as a separate company (GM Jan. 3, 2011, Nov. 8, 2010). The CVR nitrogen fertilizer manufacturing facility is the only operation in North America that uses a petroleum coke gasification process to produce nitrogen fertilizer, and includes a 1,225 st/d ammonia unit, a 2,025 st/d UAN unit, and a dual-train gasifier complex with a capacity of 84 million standard cubic feet per day of hydrogen.

Israeli environmentalists have stepped up their campaign to prevent Israel Chemicals Ltd. (ICL) from opening a new phosphate mine near the southern city of Arad. Residents of the city and nearby communities have petitioned Israel’s High Court of Justice to order Prime Minister Benjamin Netanyahu’s military advisor, Yohanan Loker, to refrain from intervening with Health Ministry officials over the mine. The petition called the involvement of the military secretary “foreign and irrelevant consideration in a decision on the risk factor.” The opponents of the mine also asked the government to release a report commissioned by the prime minister’s office on the impact of phosphate mining.

A Health Ministry report to the Southern District Planning Commission estimated that pollution from the proposed mine could cause several deaths a year, most notably due to cancer and respiratory problems. The ministry said it has appointed an additional expert to investigate the matter and will release a report in the coming weeks.

ICL subsidiary Rotem Amfert is planning to operate the mine at the Barir field, located just 4 kilometers from Arad. Rotem Amfert is interested in developing the field because of the exhaustion of other sites and the ease of mining phosphates at the proposed sites. ICL said that there are no health risks connected with mining at the Barir field. However, the company stressed that it would refrain from operations there if it turns out that an objective examination concludes there is a risk. ICL stressed that thousands of families in the region directly or indirectly make a living from the local phosphate industry.

K+S Ag reported a 105 percent increase in operating earnings (EBIT I) from its potash and magnesium business, to Euro475.9 million on sales of Euro1.84 billion for the year ending Dec. 31, 2010, compared to the prior year’s Euro231.7 million on sales of Euro1.42 billion. 2010 sales volumes were 6.99 million mt, up from 2009’s 4.35 million mt. K+S’s nitrogen business was back in the plus column for the year, with earnings of Euro55.7 million on revenues of Euro1.29 billion, up from 2009’s loss of Euro108.1 million on sales of Euro1.02 billion.

Company-wide, K+S operating earnings were up 205.4 percent for the year to Euro726.9 million (Euro2.33 per share) on sales of Euro5 billion from the prior year’s Euro238 million (Euro.56 per share) on sales of Euro3.6 billion. Potash/magnesium led all company segments in revenues with 37 percent, followed by salt at 35 percent and nitrogen at 26 percent.

K+S expects to pay an annual dividend for 2010 of Euro1.00 versus the 2009 dividend of Euro.20.

K+S fourth-quarter earnings were up 434.8 percent, to Euro195.2 million (Euro.69 per share) on sales of Euro1.34 billion from the year-ago Euro36.5 million (Euro.10 per share) on sales of Euro1.06 billion.

Going forward, K+S expects higher average proceeds and stable volumes from its potash business, as well as a moderate improvement in nitrogen earnings. The company expects both higher energy prices and for salt earnings to see a moderate drop.

In other news, K+S expects to complete the acquisition of Potash One Inc. in mid-May 2011. Infrastructure work and preparations for drillings are to start soon. A review of optimization approaches in the existing feasibility study are to be concluded in the second half of 2011. K+S hopes to utilize Potash One’s Legacy Project in Saskatchewan, building a new potash plant that could commence operations in 2015. It would be a solution mine, which would allow a faster production launch and a more flexible starting curve for production. It said Legacy offers the potential for gradually increasing output to significantly in excess of 2.7 million mt of KCI per year.

K+S Ag also told analysts March 10 that it has no interest in the nitrogen assets currently being offered by BASF (GM March 7, p. 1). This, even though K+S buys nitrogen from one of the assets that is for sale. K+S says nitrogen is not one of its two-pillar strategy, which includes potash/magnesium and salt. K+S is currently eyeing the divestment of its consumer/turf fertilizer business, COMPO (GM June 14, 2010).

The U.S. Bureau of Land Management admits that it doesn’t know how many bidders there will be when 125,762 acres of the Sevier Dry Lake in west/central Utah, where there are known potash deposits, will be offered in 64 parcels for competitive leasing in April.

For certain, according to BLM officials, there will be Emerald Peaks Minerals, a small Salt Lake City-based company that has been eyeing the area’s potential since 2008. “They are the project proponents, and based on their expression of interest the BLM completed the environmental analysis with the decision to go out for competitive lease sale in the first week of April,” Utah BLM spokesman Mitch Snow told Green Markets.

Great Salt Lake Minerals, which extracts sulfate of potash from the Great Salt Lake in northern Utah, has said that it is not interested in Sevier Dry Lake.

Actually, Emerald Peaks wasn’t the first to realize the potential. Snow indicated that there were at least two others working the area in the late 1980s and again in 1997, but neither went commercial. There was also actual production of sodium chloride in the late 1980s.

The Sevier Dry Lake potash reserves were estimated by Hazen Research at 5.2 million st. At a projected 50 percent recovery, production would continue for approximately 6.5 years at the rate of 400,000 st/y. In addition, the mine would be in operation for an additional two to three years for the initial development. Final reclamation would likely proceed for several years after final potash production.

The maximum lease size for a potash lease parcel under federal rules for leasing solid minerals other than coal and oil shale is 2,560 acres. Consequently, BLM has divided Sevier Dry Lake into 64 lease parcels. The maximum acreage of potash lease holdings for one entity in one state totals 96,000 acres.

The BLM expects that to develop the lease the lease holders will need to build dikes, ponds, associated access roads, and other facilities in the lease area, and on surrounding rights of way. Extraction techniques could include a number of surface ditches to recover the shallow brines and a number of wells for the deeper brines. These brines would be concentrated using solar evaporation. The minerals would then be harvested, compacted, and dried for transportation to market.

BLM noted that about 93 percent of the 2009 world potash production was consumed by the fertilizer industry, and 80 percent of what’s used on farms in the U.S. has to be imported.

BLM had the environmental assessment written and posted for the 30-day comment period on Sept. 20, when it was decided, based on comments by the Southern Utah Wilderness Alliance, that the area needed to be reviewed for wilderness characteristics.

The BLM also determined that a wilderness inventory for the area should be completed in compliance with Secretarial Order 3310 issued on Dec. 23, 2010. Following completion of this inventory, the BLM has determined that the Sevier Lake does not have wilderness characteristics. The determination was based on the lack of outstanding opportunities for “solitude,” as well as the lack of outstanding opportunities for a “primitive and unconfined recreation experience.” A large portion of the dry lake bed also failed to meet the requirements for “naturalness.”

Once a lease is issued, the BLM must approve a mining plan before any mining can commence. The proposed mining plan must also be analyzed through the public process set out by the National Environmental Policy Act. In addition, the State of Utah must issue a permit under the Utah Mined Land Reclamation Act of 1975.

Monsanto plans to invest $65 million into its Soda Spring elemental phosphorus plant as a means of upgrading its air quality control system. The company’s source of phosphate ore for the plant comes from the South Rasmussen Mine in Caribou County, which could be depleted within 18 months.

An environmental impact statement remains pending on the Blackfoot Bridge Mine, which would replace the South Rasmussen ore.

Like the J.R. Simplot Co. and Agrium Inc., Monsanto has mined phosphate in Southeast Idaho for decades. The Simplot and Agrium rock is used to manufacture phosphate fertilizers. Elemental phosphorus made at Monsanto’s Soda Springs plant, which runs three large electric furnaces, is used in the production of Roundup herbicide.

Monsanto officials hope to break ground on the thermal oxidizer and scrubbing system within 45 to 60 days. The system should be operating within 20 months. It is Monsanto’s largest capital expenditure in the Soda Springs plant since the 1960s. Officials say the investment’s scope shows the company’s long-term commitment to the region.

The Idaho Department of Environmental Quality (IDEQ) welcomed Monsanto’s announcement.

“IDEQ is very pleased that the thermal oxidizer and air scrubbing system will be installed at the Soda Springs plant. This system will reduce particulate emissions and reduce the plant’s impact on visibility,” said Thomas Edwards, IDEQ regional air manager. “This is a significant investment in state-of-the-art pollution control technology.”

Monsanto spokesman Trent Clark said the Soda Springs plant is already one of the cleanest, most environmentally sound phosphorus production plants in the world.

Most of Monsanto’s carbon monoxide is recycled in the plant’s processes, but some of it is burned off in three flares. Under the new system, that extra carbon monoxide will be routed to the thermal oxidizer, where it will be superheated in a burn chamber and captured, eliminating the emissions.

Installation of the new technology is the result of suggestions made during Monsanto’s 10-year permitting process. Monsanto Project Process Engineer Brian Kemmerer said it is the best available control technology for the furnaces. Clark said Monsanto employees learn to measure the opacity of the sky based on smoke emissions.

Several new employees will be hired to incorporate the new system into the plant’s integrated computer system. About 400 are employed at the Soda Springs plant.

Viterra Inc. reported net earnings of C$99.6 million ($.27 per share) on sales of $2.47 billion for the first quarter ending Jan. 31, 2011, up from the year-ago $10.6 million ($.03 per share) on sales of $1.78 billion.

Fertilizer sales were up 45 percent during the quarter, to $175 million from the year-ago $120.6 million. Volumes moved up to 373,000 mt from 310,000 mt, while the average margin per mt sold was $98.71, up from $57.05. Viterra said volumes were up due to higher commodity prices and higher expected usage rates, which has motivated farmers to take early delivery of product.

As of Jan. 31, 2011, North American retail customer prepayments were at record levels of $338.9 million, a 24 percent increase over the year-ago date’s $272 million. Viterra cited strong seed and fertilizer demand, as well as higher fertilizer prices.

First-quarter crop protection sales were $5.2 million, up from $4.1 million, while seeds were $1.1 million, up from $578,000.

Overall, gross profits for the Agri-products sector, which include the above inputs, were $53.5 million on sales of $292.6 million, up from the year-ago $32.6 million on sales of $215.4 million. Only about 10 to 12 percent of Agri-products sales occur in the first quarter.

For fiscal 2011, Viterra expects strong demand in Western Canada due to improved commodity prices and increased nutrient requirements caused by excess moisture in 2010 and 2011. It expects blended fertilizer margins will be in the $100-$120/mt range.

Viterra also expects increased demand for canola seeded acreage as a result of higher oilseed prices. It is currently estimating seeded acres of canola will increase to about 18-19 million acres in 2011, versus 16.8 million acres in 2010.

Viterra expects fertilizer volumes to Western Canada will need to be up 5 to 10 percent to replenish soils that were impacted by 2010 flooding. “There is no question that the nutrients have been depleted as a result of excess moisture, and that, coupled with the significant incentive from commodity prices, will result in higher application rates than what we’ve seen in the past,” said Doug Wonnacott, Viterra Agri-products senior vice president. “Our best guess right now is that the Western Canadian market is probably going to be close to 4.5 million mt.” He said this is about where it was in 2008. He added that the fertilizer mix is expected to stay about the same, except for an increased need for sulfur.

Despite these strong fundamentals, Viterra cautioned that it expects an overall reduction in Western Canada seeded acreage in 2011, expecting acreage to decrease 3-4 million acres, below the 10-year average of 60 million acres. It said excess moisture last year, coupled with above-average snowfall in some areas, poses some additional risk should flooding occur entering the spring planting season.

Viterra’s input business continues to be dominated by its Canadian sales, as it has 261 retail locations in Western Canada versus only 12 in South Australia, with the latter units acquired in 2010.