Tampa-Helm Fertilizer Corp. has announced that it has entered into a long-term lease agreement with IC Rail Marine Terminal to construct a 60,000 ton capacity UAN solution terminal in Convent, La. Construction of the terminal is planned to coincide with the startup of the AUM UAN plant in Trinidad, which is scheduled to commence operation in October 2009. This plant will produce 1.4 million mt of UAN solution per annum, with Helm the sole marketer of the production. The Convent, La., location, accessible by ocean-going vessels, will serve as one of the principle distribution points for Helm in North America. Helm says this terminal, combined with Helm’s existing network of owned and leased terminals, will enable the company to provide reliable and consistent service to barge, rail, and truck customers in key UAN markets.
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Incitec Pivot cuts guidance, delays AN project
Melbourne-Incitec Pivot Ltd., citing a deteriorating outlook for mining and the use of explosives, has cut its earnings guidance to A$450 million after taxes for 2009. Earnings for 2008 were A$653 million. IPL said its Dyno Nobel business in North America has been slow, with coal production cutbacks in the Powder River Basin and accelerating softness in the quarrying and construction sector. It expects Australian demand to keep pace with 2008; however, it says that a forecast lag in demand growth pushes the demand and supply balance out 12 months, to 2014 rather than 2013. As a result, IPL has decided to slow the construction of the A$935 million, 330,000 mt/y Moranbah ammonium nitrate project in Queensland. While mechanical completion will now be up to 12 months later than planned, IPL said beneficial operation will commence in the fourth quarter 2011, only six months later than previously expected. IPL, which bought Dyno Nobel in 2008, opted to revive the Moranbah project last summer (GM Aug. 8, 2008). Dyno Nobel had shut down the project in late 2007 (GM Dec. 17, 2007).
Vale buys Rio Tinto iron ore and potash assets
Rio de Janeiro-Companhia Vale do Rio Doce (Vale) said Jan. 30 that it entered into a purchase and sale agreement with Rio Tinto Plc (Rio Tinto) to acquire iron ore and potash assets through an all-cash transaction. The price to be paid for the iron assets amounts to US$750 million, while the potash deposits will be acquired for $850 million, totaling $1.6 billion. The potash assets include 100 percent of the Rio Colorado project; provinces of Mendoza and Neuquén, Argentina; and 100 percent of the Regina project, in Saskatchewan, Canada. Rio Colorado comprehends the development of a mine with an initial nominal capacity of 2.4 million mt/y and potential to be expanded up to 4.35 million mt/y, construction of a railway spur of 350 km, port facilities, and a power plant. Estimated resources amount to 410 million mt. Regina is still at exploration stage, with potential to deliver an annual output of 2.8 million mt. The area already has water, power, and rail infrastructure to serve the project, allowing the transportation of the final product to Vancouver, thus facilitating access to the fast-growing Asian market. Vale already operates Taquari-Vassouras, state of Sergipe, Brazil, where it produced 607,000 mt of potash in 2008. Additionally, it is evaluating the feasibility of potash projects in Brazil (Carnalita) and Argentina (Neuquén), which will involve the use of solution mining, the same technology planned to be employed at Rio Colorado. Simultaneously, it is developing the Bayóvar phosphate project in Peru, expected to come onstream in the second half of 2010, with an estimated capacity of 3.9 million mt/y and budgeted capital expenditures of $479 million. The iron ore assets being acquired include 100 percent of the Corumbá open pit iron ore mining operations, state of Mato Grosso do Sul, Brazil, with associated logistics assets, including port and barges.
Scotts touts 1Q sales, upgrades guidance
Marysville, Ohio-Scotts Miracle-Gro Co. reported a 3 percent increase in sales during the first quarter ending Dec. 27, 2008, to $318 million from the year-ago $308.7 million. The improvement was led by a 9 percent increase in its global consumer business and a 5 percent improvement in global professional. Scotts LawnService revenues were up 1 percent, while those for specialty retailer Smith & Hawken were off 23 percent due to a sharp decline in holiday sales. Scotts remained in the seasonal net loss column at $57 million ($.88 per diluted share), versus the year-ago $56.8 million ($.89 per share). Scotts increased its full-year outlook on an adjusted basis to a range of $2.10-$2.30 per share as a result of lower-than-expected commodity inflation, incremental volume in private label categories, and favorable interest rates. Previously, the company said it expected adjusted earnings for the year of $2.00 per share. Scotts also expects to generate free cash flow of $150-$170 million for the year, growth of up to 20 percent relative to 2008. “Strong retailer support, combined with our new product offerings and aggressive marketing plans, give us positive momentum as we enter the season,” said Jim Hagedorn, Scotts CEO and chairman. “Our success in 2009, however, will be based on keeping consumers engaged in lawn and garden ?Çô a category that has historically fared well in economic downturns.” Analysts have noted that Scotts should benefit in 2009 due to the loss of one private label competitor, Spectrum Brands Inc., which has moved out of the growing media business.
Magellan AA margins much improved
Tulsa-Magellan Midstream Partners LP reported a huge increase in operating margins from its anhydrous ammonia pipeline system for the full year and fourth quarter ending Dec. 31, 2008. Full-year margins were $8.6 million on revenues of $22.7 million, versus the year-ago loss of $3 million on revenues of $18.3 million. Annual expenses were down to $14.1 million from $21.3 million. Volumes shipped in 2008 were 822,000 st versus 2007’s 716,000 st. Fourth-quarter operating margins were $1.9 million on revenues of $6.2 million, versus the year-ago $1.4 million and $5.2 million, respectively. Fourth-quarter expenses were up, at $4.2 million from the year-ago $3.8 million. Fourth-quarter volumes were also up, at 198,000 st from the year-ago 183,000 st. Magellan said revenues were up due to higher average tariff rates and additional shipments. Operating expenses increased due to higher environmental accruals related to historical releases primarily offset by lower maintenance expenses due to project timing. Magellan full-year 2008 net income was $346.6 million ($3.27 per diluted share) on sales of $1.2 billion, versus 2007’s $242.8 million ($2.60 per share) and $1.3 billion. Fourth-quarter net income was $85.6 million ($.83 per share) on sales of $301.4 million, versus the year-ago $72.2 million ($.74 per share) and $376.0 million.
Bunge 4Q fertilizer EBIT off 656 percent
White Plains, N.Y.-Fertilizer earnings before interest and taxes (EBIT) for Bunge Ltd. were off 656 percent in the fourth quarter ending Dec. 31, 2008, to a negative $289 million versus the year-ago $52 million. However, for the year ending in December, EBIT was up 18 percent, to $321 million versus 2007’s $271 million. Fourth-quarter fertilizer sales were off 23 percent and volumes were off 33 percent. Bunge said fert results suffered in the quarter due to low sales activity, falling prices, and the devaluation of the Brazilian real. Volumes were lower due to tight farmer credit. Sales were $985 million, down from $1.27 billion, while volumes were 2.39 million mt, down from 3.55 million. Annual sales were up 50 percent, to $5.86 billion versus the year-ago $3.92 billion, while volumes were off 15 percent, to 11.13 million mt versus 13.1 million mt. Company-wide, Bunge posted a fourth-quarter loss of $210 million ($1.89 per diluted share) on sales of $10.94 billion, versus the year-ago $245 million ($1.82 per share) and $12.47 billion, respectively. For the year, Bunge net income was up 37 percent, to $1.06 billion ($7.73 per share) on sales of $52.57 billion, versus 2007’s $778 million ($5.95 per share) and $37.84 billion. Bunge said that overall, periods of low demand are short lived for its core products. It expects to work through higher cost inventories of fertilizer in the first half of 2009. It also expects tight agricultural commodity supplies will support Brazil farm economics and spur fertilizer purchases. The company is giving 2009 guidance of $6.90-$7.60 per share.
Russia assesses damages in Uralkali 2006 accident
Moscow-Uralkali has received a report from the latest Russian government investigation of the Uralkali Mine 1 accident that occurred in October 2006. While the new report states that “the cause of the accident was a combination of geological and technological factors,” it also suggests that the problems could have been detected earlier. In addition, it cites a “failure to leave a protective pillar under the railroad and a substantial delay in and incomplete scope of backfilling operations.” It listed expenses related to the resettlement of Berezniki residents and the construction of a 6-kilometer railroad bypass totaling 3.1 billion roubles (US$85.1 million). The government commission also mentioned possible future expenses. Uralkali said there has been no judicial decision requiring it to reimburse the expenses; however, the company said it cannot give any assurance that claims will not arise for the reimbursements, which could exceed 3.1 billion roubles. Uralkali as of Jan. 28 was still awaiting appendices to the commission decision for more study. Uralkali reiterated that it had already proposed to compensate voluntarily, to the tune of 3 billion roubles, which includes the costs of relocating 850-meter and 6-kilometer railway routes.
Sultan to acquire Mali phosphate deposit
Perth-Sultan Corp. Ltd. said Feb. 2 that it has entered into an agreement to acquire the Chamaguel Phosphate Project located in Mali, West Africa. It says the project has been known since 1935 and recent work has been by PDRM Geological Consultants, consisting of surface mapping and grid sampling, identified a large phosphate deposit. Work completed to date plus confirmation and extension sampling to be undertaken by Sultan should allow an initial JORC Compliant Resource estimate to be completed in the second half of 2009. Sultan will acquire 100 percent capital of Aether Minerals and Energy Ltd. Ather’s main asset is its 90 percent holding of Afriresources Mali SA. Afriresources has 100 percent ownership of a 185km2 lease located in the Tilemsi phosphate concession (incorporating the Chamaguel deposit) of Gao, Mali in West Africa. The commercial terms include the issuance of 60 million shares at settlement, with further ordinary shares to be issued upon achievement of production and product delivery to customers. Achievements of these milestones will also trigger certain cash payments to Aether. Sultan notes that Mali currently imports all of its phosphate. As a result, the government is seeking to have a local supplier of phosphate. Local demand is put at 220,000 mt/y. Sultan is an Australian base metals explorer and emerging zinc producer.
S&P downgrades Coffeyville Resources
New York-Standard & Poor’s Rating Services has downgraded the outlook for refiner and nitrogen marker Coffeyville Resources LLC from stable to negative, citing concerns regarding near-term cash flow stability and the potential for lower debt amortization on the outstanding term loan that may result from demand and margin contraction on refined products. Specifically, S&P worries that market conditions for diesel and fertilizer may weaken without a corresponding improvement in gasoline margins. S&P said this could put pressure on the company’s financial covenants and further reduce cash sweeps. S&P has affirmed Coffeyville’s B corporate credit rating and BB- issue-level rating on its senior secured credit facilities, indicating expectations for a very high (90-100 percent) recovery of principal in a payment default.
Synagro $1.2 B contract cancelled after guilty plea
Detroit-The city of Detroit and Synagro Technologies have mutually agreed to terminate Synagro’s $1.2 billion contract to produce efficiencies and environmental benefits for municipal water treatment operations after one of the leading figures in a bribery scandal that surfaced last summer (GM Archives) pleaded guilty. James Rosendall Jr., a Synagro vice president, admitted in court to charges of conspiracy to bribe public officials in exchange for the sludge-recycling contract. On Jan. 29, Detroit Mayor Kenneth Cockrel asked for Synagro to terminate the contract and it agreed. Rosendall, who was earlier terminated, faces up to 11 months in jail and fines up to $200,000. Cockrel explained the city’s position as follows: “Based on the guilty plea and conviction of Rosendall and the way this contract was approved, it became clear that we needed to take immediate action to terminate this contract. It also became evident that we needed to terminate this relationship in a way to protect the city against any legal action as well as to ensure that we were able to dispose of the excess solids in an environmentally expedient way. I, like many others in this city, am looking forward to ending this sad chapter in our city’s history and ending corruption in city government.” He said Synagro has agreed not to pursue any legal action against the city for whatever reason based on the termination. The mayor said Synagro also agreed to cooperate in the short-term arrangement the Detroit Water and Sewerage Dept. (DWSD) has made for disposal of sludge material that can’t be incinerated. “We reached this mutual decision with the city because it was appropriate under the circumstances,” said Darci McConnell, a Synagro spokesperson. “We at Synagro take our legal, ethical, and environmental obligations seriously, and we are confident that the controls we have in place will ensure that inappropriate behavior will not be repeated.” Although not entirely unexpected, the developments leave DWSD scrambling. Officials confirmed arrangements have been made with an existing contractor, Homrich Inc., which already hauls city waste to landfills, to truck sludge to a landfill owned by Waste Management, which also is already under contract with the city. The city incinerates most of the sewage sludge at its waste treatment plant in southwest Detroit, but when the amount of sludge exceeds the incinerators’ capacity the remainder is sent to landfills – an arrangement the Synagro contract was supposed to replace with recycling. There was no word on a long-term strategy or replacement for the Synagro contract.