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Antitrust suit filed against several potash producers
A federal antitrust suit was filed against several major international potash producers Sept. 11 in U.S. District Court in Minnesota. Those producers listed as defendants in the case, styled as Minn-Chem Inc. v. Agrium Inc., include Agrium, Agrium U.S. Inc., Mosaic Co., Mosaic Crop Nutrition LLC, Potash Corp. of Saskatchewan Inc., PCS Sales (USA) Inc., JSC Uralkali, RUE PA Belaruskali, RUE PA Belarusian Potash Co., BPC Chicago LLC, JSC Silvinit, and JSC International Potash Co.
The plaintiff, Minn-Chem Inc., is seeking class action status for all persons and entities who purchased potash in the U.S. directly from one or more of these defendants between July 1, 2003, and the present. The plaintiff alleges that in order to maintain price stability and increase profitability, the defendants conspired and combined to fix, raise, maintain, and stabilize the price at which potash was sold in the U.S. As a result, the plaintiff says potash prices in the U.S. increased dramatically from 2003 onward. The plaintiff is seeking injunctive relief and to recover damages, including treble damages, cost of suit, and reasonable attorneys’ fees.
Minn-Chem was identified as a Minnesota corporation based in Sanborn, Minn., that purchased potash directly from one or more of the defendants during the class period and suffered antitrust injury as a result. A Minn-Chem attorney told Green Markets the company still has a few employees but is no longer involved in manufacturing. The company used to manufacture product for farmers and cooperatives. Higher potash prices were reportedly one reason it stopped.
The suit alleges that the three Canadian producers and the three from the Former Soviet Union account for 71 percent of potash market exports, with this facilitating their ability to implement the conspiracy. In addition, the suit says there is a high degree of cooperation among competitors with overlapping ownership interests. It also says the companies have routinely held meetings during an “exchange program of mutual visits,” which “promoted the discussion of current issues affecting the potash industry and the sharing of experience.” The suit details specific meetings between industry executives and company participation in industry organizations.
The suit alleges that as a part of the conspiracy, at least in part, there were coordinated restrictions in potash production that resulted in higher prices. Specifically, it alleges that in 2006, PotashCorp and BPC jointly limited production in an effort to compel Chinese buyers to accept a price increase that would eliminate their “discount” and set a benchmark for other buyers around the world. The suit says other leading potash producers followed. The suit also points to restrictions and price increases in 2007-2008.
Green Markets will be in contact with all defendants for comment. However, as noted by Agrium on Friday morning, the lawsuit was just filed and its attorneys are now reviewing it. Mosaic had the same response for the Minneapolis Star Tribune.
The potash industry is no stranger to antitrust lawsuits and has won some and lost some in the past (GM Archives), though there have been none in several years.
Rove offers election perspective to fert conference; World Food Program speaker highlights global hunger
Some 780 fertilizer industry representatives from around the world gathered in Seattle, Wash., Sept. 7-10 for The Fertilizer Institute’s 2008 World Fertilizer Conference. Despite hotel registration headaches caused by a computer problem at the downtown Westin Seattle that left some delegates without rooms on the opening night of the event, attitudes at the conference were upbeat and were buoyed by optimism about continued strength in global fertilizer pricing and demand on a long-term basis. On a near-term basis, the situation appeared to be more bearish, at least for some products (see Market Watch, p. 2).
Attendees were treated to a keynote address on the second day of the conference by well-known political strategist Karl Rove, former deputy chief of staff and senior advisor to President George W. Bush and current political analysis contributor to Fox News, Newsweek magazine and The Wall Street Journal. Rove provided interesting insights into the presidential race, as well as recollections from his time in the Bush White House.
Rove characterized the current race between Democratic presidential nominee Barack Obama and Republican nominee John McCain as the “most weird” and “most exciting” in memory, noting that this race has been the “longest succession struggle” in U.S. history, with “one wild set of candidates.” He cautioned that the two-plus years of campaigning have been “certainly entertaining,” but have also been completely exhausting for the candidates and ultimately not healthy for the country.
Rove turned quickly to the vice presidential picks, observing that “we may have an election for the first time when the vice presidential candidates matter.” He referred to Republican vp nominee Sarah Palin as the “gun-toting, mini-skirt wearing governor of Alaska,” and said she would not have been his pick for the number two slot on the Republican ticket. “I would have been more conventional, but I probably would have been wrong,” he said, acknowledging that McCain needed to “shake up the race,” and that he was “damned impressed” with Palin’s debut speech in Dayton, Ohio. He cautioned, however, that Palin remains a “risky choice” for the Republican ticket. “You can’t say with a straight face that either side has made a choice that is most qualified to be president,” he said.
Rove recalled that he was against George W. Bush’s pick of Dick Cheney for the Republican vp slot in 2000, arguing at the time that it was a mistake to choose someone who had served under the senior President Bush and that Cheney offered no political advantages. “I had all the political reasons, but Bush made it about governing,” Rove said. “You need a governing choice, not a political one. Both candidates this year made a political choice for vice president.”
Rove acknowledged his own political leanings several times, claiming that the biggest spenders in the election so far have been the Democrats, but that the contest remains a “horse race” despite a bad economy, an unpopular war, and an unpopular sitting president. He also groused that press coverage of the race has been “consistently one-sided.”
While McCain’s focus has been the war on terror and U.S. energy policy, Obama’s talking points have been the economy, health care, and taxes, Rove said. Obama’s strategy, he argued, is to “just get enough” of evangelical, catholic, and Latino voters while broadening his appeal to blue-collar voters ?Çô those same households, Rove joked, where Obama “gets creamed,” because voters “cling to religion, guns, and xenophobia.” Rove said McCain also needs to appeal to those blue collar households that voted for Hillary Clinton, and is hoping that his choice of Palin is a “risky gamble that pays off.” He added that McCain needs to talk more about health care and other pressing “kitchen table” issues. “McCain has good instincts, but he’s not comfortable talking about it,” he said.
Looking at the list of states in play for each candidate to reach the required 270 electoral votes, Rove said Obama needs to carry every state that went for John Kerry in 2004 plus Iowa, Nevada, New Mexico, and either Virginia or Florida. McCain, on the other hand, must hold the Bush states and add New Hampshire, Pennsylvania, Michigan, and Wisconsin if he loses Iowa. In both cases, Rove said, “Ohio will be ground zero again this year.”
When asked what the Bush legacy will be, Rove argued that history will be kind and that Bush will be seen as a reformer at home due to efforts to save social security and improve education through the No Child Left Behind program. He also highlighted the war on terror. “He has kept us safe for seven years, and it has not been by accident,” Rove said, cautioning delegates that “you know about only a fraction of the plots to harm our country.”
Rove closed with an emotional account of Bush’s many meetings with the parents of soldiers who have died in Iraq and Afghanistan. He also offered a conciliatory perspective on the current election. “It is a reminder that the quality of the candidate, what they do and say, really does matter,” he said. “Regardless of what happens, we will have a historic election. And either way, it will be okay.”
The keynote speaker for the third day of the conference was Karen Sendelback, president and CEO of the Friends of the World Food Program (WFP). She offered a sobering perspective on rising food and fuel prices, saying soaring costs have pushed more people into poverty and that 850 million across the globe are now “chronically hungry.” Noting that a child dies every five seconds from hunger, she referred to the misery index in poor countries as a “silent tsunami” that goes largely unreported.
Sendelback said the WFP is a food aid agency, but its mission is greater than simply delivering food. She said the WFP also removes land mines, referring to it as the “largest de-miner in the world.” It also delivers medicine for the World Health Organization, and invests considerably in local farmer economies. She noted that 93 cents of every dollar donated to the WFP goes directly to the field, and that 80 percent of the WFP’s cash is spent in the developing world.
Sendelback described a “perfect storm” of factors contributing to the global food crisis, including a shift to a high-protein diet in China, India, and Brazil that is taking grain off the world market; the surging price of oil; the global linking of food and fuel; increasingly severe weather due to global climate change; and the falling value of the U.S. dollar. She said the most critical “food crisis nations” currently are Sudan, Guatemala, Haiti, and Myanmar.
With one-half of the world’s hungry consisting of “marginalized farmers,” Sendelback said the time has come to “revolutionize agriculture” to put more food in the pipeline, to “look to the plight” of the small farmers, and to respond to the vulnerability of import-dependent nations. She urged support for legislation to cut hunger in half by 2015. “Hunger is a solvable problem,” she said. “There is enough food in the world to feed everyone.”
At the conclusion of Sendelback’s speech, TFI awarded the Friends of the World Food Program with a $150,000 donation, which Sendelback said would help fund a Junior Farmer Field and Life School targeted at HIV orphans in developing countries.
NOLA production slowly returning; Ike on the way, closes down Texas Coast
New Orleans area fertilizer producers are slowly returning from the shutdowns they took in preparation for Hurricane Gustav. CF Industries Holdings Inc. said Sept 9 that that electrical power and natural gas supplies have been restored to its Donaldsonville, La., nitrogen complex and that the company had begun testing circuitry and equipment in preparation for startup. With electrical power restored, CF expected to begin shipments from inventory at the complex Sept. 9.
“We expect to begin an orderly production startup by mid-week, provided that Hurricane Ike doesn’t develop into a threat to the Gulf Coast and the complex,” explained Stephen Wilson, CF chairman and CEO. If startup proceeds as currently expected, all units at the complex could be in production by late next week.
In the meantime, Terra Industries Inc. said Sept. 11 that utilities had been restored to its Donaldsonville ammonia plant and that damage repairs are almost complete. Terra said it would be attempting to restart the plant over the next few days.
The Mosaic Co.’s Faustina phosphate processing plant was still out of service last week.
Power returned to PotashCorp’s Geismar, La., facility over the weekend. The majority of the units were back in service by Sept. 11. However, the company was keeping a close eye on Hurricane Ike, which was headed toward Texas between Corpus Christi and the Texas/Louisiana border.
BASF, which owns several major chemical facilities along the Texas Coast, told Green Markets Sept. 11 that it was closing all of its Texas Coast facilities in preparation for Ike. These include a facility at Freeport that produces ammonium sulfate as well as plants in Port Arthur, Pasadena, Beaumont, and Clear Lake. Non-essential employees were told to leave Sept. 10, according to a BASF spokesman, who said on Sept. 11 that the remainder were expected to leave within 24-36 hours.
The Agrifos Fertilizer Inc. phosphate plant in Pasadena was also reported to be going down in preparation for Ike. LSB Industries Inc. confirmed that it was taking down its Baytown, Texas, industrial nitrogen plant as a precaution.
In addition, refineries along the coast were also closing down, including ExxonMobil’s at Baytown.
Ike was slated to hit sometime Friday night or Saturday morning. The National Hurricane Center as of Sept. 11 was projecting it would hit land as a Category 3 (111-130 mph). Evacuations were underway in Galveston and Houston.
Simplot expansion approved by Forest Service
The U.S. Forest Service says its Eastern Idaho office legally approved a plan for the J.R. Simplot Co. to expand the company’s Smoky Canyon phosphate mine on the Caribou-Targhee National Forest near the Idaho/Wyoming border.
Rejecting appeals filed by the Greater Yellowstone Coalition and Shoshone-Bannock Tribes, Deputy Regional Forester Cathy Beaty in Ogden, Utah, said Caribou-Targhee National Forest Supervisor Larry Timchak complied with applicable laws and regulations in his June decision. “I believe this decision has been reached through careful environmental analysis and thorough consideration of the public’s concerns,” Beaty stated.
In a Sept. 5 letter to Marv Hoyt, the Greater Yellowstone Coalition’s Idaho director, Beaty said appeals by his coalition, the Natural Resources Defense Council, the East Idaho Group Sierra Club, and the Idaho Conservation League were filed in a timely manner and properly processed, but she dismissed appeals by the Caribou Clean Water Partnership and Defenders of Wildlife because those two groups did not provide input during a comment period.
The Greater Yellowstone Coalition has criticized Timchak’s decision, arguing the Forest Service should make mining companies clean up 17 old mines that are under federal Superfund authority first.
Timchak ruled Simplot could build two haul roads and power transmission lines outside its leases to access them. The haul roads pass through parts of the Sage Creek and Meade Peak inventoried roadless areas. He also allowed Simplot to temporarily stockpile topsoil outside its leases.
Timchak said litigation is now likely. If that happens, it’s possible a federal judge will issue a temporary restraining order or an injunction on the expansion because of water quality and roadless rule issues, he said.
The Greater Yellowstone Coalition indicates it plans to sue to block the expansion, arguing it would worsen selenium contamination in the Blackfoot River drainage. It contends the Forest Service ignored several legal issues.
Bill Bacon, general counsel for the Shoshone-Bannocks, will consult with tribal leaders to see if they want to file a motion to intervene in the Greater Yellowstone lawsuit or file their own complaint in federal court. He said the mine expansion could interfere with tribal treaty rights to off-reservation hunting and fishing opportunities.
Simplot spokesman Rick Phillips said his company would fare well in federal court. Arguments opposing the mine expansion have been addressed during a lengthy permitting process, he said.
Smoky Canyon expansion work includes new haul roads, power lines, temporary stockpiling of topsoil, and reclaiming mining pits. Simplot officials say the company needs to expand Smoky Canyon to keep its Don fertilizer plant near Pocatello running. Phosphate ore from the open pit mine is piped in slurry form to the Don Plant, where it is converted to fertilizer. The mine was opened in the early 1980s and is predicted to be depleted within the next two years. Company officials have said the expansion would provide a supply for another 15 years.
Forest Service opens 405,000 Idaho acres to phosphate mining, other development
In a Final Environmental Impact Statement issued on Aug. 29, the U.S. Forest Service announced plans to reduce the acreage of Idaho roadless national forest opened to phosphate mining, logging, and road building from 609,000 acres to 405,000 acres. At 9.3 million acres, Idaho is second only to Alaska in total acreage of federal forest land.
Under the compromise, the Forest Service designated 250 roadless areas in Idaho and established five management themes that guide road construction, timber cutting, and mineral development. It expects its final rule on roadless management to take effect within 30 days after the USDA secretary signs it.
That would supersede the 2001 roadless rule enacted by the Clinton administration, which began a legal battle that prompted 10 lawsuits. The most recent decision by U.S. District Judge Clarence Brimmer in Wyoming rejected the Clinton rule for the second time. Idaho was the first state to go to court to block the Clinton rule.
The FEIS would leave about 3.3 million acres completely roadless, with 5.6 million acres enjoying similar protection with exceptions for logging in areas where fires could put communities at risk, and 405,000 acres open to all development.
“The Idaho Roadless Rule represents the first time a state and its citizens had a direct voice in creating a plan for resolving an issue of national importance,” said Lt. Gov. Jim Risch, who was governor when the state’s plan was drafted in 2006. He noted the federal government owns two out of every three acres in Idaho. “I believe the process we used can serve as a model for resolving these difficult natural resource issues in the future.”
Risch’s proposal would have returned the 609,000 acres of roadless lands to general forest management, which would have allowed permanent roads and logging. The new plan narrowed the restrictions on logging and road building in the largest designated roadless areas – the 5.3 million acre backcountry restoration areas – to limit logging to 442,000 acres of community protection zones.
“The Department and Forest Service are committed to the important challenge of protecting roadless characteristics,” said Mark Rey, Undersecretary of Agriculture for Natural Resources and the Environment. “The preferred alternative does not authorize the building of a single road or the cutting of any trees.”
Rick Johnson, executive director of the Idaho Conservation League, and Jim Riley, president of the Intermountain Forest Association, voiced support for the plan. It also was endorsed by the motorized recreation industry, county officials, and the Roadless Area Conservation National Advisory Committee, who negotiated with Risch and the Forest Service. The Wilderness Society, however, still supports the original Clinton bans on logging and road building on 58 million acres of roadless national forest, expressing concern about phosphate mining on acreage with less protection.
“It’s ironic that on Labor Day weekend, when many Idahoans head to the state’s national forest roadless lands for their tremendous recreation opportunities, the state of Idaho is promoting a policy that would condemn 400,000 acres of those roadless lands – an amount of land about twice the size of the Sawtooth Wilderness – to more roads, more development and certainly more open pit mines,” said Craig Gehrke, director of the Wilderness Society’s Boise office.
The largely undeveloped roadless lands have been the center of controversy in Idaho since the Wilderness Act was passed 40 years ago, protecting many of the nation’s remote areas. Preservationists have sought to add much of the roadless area to the wilderness system, where logging and motorized use is banned. Loggers and miners have sought to open some areas to new roads and logging. Others simply want the areas left as they are.
The Forest Service says it has a $660 million backlog of road maintenance and improvement projects in Idaho, where it has 34,000 miles of national forest roads. Since water quality rules and the Endangered Species Act sharply curtailed timber harvests and road building in the 1990s, the pressure to log and build roads in these areas has dropped – but not the controversy.
The original Clinton rule and a Bush administration substitute giving individual states more say in roadless area regulations have been enmeshed in two-track litigation in federal courts. It remains to be seen whether the new Idaho compromise will remain free of the legal battles. Colorado is also working out its own roadless plan.
“As the Bush administration heads out the door, it is giving the logging and mining industries the keys to Idaho’s most pristine national forests. The administration seems intent on doing the same in Colorado, where it is now rushing to finalize a rule that would open undeveloped national forests in the Rocky Mountains to a dramatic increase in logging and oil and gas drilling,” said Jane Danowitz, Pew Environment Group’s U.S. public lands program director.
“While groups on the ground in Idaho did a commendable job to significantly improve the original administration plan, national forests on the doorstep of Yellowstone National Park will be left vulnerable to development. We hope a new administration will embrace the federal roadless rule as the way to protect America’s forests for years to come.”
PotashCorp worker dead after mine accident
Saskatoon-A PotashCorp employee was killed in an accident around 8:00 a.m. Sunday, Sept. 7, when his jeep-like vehicle rolled over, throwing him off. There were no other passengers. The accident occurred underground at the Lanigan mine in Saskatchewan. He was rushed to an area hospital, where he died. PotashCorp said the incident was under investigation. Grief counselors were brought to the mine, which resumed production Sept. 8. PotashCorp said this was the first fatality at one of its mines in three years. The last fatality was also at Lanigan, which employs some 500 workers. The local press and the Communications, Energy and Paperworkers Union of Canada identified the man as Robert Tkach, 61. He had been with PotashCorp for six years after 30 years with Weyerhauser.
Viterra, employees in mediation, GSU aids strikers
Regina-Viterra Inc. and members of the striking Grain Services Union were in mediation Sept. 10-11, according to GSU. As of Sept. 10, however, it said pickets were still up at Viterra’s Regina headquarters, as well as locations at Balgonie, Moose Jaw Seed, Shaunavon, and Swift Current. GSU had recently threatened that some 650 workers throughout Saskatchewan would join striking Regina office workers if the dispute was not soon resolved. Mediation discussions soon resumed. In the meantime, GSU donated $1,000 to the strike fund of the United Steelworkers Union, which continues its strike against PotashCorp. The two unions have vowed solidarity and have been giving each other moral support.
Cherokee outage expected to impact LSB 3Q
Oklahoma City-LSB Industries Inc. said Sept. 9 that its anhydrous ammonia chemical plant in Cherokee, Ala., has experienced repeated plant downtime during the third quarter. The downtime, which was caused by the plant’s unexpected mechanical failure, has reduced production and sales of UAN, and to a lesser degree, certain industrial products. While interim repairs have been made as needed, more extensive repairs will be made during a planned maintenance event that is scheduled for approximately 21 days in October 2008. The plant is currently operating at slightly below normal rates; however, additional downtime could occur until repairs are made during the plant turnaround. Cherokee has lost approximately 20 days of operation thus far in the third quarter. Although LSB said it was unable to predict the actual impact of the unplanned downtime, it believes it could reduce LSB’s Chemical Business operating income by an approximate range of $5.0 to $6.0 million ($3.1 to $3.7 million after provision for taxes) during the third quarter of 2008. “The unplanned downtime at our Cherokee plant and the impact it will have on third quarter results are temporary setbacks,” said Jack Golsen, LSB’s chairman and CEO. “As soon as our October plant turnaround maintenance event is complete, we should be back on track. Market demand fundamentals for UAN are extremely favorable which we believe will continue for some time, and the business level of the Chemical Business as a whole continues to be strong. Our Climate Control Business continues to have a good year. We are very optimistic about the long term business prospects for LSB.”
Viterra input unit hits $1 B in sales in 3Q
Regina-Viterra Inc. reports that its Agri-products unit, which supplies ag inputs to customers in Western Canada, posted C$1 billion in sales for the third quarter ending July 31, 2008, up from the prior year’s $588.3 million. Gross profits and net revenues from the unit were $255.4 million, up from $142.9 million. However, sales for the year-ago quarter excluded pre-acquisition sales attributable to Agricore United for May 2007, the largest seed and fertilizer sales month of the quarter. With the AU deal, Viterra expanded its retail facilities to 276 from 100 and acquired an additional 57 percent ownership in Westco; it now owns all of the fertilizer wholesaler and manufacturer. With its consolidation now virtually complete, Viterra says it operates 251 retail facilities. Third-quarter fertilizer sales were $521.6 million, up from the year-ago $224.2 million. Nine-month Agri-product sales were $1.38 billion, up from the year-ago $761.8 million. Gross profit and net revenues were $347.8 million, up from $177.2 million. Nine-month fertilizer sales were $783.9 million, up from the year-ago $348.3 million. Company-wide, Viterra reported third-quarter net earnings of $166.7 ($.71 per share) on sales of $2.2 billion, up from the year-ago $98.5 million ($.58 per share) on sales of $1.4 billion. Nine-month net income was $241.5 million ($1.13 per share) on sales of $5.1 billion, versus the year-ago $115.6 million ($1.05 per share) and $2.25 billion, respectively.