Vienna-Migao Corp., a leading producer of specialty potash fertilizers for the Chinese market, and Sociedad Quimica y Minera de Chile S.A. (SQM) of Santiago, Chile, the world’s largest producer and distributor of potassium nitrate, announced May 20 at the International Fertilizer Association Conference that they have created an investment framework agreement for a joint venture for the production of potassium nitrate in China for domestic and international distribution. The jv will create a new enterprise jointly owned 50/50 by Migao and SQM. The agreement calls for the construction of a new 40,000 mt/y potassium nitrate facility in China, which is expected to be operational in the first quarter of calendar 2009 at a capital cost of US$20 million. Migao, through its wholly-owned subsidiaries, will continue to produce potassium nitrate in China, and distribute it through the newly formed jv. The jv will distribute any exports of potassium nitrate produced by Migao or the jv, as well as imports of SQM’s potassium nitrate to China. In addition, the jv will distribute any exports of products produced by Migao. “We are very pleased to enter into this agreement with SQM. This mutually beneficial agreement leverages SQM’s strong international network and Migao’s established presence throughout China,” said Mr. Liu Guocai, Migao’s CEO. “This agreement expedites Migao’s ambition of becoming recognized as a leading international fertilizer company.” Patricio Contesse, SQM CEO said, “We are thrilled at this opportunity to work with Migao in the growing Chinese market, as we believe the synergies we are creating will benefit us both. This agreement will allow us to further develop our presence in one of the most important markets for the fertilizer industry, and it is consistent with our strategy of strengthening our worldwide leadership position in our three core businesses.” SQM and Migao will now take the next steps to effect the jv, including seeking the necessary approvals from the Chinese government.
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Canpotex looks at three port options
Saskatoon-Canpotex Ltd., which has been looking for new port capacity for some time, said last week it is considering three options that could add 10 million mt/y of handling capacity. These include new facilities at Prince Rupert, B.C. or Cherry Point, Wash., or a further expansion to the existing Canpotex terminal in Vancouver. Canpotex is already expanding the Vancouver location to some 8.5 million mt. With this upgrade, due in 2010, Canpotex capacity will be 12 million mt/y. The new 10 million mt would be on top of that. Mosaic President Jim Prokopanko outlined the pros and cons of all three options. Vancouver is congested, but expandable. Prince Rupert would be one day closer to the Asian markets, but is served by only one rail line. Cherry Point would mean a border crossing, but the location can easily accommodate large vessels. The price tag for these options is put between $300-$500 million. In addition to its existing Vancouver terminal, Canpotex also has a facility in Portland, Ore.
LOL earnings up in 1Q
Arden Hills, Minn.-Land O’Lakes Inc. reported net income of $61.3 million on sales of $3.26 billion for the first quarter ending March 31, 2008, compared to the year-ago $52.6 million and $2.2 billion. The recent quarter sales included $487 million in crop protection products (CPP) sales that would not have been included in LOL’s financials before the repositioning of Agriliance LLC assets in 2007. With the CPP sales factored out, net sales for the quarter were still up 27 percent. LOL did report a $10.9 million pretax loss in its agronomy business, compared to a year-ago $1.6 million pretax loss. LOL said CPP sales are up 52 percent over first quarter 2007 numbers, and the company expects a solid year for this business. This reflected sales of $487.2 million in first quarter 2008, versus the CPP unit of Agriliance posting $256.4 million in sales in first quarter 2007. The increase was primarily related to sales from the CPP business to the current Agriliance retail business, which were previously recorded as intercompany transfers rather than sales. An estimated $15 million in vendor rebates that would have appeared on the company’s books in the first quarter under previous accounting methods will be booked later in the year.
PotashCorp to donate $1 M to China quake relief
Saskatoon-Potash Corp. of Saskatchewan Inc. said May 16 that it made a donation of US$1 million to assist relief efforts in China following an earthquake that struck Sichuan Province on May 12. The donation will be directed to the China Charity Federation for use by the Sichuan Charity Federation. “We extend our thoughts, prayers and support to the thousands of people whose lives have been affected by this tragedy,” said PotashCorp President and CEO Bill Doyle. “Our friends and business partners in China say it is a traditional value in their country that when disaster strikes, help comes from all sides. We share this value and are responding quickly in their time of need.” This donation follows a commitment to the relief efforts in Myanmar through CARE USA, which was announced at PotashCorp’s annual meeting of shareholders on May 8.
Aurox to study Balla Balla phosphate assets
Perth-Aurox Resources Ltd., an Australian iron ore development company, says it also has phosphate assets for development at its Balla Balla iron ore location in northern Western Australia, not far from Port Hedland. Currently, the phosphate was slated to be removed as a waste product from magnetite mining. However, with phosphate rock moving from $50/mt to $400/mt on world markets within the past year, Aurox is now giving phosphate another look. It is moving ahead with studies into the beneficiation and sales of phosphate from the project. It currently estimates that its deposit could have well over 100 million mt. Aurox says it is already well advanced in the development of Balla Balla, having completed a bankable feasibility study for 6 million mt/y of magnetite iron ore production. It says it has in place two 15-year sales contracts for total of 6 million mt/y, increasing to 10 million mt/y in year five with major Chinese steel companies. The facility is near major ports, gas, and power grids with main highway access. Iron ore shipments to China could begin as early as 2010.
TFI joins other ag groups for presentation at the UN
Washington-The Fertilizer Institute (TFI) joined representatives from the Soil Science Society of America (SSSA), the Soil and Water Conservation Society, and the World Bank in May in conducting a United Nations (UN) learning center course titled A Global Toolbox to Manage Water and Nutrients for Agri-Communities. TFI Vice President of Scientific Programs Bill Herz presented at the UN sanctioned course, which was held as a part of the sixteenth session of the Commission on Sustainable Development (CSD-16) at UN headquarters in New York City. The objective of the learning center course was to teach delegates about technologies and tools, including best management practices (BMPs), available to achieve sustainable agricultural production goals and improve water quality and availability. Through the center, delegates learned how to identify the best management practices or land practices within the toolbox that protect and enhance water quality. TFI’s presentation centered on its stewardship system of using the right fertilizer product at the right rate, time, and place. “Using the tools that are available to them, farmers can properly manage fertilizers and on-farm sources of nutrients to meet food production needs while protecting the environment,” said Herz. “With today’s food supply crisis as a backdrop, it is important to remember that adequate soil fertility is often a limiting factor in enhanced food production.” The Commission on Sustainable Development – also known as CSD – was created in December 1992 to ensure effective follow-up of the 1992 United Nations Conference on Environment and Development (UNCED, also known as the Earth Summit), in Rio de Janeiro, Brazil, where world leaders signed the Framework Convention on Climate Change and the Convention on Biological Diversity; endorsed the Rio Declaration and the Forest Principles; and adopted Agenda 21, a 300-page plan for achieving sustainable development in the 21st century. A copy of TFI’s learning center presentation can be found on TFI’s Web site at www.tfi.org.
TFI tells GOP senators about high natural gas prices
Washington-The Fertilizer Institute (TFI) on May 16 discussed the impact of the natural gas crisis on the U.S. fertilizer industry before the U.S. Senate Republican Conference at a hearing titled More American Energy: Lowering the Cost of Energy and Balancing the Family Budget. Terra Industries Inc. President and TFI Chairman Michael Bennett testified on behalf of TFI. Bennett told the group that “in seven of the last eight years since 2000, global consumption of grain and oilseeds has exceeded production. If the world’s farmers stopped growing food today, we would only have enough grains in the world’s storage bins to feed the world’s population for 55 days.” He told the senators that fertilizer use currently represents 40 percent of the world’s food production and will have to continue to be a part of the solution toward resolving the food crisis. He emphasized that escalating domestic natural gas prices had caused 26 U.S. nitrogen plants to shut down since 2000. “Currently, only 30 nitrogen plants are operating in the U.S. and 55 percent of the U.S. farmer’s nitrogen fertilizer is imported. In less than 10 years, we went from being basically self-sufficient in nitrogen fertilizer supply to importing more than half of our needs.” He said America’s food security ?Çô and by extension, its national security ?Çô will be jeopardized if action is not taken to address the country’s natural gas crisis. He said TFI supports the newly introduced “Domestic Energy Production Act (S.2958),” which the Senate Republican leadership recently introduced. He added that the fertilizer industry particularly supports provisions that would allow states to petition to lift federal moratoriums on drilling off their shores and the bill’s efforts to promote important coal-to-liquids technologies and energy production initiatives.
Management Briefs
Glenn Stroud has been appointed to the new position of general manager of Agrium U.S. manufacturing, assuming overall responsibility for Agrium’s U.S. nitrogen and phosphate operations. Stroud will remain based at Borger, Texas, and continue to report directly to Stephen Dyer, Agrium’s vice president of manufacturing, who announced Stroud’s promotion May 21.
Dyer also announced that Erik Vettergren has accepted the position of plant manager of Agrium’s Conda Phosphate Operations near Soda Springs, Idaho, overseeing processing operations at that phosphate fertilizer plant. Lin Kramer will continue to manage Conda mining operations and, like Vettergren, will report directly to Stroud.
Stroud has held numerous leadership positions within Agrium the past eight years, including general manager, U.S. Nitrogen; production manager, Conda Phosphate; and production manager, Kennewick, Wash., Nitrogen Operations. A Montana State University graduate with a Bachelor of Science degree in chemical engineering, Stroud has more than 20 years of experience in the fertilizer and chemicals industry, including a wide spectrum of engineering, operations and maintenance responsibilities. Prior to joining Agrium in 2000, he held a number of leadership positions with the Unocal Corp.
It also was announced that Charles Ross, who managed Conda Phosphate Operations for a number of years, has been named start-up manager of Agrium’s $1.2 billion nitrogen complex in Damietta, Egypt, which will have a combined capacity of 1.3 million mt of urea and 100,000 mt of net ammonia after it is completed in 2010.
Agrium will have a 60 percent interest in the EAgrium venture and be the exclusive marketer of its exported nitrogen products. EChem and EGas, which are owned by the Egyptian government, will hold a 24 percent interest. GASCO, the national operator of a gas distribution grid, will hold a 9 percent interest, and the Arab Petroleum Investment Corporation will hold a 7 percent interest.
The 2008 IFA International Crop Nutrition Award last week was presented to Dr. Achim Dobermann, Deputy Director General for Research of the International Rice Research Institute (IRRI), for promoting the ecological intensification of rice, maize, and soybean production systems in many countries. IFA noted that given the current food situation, Dr. Dobermann’s work on rice, a staple food for about two-thirds of the global population, is particularly relevant.
The International Plant Nutrition Institute (IPNI) said May 17 that Incitec Pivot of Australia is joining the group as a full member. IPNI, which was launched in January 2007, has as its mission to develop and promote scientific information about the responsible management of plant nutrients. Julian Segal, Incitec Pivot managing director and CEO, and James Whiteside, general manager, supply chain and trading, will join the IPNI board of directors.
Market Watch
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 85.18 | 89.05 | 39.47 |
| CF Industries | CF | 131.87 | 138.73 | 42.95 |
| Intrepid Potash | IPI | 46.83 | 46.77 | N/A |
| Mosaic | MOS | 122.51 | 128.93 | 32.27 |
| PotashCorp | POT | 199.74 | 204.15 | 67.87 |
| Terra Industries | TRA | 40.17 | 46.15 | 19.03 |
| Terra Nitrogen | TNH | 150.66 | 148.04 | 76.02 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 41.45 | 41.15 | 40.85 |
| Deere & Co. | DE | 80.95 | 83.61 | 58.14 |
| Scotts | SMG | 28.66 | 28.83 | 46.40 |