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Terra Nitrogen reports 1Q net income of $81.6 M

Sioux City-Terra Nitrogen Co. LP (TNCLP) reported net income of $81.6 million ($3.93 per common unit) on revenues of $174.5 million for the first quarter ending March 31, 2008, versus the year-ago $35.3 million ($1.87 per unit) and $128.2 million, respectively. TNCLP said ammonia sales volumes were off 45 percent due to wet, cold conditions. Ammonia and UAN selling prices increased by 46 percent and 54 percent, respectively, while natural gas costs increased 12 percent. TNCLP also announced a cash distribution for the recent quarter of $4.20 per common LP unit payable May 28, 2008, to holders of record as of May 8, 2008.

Terra Nitrogen Production

1Q-08 Vol. Avg Unit Price 1Q-07 Vol. Avg Unit Price
Ammonia 38 $519 69 $356
UAN 32 502 281 502 182
Nat. Gas Cost $7.16/mmBtu $6.39/mmBtu

* Volumes in thousands.

Bunge net income up 1,964 percent

White Plains, N.Y.-Bunge Ltd. reported first-quarter net income of $289 million ($2.10 per diluted share) on sales of $12.5 billion, up from the year-ago $14 million ($.05 per share) on sales of $7.3 billion. Higher volumes and margins led to a strong performance from the fertilizer sector. The volumes increase was driven by product sales for soybean plantings, which historically are purchased in the second half of the year. Soybean farmers accelerated purchases because of favorable agricultural commodity prices and concerns about increasing crop input costs. Margins benefited from rising international prices. First-quarter fertilizer earnings before interest and tax (EBIT) were $133 million on sales of $1.2 billion, up from the year-ago $36 million and $609 million, respectively. Fertilizer volumes were up 9 percent, to 2.67 million mt from the year-ago 2.45 million mt.

Yara sells holding in SQM

Oslo-Yara International ASA said April 22 that it has sold its indirect holding in SQM with a profit before tax of approximately US$80 million. Since 2001, Yara has held an indirect equity share of the Chilean mining company, Sociedad Quimica y Minera de Chile SA (SQM), through the Chilean intermediate holding companies Pampa Calichera, Oro Blanco, Norte Grande, and SQYA, currently equal to approximately 8 percent on a fully diluted basis. Yara has decided to sell its ownership in SQM to entities controlled by its partner, Sr. Julio Ponce. Yara said SQM’s successful development of its iodine and lithium businesses has increasingly exposed Yara to businesses other than fertilizer. The shares have therefore been sold to re-deploy funds to Yara’s focused growth areas. Also since 2001, Yara has had a global marketing agreement for specialty fertilizers produced by SQM, which it says has been very successful for both parties. The sale of the shares will have no impact on the marketing agreement, which both parties continue to see as mutually beneficial.

LSB wins judgment in excess of $11 M

Oklahoma City-LSB Industries Inc. said April 18 that the Arkansas Supreme Court unanimously upheld a lower court’s judgment in favor of the company’s subsidiary, El Dorado Chemical Co. (EDC), granting EDC a judgment for damages of approximately $9.8 million against defendants Ingersoll-Rand Co. and DR Holding Corp. as general partners of Dresser Rand Co. With applicable interest, the judgment is now in excess of $11 million. EDC will pay attorney fees equal to 31.67 percent of its recovery. The case claimed negligent failure by Dresser Rand to properly rebuild a hot gas expander for EDC’s DM Weatherly nitric acid plant (GM Oct. 23, 2006). The case also claimed Dresser Rand’s negligent failure to rebuild a hot gas expander for other nitric acid plants located at EDC. The case was heard in Union County, Arkansas Circuit Court.

Koch gets ammonia release under control

Duncombe, Iowa-State environmental inspectors report the worst is under control, but they’re not certain if it will take a few days or another week to get wastewaters down to safe levels from Koch Nitrogen, which was the scene of an ammonia leak April 15. “We’re continuing to get data showing the levels are coming down,” State Department of Natural Resources Environmental Specialist Trent Lambert told Green Markets. “We’re headed in the right direction.” Koch officials refused to disclose any information about production interruptions from the release, confirming only that operations had resumed at the plant. Lambert, however, reported that to his knowledge the plant is not yet back in full production. “Rather,” he added, “they continue to operate in what they call water conservation mode. This means they are operating the affected equipment at a low production level to introduce as little new wastewater into the system as possible. So, essentially, the UAN plant has not been in full production since the afternoon of April 15, and is not currently in full production.” Lambert gives Koch crews full credit for their heads-up response after a gasket in the reactor developed a hole and allowed the release of thousands of pounds of ammonia. He said the workers evacuated and bled the system from the control room. When it was safe to re-enter, the workers found that the leak was not as extensive as first thought, but instead of a gas it was liquid. “But it wasn’t 18,000 pounds as originally reported in the press,” Lambert stressed. “Still, the ammonia concentration was too high to be discharged in the river. So we had them shut down their pumps, and Koch has been running tanker trucks around the clock to the Fort Dodge treatment plant. Nothing has been discharged for over a week.” Theresa Johnson, spokeswoman for parent company Koch Industries Inc., said of an estimated 6,825 pounds of anhydrous ammonia that were released, two-thirds evaporated, and only about 15 pounds got into the Des Moines River. Lambert said a combination of trucking, putting to use storage capacity in a 600-gallon on-scene tank, and re-circulating water between ponds to break down the ammonia was getting the job done. “We’ve sampled every truckload at key points in the plant on an hourly basis to see how much was removed and how far we had to go,” he added. “No discharge into the river will be allowed until the wastewater is down to permitted levels. If we get a few sunny, windy days it will help in breaking down the ammonia.” Lambert calculated that if a high level had been discharged into the river there would have been an immediate acute loss of river life and potentially an impact on water supplies in Des Moines, 60 miles away. He said no injuries were reported from the ammonia incident and Koch employees “exercised a very high amount of work and effort to keep a handle on the situation.”

Two workers recovering from anhydrous burns

Clontarf, Minn.-Two workers injured in an anhydrous ammonia release April 28 at Johnson Fertilizer in this western Minnesota town are making “tremendous progress” in their recovery, according to a member of the Johnson family. Both suffered severe chemical burns while working on an applicator hose that contained anhydrous under pressure. According to the Swift County sheriff’s office, which received the call at 10:35 a.m., the 10-foot hose had already been removed for maintenance when it ruptured and released the vapor. The injured workers were taken by ambulance to the Swift County-Benson Hospital, where they were airlifted to Regions Burn Center in the Minneapolis-St. Paul Twin Cities. They were identified as Leon Beam, 41, of Benson, and Thomas Lindstrom, 62, of Clontarf. Owner Dave Johnson was not available, but a Johnson family member said that Lindstrom was to be released from the hospital April 23 and Beam was out of intensive care and had learned that he won’t lose his sight from the exposure. The contact at Johnson said the small amount of product had been left in the hose since last fall.

Illinois funding freeze threatens fertilizer research

Springfield, Ill.-Gov. Rod Blagojevich’s freezing of $40 million in funds for agriculture programs because of a state revenue shortfall directly threatens fertilizer research paid for by fees imposed entirely on the industry. “The Blagojevich administration has frozen all programs under the jurisdiction of the Illinois Department of Agriculture, including Fertilizer Research & Education Council (FREC), because state revenue is not able to meet the state’s spending obligations,” reported Illinois Fertilizer and Chemical Association President Jean Payne. “However, unlike soil and water conservation and extension (which are also impacted), FREC is 100 percent funded by the fertilizer industry. Unless the monies are released soon, there will be essentially no nutrient research conducted in Illinois during the 2008 growing season.” Payne testified on April 16 before the joint House and Senate agriculture and appropriations committees that FREC is funded by a 25 cent per ton inspection fee on agricultural fertilizer, with half going to the state fertilizer inspection program and the other half to FREC. She reported that some $500,000 was deposited into the FREC fund for the last inspection fee assessment period, and the council approved research projects equaling $500,000 for the 2008 year. She warned that loss of revenue will put on hold on-farm trials that are directly related to the University of Illinois’s efforts to fine-tune the Illinois nitrogen rate recommendations, residue management and nitrogen response in continuous corn, and an economic impact study on the importance of the fall application season for nitrogen. For the time being, she reported, a fertilizer inspection fee will be collected again this spring and more funds deposited into the FREC program. “But we have no idea when they will be released, or worse, swept by the administration into other non-agriculture programs. FREC is a 100 percent industry funded program independent of the need for state general revenue, and therefore there is no valid way the administration can justify holding the funds to expend for other purposes,” Payne asserted.

Lateegra Gold announces phosphate acquisition

Vancouver-Lateegra Gold Corp. said April 21 that it has acquired a 100 percent interest in “Fernie” claims, consisting of 117 claims encompassing 56,000 hectares in the Fernie Formation Phosphate Belt, located near Fernie, B.C. The Fernie claims encompass two potential deposit areas known as the Line Creek and Barnes Lake areas. Lateegra notes that these reports are historic and do not comply with modern reporting standards. Lateegra says the property is underlain by the Fernie Formation Phosphate Belt, characterized in numerous bulletins published by the B.C. Ministry of Mines and Petroleum. The company intends to commence a work program as soon as possible in order to verify sample data and prepare for a winter/spring drill program, and to complete a NI 43-101 compliant report. For more details, see www.lateegra.com.

Mitsubishi, Daewoo win Algerian contract

Tokyo-Mitsubishi Heavy Industries, Ltd. (MHI), jointly with Daewoo Engineering & Construction Co. Ltd. of Korea, has received an order for a large-scale fertilizer complex to be constructed in Algeria. The order was placed by Algeria Oman Fertilizer Co. (El Djazairia El Omania Lil Asmida SPA), a joint venture between the Suhail Bahwan Group Holding LLC of Oman and Sonatrach, an Algerian government-owned company formed to exploit the country’s hydrocarbon resources. The plant on order will mark the world’s largest facility to be delivered in a single phase, with a total construction cost of approximately $2.4 billion dollars. The plant is slated to go on-stream in mid-2012. The fertilizer production complex will be built in the Arzew industrial zone near Oran, the second largest city in Algeria, on the Mediterranean coast. It will initially produce ammonia from natural gas, and almost all ammonia output will be converted to urea for producing granular urea. The complex will consist of two 2,000 mt/d ammonia production plants, two 3,500 mt/d urea production and granulation plants, and supporting facilities. The plants will adopt process technologies from Haldor Topsoe A/S of Denmark for ammonia, Snamprogetti S.p.A. of Italy for urea, and Uhde Fertilizer Technology B.V. of the Netherlands for granulation. MHI, as leader of the consortium, will be responsible for basic and detailed design work, equipment procurement, and dispatch of technical advisors for erection and test operation. Daewoo, the consortium partner, will take charge of the construction work.