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Sask. farmers say fert prices are lower in U.S.; no significant difference, says govn.

News, Saskatchewan

The Agriculture Producers Association of Saskatchewan (APAS), Regina, is concerned that fertilizer prices across the border in the U.S. are lower and wants the provincial and federal governments to launch an investigation to find out what’s behind the “constant and currently unexplained price hikes and discrepancy between the Prairies and northern U.S. states.” According to APAS President Glenn Blakley, “A lot of the fertilizer that is being sold in the U.S. is coming from Canadian sources. Governments should be finding out why fertilizer companies can use Canadian natural resources to produce fertilizer and sell it cheaper to American farmers than to farmers in Canada. This is essentially providing a subsidy to American farmers at Canadian farmers’ expense, and governments have full responsibility to investigate and correct this situation on behalf of our producers.”

Blakley pointed to fertilizer prices that are increasing $200 to $300 per ton again this year, while at the same time prices are coming down for natural gas and input supply companies are experiencing record profits from these high prices. “Every increase in fertilizer prices is money that is coming out of farmers’ pockets,” he insisted. “Every $10 cost increase per ton takes $61 million from Canadian producers. If governments want to help farmers capitalize on higher grain prices and reinvest in their operations, they need to stop the predatory actions that happen every time we need to purchase inputs.”

Blakley said APAS is being joined by Keystone Ag Producers (KAP) and Wild Rose Agricultural Producers (WRAP) to put more pressure on government at both levels.

The Canadian Fertilizer Institute pointed out last week that the issue was addressed by the federal government last year, with a finding in March 2007 that there has been no significant difference in Canada-U.S. fertilizer prices in more than a decade. “The fertilizer market is global in nature and the North American fertilizer market is completely open and integrated,” according to Agriculture and Agri-Food Canada, a bi-weekly bulletin published March 30, 2007. “As a result, Canadian fertilizer prices are linked to the U.S. market. Statistical analysis has confirmed that average fertilizer prices in Canada and the U.S. border area were not statistically different for urea, mono-ammonium phosphate and muriate of potash over the 1993-2006 period.”

CFI noted the huge increase in international demand for fertilizer and tight supplies and said these influence the cost of fertilizer in Canada.

Furthermore, CFI said it was its understanding that the federal Bureau of Competition Policy has rejected calls by farm groups for an investigation. The Bureau had not returned calls at press time.

Yara workers end strike; NH3 plants resume production

Ammonia, News Briefs

The strike action against Yara Trinidad Ltd. ended Monday, Jan. 21 at noon. It began Friday, Jan. 18 at 3:00 p.m. Yara had closed its three Trinidad plants the night before at midnight in preparation for the strike.

Yara said discussions with the Oilfield Workers’ Trade Union (OWTU) intensified Jan. 18 and continued throughout the weekend until a negotiated settlement was achieved Jan. 21. Yara expected a full return to work by its employees on Tuesday, Jan. 22.

Yara’s three major plants are expected to resume production one at a time over the next week. The Yara Trinidad Ltd. plant (1,000 mt/d) is expected to resume production Thursday, Jan. 24. The Tringen I plant (1,400 mt/d) will come up on Friday, Jan. 25. Tringen II (1,600 mt/d) is expected up on Tuesday, Jan. 29. Based on these numbers, Yara would have lost at least 33,400 mt of production during the downtime. At current prices, this would amount to approximately $15-$16 million.

The settlement covers the new collective agreements for the bargaining units at Yara Trinidad Ltd. over the period Aug. 1, 2007, to July 31, 2010. The settlement includes a 16.5 percent wage increase over a three-year period – first year, 5 percent; second year, 5.5 percent; and third year, 6 percent.

In addition to lump sum cash payments in the second year, they agreed to restructuring of other benefits, including COLA at $0.23 for every one point rise in the retail prices index over the three-year period; an 80 percent increase in housing allowance; a 50 percent increase in traveling allowance; substantial improvements in medical plan payments; and a commitment for the company and the union to discuss revised work arrangements for shift employees during periods of plant maintenance turnarounds.

Yara said it is confident that the achieved settlement places its employees in a very competitive compensation position in the energy sector.

Yara said the negotiations between Yara and the OWTU began on June 12, 2007, and took a grave turn in January 2008. Yara said the negotiations have been very extensive, including 32 bilateral sessions, 7 conciliation sessions at the Ministry of Labor, 2 closed door meetings between the president of Yara Trinidad Ltd. and the president general of the OWTU, and approximately 4 further bilateral sessions between the company and the OWTU, up to and including the meeting that resulted in final settlement.

Yara Trinidad Ltd. manages and operates a three-plant ammonia production facility located at Savonetta in central Trinidad. Yara Trinidad exports 99 percent of its annual 1.3 million mt of ammonia.

FertiNitro ratings boosted

News

Fitch Ratings, New York, has affirmed and removed from Rating Watch Negative FertiNitro Finance Inc.’s ‘CCC’ rated US$250 million 8.29 percent secured bonds due 2020. The rating outlook is stable.

Fitch says conditions in Venezuela have not turned out as it earlier feared. Fitch was informed by FertiNitro that only 130,000 mt of Petroquimica de Venezuela, S.A. (Pequiven) urea offtake would be redirected to the domestic market in 2008. In 2007, FertiNitro faced unplanned shutdowns due to technical and power related issues.

The negative rating reflected Fitch’s concerns on the implications of the implementation of the Decree-Law 5,218 of March 6, 2007, which forces FertiNitro and other producers of nitrogen fertilizers in Venezuela to direct their output from global exports markets to satisfy the domestic market demand, where sales are subject to pricing dictated by the government. According to the offtake agreement between Pequiven and FertiNitro, Pequiven is obligated to re-sell, on a gradually decreased percentage, its 50 percent share of the plant’s production outside Venezuela at market prices. FertiNitro’s plant was originally conceived and developed to convert associated natural gas of Petroleos de Venezuela S.A. (PDVSA) into ammonia and urea, with export sales of these products generating dollar revenues for Pequiven.

Fitch said price controls could diminish the economic viability of FertiNitro. According to the law, the redirected output must be sold in local currency for the equivalent of approximately US$72/mt; this price ceiling is currently one-fourth of the international market price.

After six months of the decree-law in effect, FertiNitro’s sales have been stable and redirection of its offtake to the domestic market has been less than expected by Fitch in 2007. Fitch believes that some redirection of FertiNitro’s output might not cause project revenues to decrease substantially during the next years. However, there is still uncertainty associated with the ultimate volume of diverted output ordered by the decree. Furthermore, local demand for urea still remains unknown, and official data from the Venezuela Ministry of Energy and Oil shows that Pequiven’s wholly-owned plants in the Tablazo and Moron complexes are not producing sufficiently to satisfy domestic requirements. While local sales from FertiNitro have averaged 126,000 mt of urea since 2004, sales up to October 2007 grew to 175,000 mt.

Over the coming months, Fitch said FertiNitro plans to proceed with a capital expenditures program that will further strengthen their production capacity. As of October 2007, the urea trains produced at 89 percent of nameplate capacity, above 2006 levels. Higher prices in the global markets offset the reduced shipments that resulted from unexpected shutdowns of the urea and ammonia trains in October 2007. Ample accumulated cash balances enabled FertiNitro to pay the programmed semi-annual amortization payments of US$21.3 million. FertiNitro’s debt service coverage ratio is expected to average 1.77 times (x) in 2008.

FertiNitro ranks as one of the world’s largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 3,600 mt of ammonia and 4,400 mt of urea. It is owned 35 percent by a Koch Industries, Inc. subsidiary, 35 percent by Pequiven, a state-owned petrochemicals company, 20 percent by a Snamprogetti S.p.A. subsidiary, and 10 percent by a Cerveceria Polar, C.A. subsidiary.

Potash Corp announces stock repurchase, dividend

News Briefs, Saskatchewan

Saskatoon-Potash Corp. of Saskatchewan Inc. said Jan. 23 that its board of directors has approved its intention to commence, subject to regulatory approval, an open-market repurchase program of approximately 5 percent of its outstanding common shares over a one-year period through a normal course issuer bid. The buyback will involve the purchase of common shares at the prevailing market price from time to time. PotashCorp will be permitted to repurchase up to 15.82 million of its outstanding shares. Shares purchased will be cancelled. There were 316,411,209 shares as of Dec. 31, 2007. “We have a long history of using our strong cash flow to create value for our shareholders,” said PotashCorp President and CEO Bill Doyle. “We believe there are no better assets in our industry than the ones held by our own company. We have tremendous potential today and in the years ahead, with expected increasing global demand, rising prices for our products and the unique capability to capitalize in this environment. Reinvesting in our own company positions us well to maximize long-term value for our shareholders.” PotashCorp also announced that its board had declared a quarterly dividend of US$.10 per share payable May 8, 2008, to shareholders of record April 10, 2008.

Ammonia plant in works for Augusta site

Ammonia, News Briefs, Southeast

Augusta, Ga.-Southern Ionics officials say they have cleared the first hurdles on the way to building a new plant on a nine-acre site recently acquired here to produce aqua ammonia solutions and sulfite-based solutions. Target markets are chemical, power, and paper industries, as well as agriculture – although it is not a core market. Spokesman Randy Weimer told Green Markets that the city’s engineering services committee has met and will recommend that the Augusta Commission approve rezoning the site to a heavy industrial classification at its Feb. 5 meeting. Earlier, favorable reports were submitted by the city’s environmental engineer on the company’s safety and environmental record and by the county fire department on the chemicals to be manufactured and stored and emergency notification requirements. Although a few residents voiced concerns about the chemicals, Weimer noted, a recent public hearing appeared to resolve questions about Southern Ionics’ plans. Southern Ionics has plants at Baton Rouge, La.; Calhoun, Tenn.; Chickasaw, Ala.; Columbus, Miss.; Lake Charles, La.; Pasadena, Tex; Tuscaloosa, Ala.; and West Point, Miss.

New Vision plans $10 M Minnesota terminal

News Briefs, Northern Plains

Worthington, Minn.-New Vision Cooperative, which operates dry fertilizer facilities at Jeffers, Hills, and Beaver Creek and a liquid terminal at Heron Lake, Minn., has disclosed plans for its biggest installation yet – upgrading its Brewster plant with a 45,000 st blending and combination herbicide/seed storage facility capable of unloading 1,200 st an hour off rail cars and dispatching 450 to 500 st per hour out of wholesale and blending towers. New Vision General Manager Frank McDowell and Agronomy Division Manager Dennis Weber discussed their plans with Nobles County officials earlier this month. Weber told Green Markets that before New Vision goes ahead with the $10 million project it needs to get Minnesota’s Department of Transportation to agree to upgrade a half-mile gravel access road to handle heavy truck traffic during the busy spring and fall seasons. He said a decision could come at a meeting with state officials this week, and with approval on the upgrade, work would begin in April and be completed by early 2009. County officials were advised that the new facility would generate 13 new full-time and nine seasonal positions, with an additional payoff of $1 million in three years. The new terminal would be built on land to the south of the New Vision elevator in Brewster, and will be accessible both from the south and from the north via the elevator access. Fertilizer would arrive at the plant via train, and would be shipped out on trucks. Weber said traffic would increase by 75 to 100 trucks per day during the four-week window in the spring and the six-week window in the fall. Three members of the county board were selected to work with New Vision and city officials on the plans. One member commented to the local press that “it’s a worthwhile project and in the interest of the county and city of Brewster.”

Viterra adds Farr-Mor NH3 assets

Ammonia, News Briefs, Saskatchewan
Regina, Sask.-Viterra has announced its acquisition of the anhydrous ammonia assets of Farr-Mor, an independent supplier of NH3 located in Lewvan, Sask. The assets will be relocated to Viterra’s Farm Service Centre in Weyburn, Sask., and will complement its offering of products, including fertilizer, seed, equipment, and crop protection packages. “By aligning our assets with the needs of our customer base, we position ourselves to elevate our level of service to area farmers,” said Kevin Hallborg, Viterra vice president, marketing, sales & operations.