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PotashCorp announces Rocanville expansion plans

Featured, News

PotashCorp. of Saskatchewan Inc. announced plans Nov. 14 for a 2-million mt mine and mill expansion at Rocanville, Sask., that will raise the company’s total annual potash capacity to 15.7 million mt by the end of 2012, which is three years earlier than previously announced. PotashCorp said that by leveraging off the existing facilities and infrastructure at Rocanville, which the company believes is one of the lowest-cost production facilities in the world, it expects to complete the project in less than five years at an estimated cost of U.S. $1.8 billion. PotashCorp said this would be significantly faster and over 25 percent less expensive than comparative greenfield capacity, and will help maintain Rocanville’s already low-cost position.

“For nearly 20 years we have optimized the value of our potash assets and consistently served the needs of our customers by following our long-held strategy of matching supply to market demand,” said PotashCorp President and CEO Bill Doyle. “With a global environment of growing demand and tight supply, potash consumers around the world need us to bring more product to the table, and this is our next step in meeting that need. The cost of a greenfield operation has continually escalated, and at a very rapid pace. Our best estimate for a 2-million mt greenfield mine in Saskatchewan today is U.S. $2.5 billion, and that is only within the plant gate with no infrastructure requirements.”

PotashCorp says Rocanville, in southeastern Saskatchewan, is an extremely valuable asset due to the quality of the potash deposit and its proximity to the U.S. market. The geology of the deposit allows for the most technically advanced potash mining methods in the world to be applied, lowering production costs. To support this project, PotashCorp will significantly expand an area of the deposit adjacent to the existing Rocanville potash Crown lease. One new service shaft – used to transport people and materials – will be sunk in this new area of the deposit, while the existing service shaft will be converted to a production shaft. When the project is completed, Rocanville will have two shafts with ore-hoisting capability, substantially raising the volume of potash that can be brought to the surface. A new underground conveyance system will be constructed to transport ore from the new mining area to the production shafts. This will reduce both the cost of the expansion and the ramp-up time, as only one new shaft will be needed and existing underground workings will partially support the increased production. Mining machines, underground services, and infrastructure for power will be added as required.

A new mill that will process 2 million mt of additional finished product annually will be built adjacent to the existing mill. New offices will be constructed on the site of the new service shaft, while existing load-out, storage, and onsite rail capability can be leveraged to handle the increased mt with minimal investment. The project will begin immediately after final permitting approvals are received.

Earlier in the year PotashCorp announced debottlenecking and expansion projects at Patience Lake (returning 360,000 mt of idled capacity by 2009), Cory (a 1.2-million mt debottleneck and expansion by 2010), and New Brunswick (a new 2.0-million mt mine with ramp-up starting at the end of 2011). PotashCorp said with the rest of the potash industry believed to be operating at or near capacity, it expects the additional capacity at Rocanville to be necessary to meet further demand growth. These projects, combined with expected other future debottlenecking opportunities at the company’s existing Saskatchewan facilities, will raise its projected annual capacity to 15.7 million mt by the end of 2012 and 17.2 million mt by 2015.

“We believe the factors driving long-term growth in potash demand are unlikely to reverse,” said Doyle. “As the company with the expertise and ability to bring on significant capacity more quickly and at lower cost, PotashCorp is well positioned to meet that demand. As we have in the past, we will manage this capacity according to market demand, always striving to meet the needs of our customers around the world while delivering value to the investors who have supported our continued growth.”

Teenager causes major ammonia leak in Tampa, raises issue of pipeline security

Ammonia, Featured, News, Tampa

A 16-year-old drilled a hole into Tampa Bay Pipeline Corp.’s anhydrous ammonia pipeline around 5:30 p.m. Nov. 12, causing an ammonia leak that prompted the evacuation of hundreds of residents. Local reports were that reverse 911 calls went out to some 3,700 people seeking their evacuation.

According to the Hillsborough Sheriff’s Department, the youth, along with two male friends (ages 14 and 16), went to the area of Highway 301 and the Alafia River looking for money that the 16-year-old juvenile had heard was hidden in a pipe under the bridge. The 16-year-old had gone to the location on Sunday by himself and had attempted to drill into the pipe, but was unsuccessful. He returned on Monday with his friends to continue searching. The juvenile was drilling on the pipe when it began leaking, which resulted in him getting burned.

The youth went home and told a parent what had happened; he was then transported to Tampa General Hospital suffering from chemical burns.

The Sheriff said that it does not appear that the other two juveniles were involved in the drilling of the pipe. They went home and told their parents what had occurred, and their parents called the Sheriff’s Office.

The pipeline was sealed on the afternoon of Nov. 14, after officials waited until the pressure had fallen to safer levels and mixed propane to burn off the remaining ammonia. Earlier that day officials said the pressure had dropped to 20 pounds per square inch, but the figure was revised upward to 100 pp square inch and the repair work was postponed until the level dropped. The pipeline was capped by a specialized welder flown in from Houston, and work to repair the damage and reconnect the line was underway Nov. 15.

The 30-mile-long pipeline runs from Port Sutton in Tampa through Hillsborough County to Mosaic Co.’s New Wales phosphate processing plant, according to Mosaic spokesman David Townsend. Townsend said the plant was served by two pipelines, one from the north and the other from the south, and only the southern pipeline was affected. He said that line was shut off when the alarm sounded, and the company was able to continue production at normal rates, first using ammonia from storage tanks on site and then from the northern line.

“It was ridiculous for a kid to be able to do it,” Townsend said. He added that the money the youth was searching for was an “urban legend.”

The 16-year-old drilled on an exposed, eight-foot-length of pipe that crosses the Alafia River at Riverview in Hillsborough County. Officials said the other youths were just leaving the scene when the 16-year-old pierced the pipeline. All of the young men had heard the legend that a robber had used the pipe to store cash from a series of robberies before being arrested. However, one of the teens said he thought that the pipeline being drilled was the wrong pipe, because it was not capped at the end.

The 16-year-old received burns over 18 percent of his body and remained in a local hospital Nov. 15. Neither of the other two youths were injured.

Environmental officials said no damage to the river had been detected, but the ammonia could lead to growth of algae, which could cause problems at a later date.

The evacuation ended around 2 p.m. on Nov. 14, and residents were allowed to return home. However, some complained that they were not informed of the situation by the reverse 911 system and were not told of the problem even when they called complaining of the smell from the leak. In addition, they said they were not told a shelter had been set up for them and they had to spend the night in a parking lot.

In addition to the evacuation of about 3,700 residents, two schools, as well as a civic center and a recreation center, were closed for two days.

Security for the pipeline, and others in the county, was questioned by several local officials. State Sen. Rhonda Storms, a Republican representing the Riverview area, chastised the company after the second leak in four years. She and other officials called for additional security for all pipelines in the state. Previously, a man seeking to tap into the pipeline to obtain ammonia for making methamphetamine caused an explosion, releasing 90 tons of ammonia (GM March 22, 2003). It was discovered that he operated the largest meth plant ever discovered in the state. He was sentenced to 30 years in prison.

Storms and other officials questioned whether increased security should be required, especially if pipelines could be attacked by terrorists, considering this one had been damaged by an unwitting juvenile.

The Pipeline and Hazardous Materials Administration, a branch of the National Transportation Security Board, regulates the pipeline, and the Transportation Security Administration was apparently responsible for security, along with the company. Actual national security requirements for the pipeline are either vague or nonexistent.

Law enforcement officials had not decided whether to charge the 16-year-old, but he could face felony criminal mischief charges. Tampa Pipeline Corp. officials told the local media they would not seek financial reimbursement from the boy’s family. In addition, the company said it would pay expenses of residents who were forced to evacuate.

The pipeline was installed in 1981; 1,800 tons of ammonia flow through the 0.28 inch-thick pipe daily.

Tampa Pipeline officials could not be reached for comment, because the telephone went unanswered and no message could be left.

PhosCan completes product testing

News

PhosCan Chemical Corp. and Baltic Resources Inc. have jointly announced the completion of the independently conducted phosphoric acid tests utilizing concentrate from the Martison Phosphate deposit. The deposit is currently being examined as one of the primary inputs for the development of a vertically integrated phosphoric acid plant to be located near Hearst, Ont.

PhosCan says high quality super phosphoric acid (SPA) and mono ammonium phosphate (MAP) were produced at consultant Jacobs Engineering Group Inc.’s laboratory/pilot plant. The commercial liquid fertilizer 10-34-0 was also produced in the lab with high polyphosphate and low magnesium content.

“This is a significant step forward for the Martison Phosphate Project,” said Stephen Case, PhosCan president. “In May, 2007, we announced the completion of an independent mineral resource estimate, which included measured and indicated resources of 62.2 million mt averaging 23.55 percent P2O5 plus an additional 55.7 million mt of inferred resources averaging 21.87 percent P2O5. The pilot plant technology development carried out by Jacobs Engineering now confirms that these mineral resources are amenable to processing into marketable products which are in high demand in the agricultural fertilizer market.”

PhosCan also said the testing indicated that 11-37-0 and DAP can also be produced from the Martison phosphate rock.

Because of the high quality of the Martison rock concentrate, sulfuric acid consumption was, as expected, 10-15 percent less than typical Florida and North Carolina concentrates, according to PhosCan. In addition, less by-product phosphogypsum was produced, and at an indicated industrial and agronomic quality.

PhosCan noted that MAP is the main solid phosphate product used in the Canadian market, which currently imports over half of its requirements from the US. 10-34-0 is the main liquid phosphate fertilizer used in the upper Midwest US market. SPA, the phosphate raw material for liquid phosphate fertilizer production, is in short supply, with reductions in availability from two SPA production sites in the U.S.

The Martison project is a 50 -50 joint venture between PhosCan and Baltic, with PhosCan acting as the operator of the joint venture.

Yara JV Qafco signs letter of intent for expansion

News

Qatar Fertilizer Co. (Qafco) has signed a letter of intent for the construction of the Qafco-5 expansion project. The total cost of the project is estimated at U.S.$3.2 billion.

A letter of intent between Qafco and a consortium of the Italian company Snamprogetti and the Korean company Hyundai has been signed for the construction of the Qafco-5 expansion project. Yara International ASA owns 25 percent of Qafco; the remaining 75 percent is owned by Industries Qatar.

The Qafco-5 project includes the construction of two ammonia plants with a total daily production capacity of 4,600 mt and a urea plant with a total daily production capacity of 3,850 mt. The project also includes upgrades of already existing facilities and infrastructure that will facilitate future expansion.

Upon completion of the Qafco-5 project, Qafco’s total annual production capacity will increase to around 3.8 million mt of ammonia and 4.3 million mt of urea. The project will deliver a 73 percent increase in ammonia capacity and a 43 percent increase in urea capacity. Yara said as a result of the expansion, Qafco will become the world’s largest single site producer of ammonia and will retain its status as the largest single site producer of urea.

“Qafco is a long standing and successful partnership, and the expansion will further strengthen Yara’s production base with competitive gas sourcing. The investment cost has increased substantially compared with previous expansions, reflecting a general cost increase for petrochemical plant projects. However, long-term fertilizer prices will need to reflect the higher construction cost levels to motivate new supply in a tight and growing global fertilizer market. Qafco’s scale and competitive gas sourcing combined with Yara’s global marketing network forms a strong foundation for profitable expansion,” says President and CEO of Yara International, Thorleif Enger.

Construction work on Qafco-5 is set to commence in January 2008, after the signing of the project construction agreement. The construction work is scheduled to take approximately 40 months, with completion around the end of first quarter 2011.

The project will be partially financed with bank loans, with the balance coming from Qafco’s existing reserves and cash flows from its operations.

Treasury action not thought to impact U.S. imports

News, U.S. Imports

The U.S. fertilizer industry was abuzz late in the week with speculation that a new trade action against a Belarusian state company would prevent certain nitrogen or potash cargoes from being imported into the U.S. However, representatives of trading companies and the U.S. Treasury Department, which took the action, said there is no need to worry – at least for now.

Specifically, on Nov. 13, the U.S. Treasury designated Belarus’ largest petrochemical conglomerate under Executive Order 13405 as being controlled by oppressive Belarusian president Alexander Lukashenko.

“Today’s action tightens our sanctions against Lukashenko and his cronies by imposing financial sanctions against a massive conglomerate under the regime’s control,” said Adam Szubin, Director of Treasury’s Office of Foreign Assets Control (OFAC).

Belarusian State Concern for Oil and Chemistry, a.k.a. Belneftekhim, along with its representative offices in Germany, Latvia, Ukraine, Russia, and China, and its wholly-owned U.S. subsidiary Belneftekhim USA, Inc., were added to Treasury’s list of Specially Designated Nationals and Blocked Persons, with the result that any assets the entities hold under U.S. jurisdiction must be frozen, and U.S. persons are prohibited from transacting or doing business with the designated entities.

The action follows the 2006 blocking of the assets of Lukashenko and nine other senior officials of his administration. In February 2007, Treasury blocked the assets of another 6 high-ranking Belarusian officials, bringing the total number of designated officials to 16.

There was speculation within the fertilizer industry that the action could impact trade by Belarusian Potash Co. (BPC) and nitrogen maker PO Azot Grodno. However, BPC and ConAgra Fertilizer Co., which buy nitrogen products from Grodno, both indicated that there was no impact to their companies. While Belneftekhim may have done business with Belaruskali, the Belarus potash producer, and Grodno, it does not own them. Belneftekhim is believed to be involved in operating the potash mine, but not in its ownership. BPC is a joint venture that markets the potash of Belaruskali and Uralkali.

A Treasury spokesperson told Green Markets that Treasury’s prohibition is against companies doing business with Belneftekhim directly.

TFI testing data receives international approval

Calcium Ammonium Nitrate
Washington, D.C.-The Fertilizer Institute announced last week that the Organization for Economic Cooperation and Development (OECD) has approved product testing data on nitrate and sulfate products generated by TFI and the European Fertilizer Manufacturers Association (EFMA) for inclusion in an international database of chemicals. TFI said acceptance of the data by the OECD provides further credibility to efforts to demonstrate with scientific data that fertilizer products are safe. The nitrates category consists of sodium nitrate, potassium nitrate, potassium sodium nitrate, ammonium nitrate, calcium nitrate, calcium ammonium nitrate (CAN), and nitrogen solutions (UAN), while the sulfates category contains potassium magnesium sulfate, calcium sulfate, and potassium sulfate. “TFI completed its product testing program on 23 fertilizer materials in early 2003, demonstrating that all major fertilizer products are safe when used as intended and pose no harm to industry workers, community members or the environment,” said TFI President Ford B. West. “We are pleased with the OECD’s approval of our nitrate and sulfate products, which now join our phosphates and ammonia groups with this much-deserved international approval.” The U.S. is the sponsor country for fertilizer products within the OECD process, and EPA served as the formal presenter for the data at a recent OECD meeting in Helsinki. TFI said the OECD decision also confers regulatory approval through EPA’s High Production Volume (HPV) data challenge, and covers many of the important data points necessary in the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) program. “International approval for this safety data is an essential next step given the globalization of the fertilizer industry and the increased efforts on the worldwide regulation of chemicals,” West said. The phosphate and ammonia groups of fertilizer data were reviewed and accepted for OECD review in early November, and fertilizer acids are scheduled for review in April 2008 in Paris, France.