The U.S. Bureau of Land Management and the U.S. Forest Service have released the final environmental impact statement (FEIS) for J.R. Simplot Co.’s Smoky Canyon phosphate mine expansion. It puts heavy emphasis on prevention of selenium leaching, along with monitoring of fish habitat and population and stream contamination. Each agency will issue records of decision sometime after a 30-day FEIS availability period starting Oct. 27, but a go-ahead is anticipated after unprecedented federal, state, and public scrutiny of the project, which Simplot says is essential to continuing operations in southeast Idaho.

“A lot of effort has gone into this EIS to develop on-the-ground mining practices and methods that are state of the art,” stated Joe Kraayenbrink, BLM’s Idaho Falls district manager. “The alternatives are designed to keep surface and ground water well within acceptable state and federal water quality standards. In the future, we should expect that mining and reclamation practices are held to an extremely high standard, and Smoky Canyon will be a trendsetter. It’s no longer business as usual.” Noting that the Simplot expansion has been under the microscope for over four years, Caribou-Targhee National Forest Supervisor Larry Timchak remarked, “As decision makers, we need to balance the public concerns with the laws and regulations that govern our management to reach a decision that provides for future phosphate mining in an environmentally sound and legal manner. I believe we have done that.”

But environmental groups believe otherwise and are talking appeal. Idaho Greater Yellowstone Coalition Director Marv Hoyt was disappointed but not surprised by the announcement that the agencies are on the verge of permitting the expansion. “The Forest Service and BLM are much too willing to allow the phosphate mining industry in Idaho to poison lands, waters, and wildlife at the expense of the public interest. In the case of the Smoky Canyon Mine expansion, the agencies are clearly making decisions based on politics and big money interests rather than as responsible stewards of the public’s resources. If the record of decision authorizes expansion as described in the FEIS we will have no choice but to appeal that decision.”

Hoyt didn’t comment on the agencies making prevention of selenium and other pollution the chief concern of their environmental analysis, which would require Simplot to implement an engineered cover system to prevent rain and snow from percolating through selenium-laden waste rock and into groundwater sources. Simplot spokesman Rick Phillips explained, “The idea is to keep the water away from the selenium.” Phillips also emphasized that the FEIS is an essential step to enable Smoky Canyon to provide an uninterrupted supply of phosphate ore to its Don manufacturing facility at Pocatello.

Geologist Bill Stout, BLM environmental project manager for the EIS, told Green Markets that an engineered store and release cover system over all potentially seleniferous materials, including both the backfilled pits and external waste rock dumps, takes advantage of the area’s unique geological and hydrological conditions and will place “90 percent of the selenium material back into the pits as backfill.” Simplot would also implement a 30-acre test cover prior to installation of the operational system. He said mining will take place from the north end to the south to maximize the backfill of selenium waste rock behind the mine sequence, which he termed “very important to reduce the exposure of the selenium material (assuring that) every potential seleniferous deposit be covered with the store and release cover.” He noted that the cover would use local rock, clay, and topsoil. Moisture remaining in the cover would be evaporated by transpiration from vegetation planted during reclamation that is to take place as mining proceeds to reduce exposure time.

In addition to the engineered cover to prevent the leaching of selenium, the agencies would require Simplot to utilize other measures to reduce environmental impacts, such as employing topsoil salvage and conservation methods; creating vegetative islands of diversity to promote reestablishment of vegetation; using best management practices to control sediment and culverts designed to pass adult and juvenile fish at perennial stream crossings; conducting migratory bird surveys prior to vegetation removal; and restricting ground disturbance to migratory birds. Both the construction and performance of the engineered cover would be monitored. Surface and groundwater monitoring programs would be implemented to demonstrate the effectiveness of employed mitigation measures, provide early detection of possible impacts from the mine, and determine compliance with state and federal water quality standards. The fisheries monitoring program includes a three-tiered approach that would monitor fisheries habitat, fish populations, and possible contaminant levels in the fish and aquatic food base.

BLM officials pointed out that while the new Simplot mining activity will be unaffected for the most part by Forest Service roadless restrictions because of pre-dated leases, determination for a smaller lease modification section is being deferred because mining there is at least three years away and future legal action or ruling-making could change requirements in the meantime.

Terra Industries Inc. posted third-quarter earnings of $54.4 million ($.51 per diluted share) on sales of $593.7 million for the third quarter ending Sept. 30, compared to the year ago $10.3 million ($.10 per share) and $464.8 million, respectively. Income would have been even more, but the company recorded a $39 million impairment charge for its Beaumont, Texas, facility, which is being sold.

Revenues were up due to higher nitrogen selling prices. Ammonia, UAN, and ammonium nitrate prices improved 8, 61, and 11 percent, respectively, over the same period last year. Sales volumes also improved, with ammonia, UAN, and AN volumes up 2, 8, and 28 percent, respectively, over last year.

“We’re very pleased with Terra’s strong performance in a positive industry-wide environment in the third quarter,” said Terra President and CEO Michael Bennett. “We saw the expected seasonal declines in nitrogen selling prices, but continued strong demand reversed the trend and prices rose though the quarter.”

Nine-month net income was $132.2 million ($1.24 per share) on sales of $1.79 billion, versus the year-ago loss of $7.4 million ($.12 per share) and $1.39 billion.

Average North America natural gas prices were up for the quarter at $7.12/mmBtu versus the year-ago $6.20/mmBtu, but they were down year-to-date ?Çô $6.95/mmBtu versus $7.36/mmBtu.

“As we look ahead, we are encouraged by forecasts for strong corn and wheat plantings driven by high prices for these nitrogen-intensive crops. Clearly, with our fundamental drivers aligning favorably, we remain quite positive about our outlook for the rest of this year and the 2008 first half.”

* Sales volumes in thousand short tons.

Potash Corp. of Saskatchewan Inc. reported its best ever third quarter earnings last week. Earnings were $243.1 million ($.75 per diluted share) on sales of $1.295 billion, versus the year-ago $145.2 million ($.46 per share) and $953.5 million. PotashCorp said they were the second highest quarter in history and would have exceeded the best quarter – second quarter 2007 – if not for the net negative impacts of a stronger Canadian dollar and an increase in the company’s consolidated tax rate.

Potash gross margin rose to $221.3 million from the year-ago $153.6 million and was the second highest quarterly total in company history. The improvement was mainly due to higher prices, but volumes were up slightly. Higher freight rates have been a problem, but the demand is so high that product was on allocation to all customers. PotashCorp expects still higher prices once the Chinese come back to the bargaining table, noting that new prices to Brazil to take effect Dec. 1 will be $355/mt, up $175/mt in 2007.

PotashCorp reported its best year for phosphates, spurred on by higher prices and strong demand. Third-quarter gross margins were $129.9 million, up from the year-ago $29.8 million. While prices and demand continue to be up, costs are as well, with phosphate rock and sulfur prices higher in particular. Sulfur prices were up 8 percent in the third quarter from the year-ago quarter, and product is expected to be tight through 2008.

Third-quarter nitrogen gross margins of $123.9 million were almost double the $62.4 million in the year-ago quarter. Realized prices for ammonia and urea were up 11 and 37 percent, respectively, compared to the year-ago period, while prices for UAN jumped 51 percent. Strong demand limited the size and duration of a seasonal pricing decline in the third quarter.

Nine-month net income was $726.8 million ($2.25 per share) on sales of $3.8 billion, versus the year-ago $445.8 million ($1.40 per share) and $2.74 billion, respectively.

PotashCorp said demand driven growth in the fertilizer industry is expected to continue, as strong economies in Asia and Latin America are creating greater demand for better food. And despite a slight pause in the biofuel industry to address logistical and infrastructure issues, PotashCorp said the biofuel production is expected to consume about 1 billion additional bushels of corn in 2008.

“While we faced a number of challenges in the third quarter, including record ocean freights and a stronger Canadian dollar, we see increasing margins as we go forward,” said Bill Doyle, PotashCorp president and CEO. “Our growth in potash this year will be largely volume related, but 2008 should be a strong margin year. With potash in tight supply, price increases seem all but certain, and these increases will now flow through to the bottom line.”

Registrants to Green Markets‘ Oct. 23 audio conference heard up-to-date analysis of the many security issues currently facing the fertilizer industry. Speakers for the 90-minute interactive event, entitled Chemical Security and the Fertilizer Industry, included MaryBeth Kelliher of the Department of Homeland Security, Jim Schellhorn of Terra Industries Inc., and Richard Gupton of the Agricultural Retailers Association.

Kelliher kicked off the event with an in-depth look at the new Chemical Facility Anti-Terrorism Standards (CFATS), which were published in April and went into effect June 8, 2007. As chief of DHS’s Policy and Programs Branch, Kelliher described in detail the department’s Chemical Security Assessment Tool, calling it the “backbone of the CFATS program.” The fertilizer and chemical industries are still waiting for the release of the final Appendix A list of chemicals and screening threshold quantities, which Kelliher reviewed and said will be published this fall.

Schellhorn, director of Environmental Health, Safety and Security for Terra Industries, talked about Terra’s facility security program and how the company has responded to the Maritime Transportation Security Act and Homeland Security’s CFATS program. He also gave an up-to-the-minute overview of federal efforts to regulate ammonium nitrate sales, and talked about the increased costs related to the rail transportation of toxic-by-inhalation (TIH) commodities such as anhydrous ammonia.

ARA’s Gupton capped the conference with a discussion of the industry’s continuing efforts to influence the final CFATS regulations. As vice president of Legislative Policy & Counsel for ARA, Gupton talked about other areas of concern involving chemical security legislation and provided listeners with specifics about conducting a Security Vulnerability Assessment (SVA). He observed as well that as railroads continue to distance themselves from TIH commodities, the demand for truck transportation will grow. Gupton noted that it takes four trucks to replace one ammonia tank car.

Listeners were allowed to pose questions to the panel, either by email or by telephone, at the conclusion of the presentations. An audio recording of the conference is available on CD-ROM for $199, and can be ordered by visiting http://www.pf.com/eventDetail.asp?id=78&type=2. Recordings of past Green Markets audio conferences can also be ordered at http://www.pf.com/events.asp.