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Farmers of North America imports Russian fertilizer into Port of Churchill, Manitoba

Featured, News

Farmers of North America (FNA), a cooperative based in Saskatoon, Sask., brought the first-ever ocean shipment from Russia into the Port of Churchill in Manitoba. The Murmansk Shipping Co. vessel Kapitan Sviridov docked at the port on Wednesday, Oct. 17, carrying fertilizer identified as 10,000 mt of a bagged nitrogen-blend from Russia via Estonia. Officials and dignitaries were on hand to greet the vessel.

“This is a historic event,” said Lloyd Axworthy, chair of the Churchill Gateway Development Corp. “This vessel represents the first shipment under the Arctic Bridge concept linking Russian and Canadian Prairie markets. It is an important step forward.” Churchill claims the shortest sea route between Canada and northern Europe.

Mike Ogborn, managing director of OmniTRAX Canada Inc., which owns the Hudson Bay Port Co. and Hudson Bay Rail Line, called 2007 a “banner year” for Churchill. “We’ve seen record wheat shipments, record northern re-supply shipments, the first domestic-bound grain shipment and now this – the first foreign cargo shipment imported through Churchill in years,” he said. “This season has been an excellent demonstration of the possibilities for this northern port.”

After unloading the fertilizer, the Kapitan Sviridov will load 20,000 mt of wheat destined for Italy, part of the Canadian Wheat Board’s largest wheat shipping program through Churchill since 1977. Exports from the port this year are expected to total 600,000 mt. However, port owner OmniTrax has been quoted by the Canadian press as saying 1 million mt/y of throughput is necessary in order to make the port viable.

An FNA spokesman told Green Markets not to be surprised if another fertilizer import arrives at the port in the near term. The company hopes to begin importing urea and phosphates in particular. He said FNA had brought in fertilizer via NOLA before, but never through a Canadian port. FNA serves some 8,000 farmers in Canada and the northern U.S.

“We do not expect to shake the domestic fertilizer industry to its knees,” said FNA Vice President Glenn Caleval, “but with the support of committed members we are proving through action that alternatives exist and that we will go anywhere in the world necessary to give farmers access to those alternatives.”

The shipping season at the Port of Churchill, which is located in northern Manitoba on the Hudson Bay, is from July through November, though there is the potential to expand the season by using ice breakers. It is the only deep-water ocean port in the Prairie region. It has four berths for the loading and unloading of grain, general cargo, and tanker vessels.

Canada is on the fast track to develop the port and its rail link. Prime Minister Stephen Harper on Oct. 5 announced some C$68 million in public and private funding to upgrade the port and the rail line leading to it. The federal government and the province of Manitoba will commit to cost sharing $40 million for the upgrade to the rail line between The Pas and Churchill. Additionally, the federal government and the province have agreed to cost share up to $8 million for improvements at the Port of Churchill.

“A strong and sovereign Arctic must be a healthy and prosperous Arctic. In the weeks and months that lie ahead, our government will continue to introduce measures aimed at unleashing the North’s true potential,” said Harper.

The Hudson Bay Rail Co. has also committed to spend $20 million for rail line maintenance. The company is owned by OmniTrax Canada, which also owns and operates the port. OmniTrax Canada is owned by OmniTrax, based in Denver.

Mosaic, Saskferco could benefit if TransCanada completes $4 B Saskatchewan gasification plant

Featured, News, Saskatchewan

The Mosaic Co. and Saskferco Products Inc. could benefit from a proposed $4 billion polygeneration plant in Saskatchewan proposed by TransCanada Corp., one of North America’s largest energy companies. The plant would use petroleum coke as feedstock and produce 300 megawatts of electricity, as well as chemicals or other products that could be used in fertilizer production. Downstream specifics have not been released. TransCanada said it would be one of the largest ?Çô if not the largest ?Çô gasification undertakings in North America.

TransCanada has GE Energy and Bechtel Overseas Power Corp. under a project development agreement to initiate the engineering design phase after already completing the first preliminary engineering step. If this work indicates the project is economically viable, the detailed engineering design phase will follow. If the project receives final approvals for construction, the facility would have an in-service date targeted for 2013. TransCanada has been working with both companies since early this year and will be using GE Energy’s gasification and flexible-fuel technology to generate power and support local industrial processes. Last summer, GE Energy signed its 30th gasification technology licensing agreement with Eastman Chemical Co. for a new facility in Texas.

John Jenkins, commercial manager for the project in Belle Plaine, Sask., told Green Markets that plans are to provide hydrogen and nitrogen to the adjacent potash solution mine operated by The Mosaic Co. and the Saskferco nitrogen plant. “We are not now and do not plan to be in the fertilizer business,” Jenkins reported. “But a key component of the project is being able to sell product to them.” He said steam generated by the plant would be another component that could be sold to Mosaic for use in its potash mine.

Both the Mosaic and Saskferco facilities are located near the proposed facility. A Saskferco spokesperson last week said the company is still awaiting more information about the project. Mosaic had not responded at press time.

Jenkins said another important element is access to the oil production areas for transporting CO2 for enhanced oil recovery by what he described as a “relatively short pipeline.” Jenkins was not able to talk about the amount of hydrogen or nitrogen that would be produced as a co-product at the plant because “everything is still in the early phase.” Neither would he estimate the amount of petroleum coke that would be needed to keep Belle Plaine running. “We’re getting close to being able to put out a number,” he offered. “You can say that it will be a very large and significant quantity.” Petcoke, a byproduct of upgrading heavy oil, would come from the oil sands fields in Alberta where there are a number of sources, he reported, and would have to be transported by rail because of the distance. He agreed that growth of gasification could eventually mean tighter petcoke supplies and would need to be handled with long-term contracts.

Jenkins said TransCanada prefers to stay away from comparisons, but with other petcoke or coal-based gasification projects pegged at costing $1.6 billion, Belle Plaine, with its larger, complex nature, would “be in the top tier.” It has also attracted financial support from the government of Saskatchewan because of its potential for reducing greenhouse gases. Initially, the government is putting up to $6 million for engineering design, matching the $6 million TransCanada has spent over the past two years. Each will contribute up to $20 million for permitting, including environmental assessment and community consultation. TransCanada would repay the $26 million if the project proceeds; if not, the funding does not have to be repaid.

Southeastern U.S. having record drought; Southern States Co-op assists farmers

News, Southeast

The drought in the Southeast, described by some experts as the most severe on record, is prompting both innovative and restrictive measures from government offices and some area businesses, including agribusiness companies.

With weather experts calling this the worst drought in 100 years, North Carolina Gov. Michael Easley asked residents Monday to stop using water for any purpose “not essential to public health and safety.” The New York Times on Oct. 26 reported that Easley warned he would soon have to declare a state of emergency if voluntary efforts fell short.

One week earlier, Charles Turner, the mayor of Siler City, N.C., did just that, declaring a water shortage emergency and ordering all residents, businesses, and industries to reduce water use by 50 percent or face possible fines and the termination of water service. And in Atlanta, Ga., Mayor Shirley Franklin in early October convened a news conference to implore residents to conserve water.

The Times reported that without rain, the Lower Rocky River Reservoir that supplies Siler City will be completely drained in 80 days. Similarly, Lake Lanier, the water source for the Atlanta area, could be dry in 90-121 days if weather conditions remain dry. The Times also reported that the Georgia Environmental Protection Division is expected to send Gov. Sonny Perdue recommendations on tightening water restrictions in the near term, which may include mandatory cutbacks on commercial and industrial users.

In Greene County, Tennessee’s largest cattle raising county, officials estimate that 80 percent of the ponds have already dried up, prompting cattle producers to liquidate their herds and deflating local livestock prices. Volunteer fire departments have offered their help by hauling water to parched farms from area rivers, and many cattle farms are importing hay from out of state.

Southern States Cooperative, based in Richmond, Va., has responded to the widespread drought by offering special purchase programs throughout its operating territory. These include extended payment terms with no interest for up to six months for fertilizer, lime, seed, feed, and other products. The co-op, which has some 300,000 farmer members and 1,100 retail outlets throughout the Southeast, is also stocking a variety of drought-related products, including transfer pumps, watering systems, and stock tanks.

The statistics that prompted these actions are impressive. The U.S. Drought Monitor on Oct. 16 labeled most of Alabama, Tennessee, and North Carolina as an “exceptional” drought area, its most severe drought category. Those areas were joined by the northern half of Georgia and parts of southeastern Kentucky and northern South Carolina. Adding areas of extreme drought, the next most severe rating, brings in most of the Carolinas and Kentucky, as well as a section of northern Florida, southern Indiana, and southern Ohio.

The drought has been exacerbated by unseasonably warm weather in the region. Memphis, Tenn., posted a daily record high of 95 degrees on Oct. 8, and Charleston, W. Va., reached or exceeded 90 degrees on five consecutive days from Oct. 4-8, breaking a record that had stood since 1919. Raleigh-Durham, N.C., experienced three days of 90-degree heat from Oct. 7-9, boosting its year-to-date total to 83 days and shattering the previous 90-degree heat record of 72 days set in 1953.

The drought’s effect on crops in the region has become increasingly evident. As of Oct. 14, USDA assigned good or excellent ratings to just 8 percent of the cotton crop in Alabama and South Carolina, along with 15 percent of Tennessee’s acreage, 20 percent in Virginia, and 25 percent in North Carolina. Poor or very poor ratings were given to 70 percent of Alabama’s cotton crop, 61 percent in South Carolina, 51 percent in Tennessee, and 40-41 percent of the acreage in North Carolina and Virginia.

Yara to expand Sluiskil urea capacity by 45 percent

News Briefs, Urea

Oslo-Yara International ASA said Oct. 19 that it plans to strengthen its production base by investing in a new urea unit at its Sluiskil plant in the Netherlands. The investment increases urea production by roughly 45 percent, to 3,500 mt/d from 2011, creating a world-scale facility at an investment cost of approximately EUR 300 million. Construction is planned to start in 2008. “Increased natural gas prices in so-called ‘stranded gas’ regions like the Middle East, are improving the relative competitiveness of European ammonia plants,” said Yara CFO and Head of Strategy Sven Ombudstvedt. “Efficient European ammonia plants now represent a more attractive case for upgrading investments. This investment takes advantage of urea upgrading margins on excess ammonia capacity in Sluiskil and improves our finished product portfolio. Moreover the replacement of existing capacity reduces maintenance costs and improves energy efficiency at the plant.” The new urea unit will be integrated into the existing facilities at Yara Sluiskil. Currently, approximately 70 percent of ammonia production onsite is consumed in the production of finished fertilizer products, with the balance transported to other Yara production sites or sold to third parties. With more ammonia upgraded to urea, liquid fertilizer, AdBlue, and other finished products onsite, Yara’s exposure to the international ammonia market will be reduced. Onsite integration will also further improve energy efficiency and reduce maintenance and operating costs. Yara Sluiskil produces ammonia, nitric acid, nitrates, urea, liquid fertilizer, liquefied CO2 for the food industry, and environmental products. The plant ranks among the largest and most efficient European fertilizer facilities, said Yara.

Southern States to build new sulfuric acid plant

News Briefs, Southeast, Sulfuric Acid

Savannah-Southern States Chemical, a Dulany Industries company, announced Oct. 16 that an agreement has been reached to build a new sulfuric acid production plant in Wilmington, N.C. The company says the new location, yet to be announced, will solidify Southern States Chemical’s position as the largest industrial producer/supplier of sulfuric acid on the East Coast. The plant is expected to be operational in 2009. “The decision to build this new state of the art sulfur burning acid plant in Wilmington, where we already have two operational plants, centered primarily on our core strength as a reliable, on-purpose supplier to the industrial customer base in our market area,” says Key Compton, president of Southern States Chemical. “This geographic position provides more efficient distribution to our customer base on the East Coast and increases Southern States Chemical’s total manufacturing capability in the Southeast to over 1,100 tons of sulfuric acid per day in addition to our marketed product. Particularly today, this added security of supply will certainly be welcome!” Dulany Industries Inc., Southern States Chemical’s parent company, also has ties to dry and liquid bulk warehousing/terminaling and industrial/environmental services. Its other subsidiaries are SeaGate Handling, Savannah Bulk Terminal, and Envirovac Industrial Services.

Ammonia release in Oregon prompts evacuation

Ammonia, News Briefs, Pacific N.W.

Athena, Ore.-The accidental release of about 1,800 gallons of anhydrous ammonia at a Western Farm Service (WFS) facility in Athena, Ore., on Oct. 15 resulted in the temporary evacuation of school kids and some of the town’s 1,200 residents. The incident reportedly occurred when a nurse truck driver pulled away from an ammonia storage tank at the facility with a hose still attached, causing a valve to break. The release was reported immediately, and emergency personnel evacuated everyone in the direct path of the visible cloud by going door to door and closing part of Highway 11 into town. Students and faculty at Athena Elementary and Weston-McEwen High School were evacuated to neighboring Weston Middle School until emergency responders gave the all clear to return. Local reports said the leak was stopped and the cloud dissipated within two hours. The driver of the shuttle truck was reportedly treated at a Walla Walla, Wash., hospital for injuries sustained during the incident. Agrium Inc., which owns WFS, noted that the community was upset by the evacuation, and apologized for the incident. A much less serious ammonia leak was also recently reported at another Agrium-owned site in Farmersburg, Ind., which was a former Royster-Clark location. That incident was checked out by the local fire department. The company said there was no measurable loss of ammonia.

The Andersons increases guidance

Eastern Cornbelt, News Briefs

Maumee, Ohio-The Andersons Inc. said Oct. 13 that it has raised its guidance range for the fiscal year to between $3.15 and $3.35 from the previous guidance of $2.90 to $3.15. The increase is largely attributed to positive market factors in the agriculture industry, mainly better performance in the Plant Nutrient Group and the large grain harvest projected this fall, which will have a positive impact in the Grain & Ethanol Group. The company will release its third quarter earnings Oct. 31.

MFA to pay $100,000 fine

News Briefs, Western Cornbelt

Columbia, Mo.-MFA Inc. will pay a $100,000 fine after pleading guilty to one misdemeanor violation of the Clean Air Act in connection with a spill of anhydrous ammonia fertilizer. In addition to the fine, MFA agreed to make “significant safety upgrades” to its facilities, which will cost “hundreds of thousands of dollars.” The accident occurred during the process of transferring anhydrous ammonia from a bulk tank to a nurse tank when a connection between the loading valve and the fill valve on the nurse tank became separated, severely burning employees.

Uralkali IPO valued at $948 M

News Briefs, Russia

Moscow-JSC Uralkali has raised some $948 million from its recent IPO on the London Stock Exchange. Shares were valued at $3.50 and global depositary receipts (1 GDR equals 5 ordinary shares) at $17.50. Uralkali offered 270.8 million shares, representing 12.75 percent of the company’s issued share capital. Uralkali shares are also traded on the Russian Trading System.

BLM potash lease sale nets $776,000

Carlsbad, NM, News Briefs, Potash

Carlsbad-An Oct. 3 competitive sale of potash leases on three 320-acre parcels administered by the Bureau of Land Management in Eddy County netted $776,000 in revenue. Intrepid Potash Co. was the high bidder on two of the parcels, paying $425 and $650 per acre for the parcels (totaling $136,000 and $208,000, respectively); Mosaic Potash paid $1,350 per acre for the third parcel, with a total bid of $432,000. The leases are awarded for a period of 20 years. The federal government will receive a 5 percent royalty on production from the leases. Half of the revenues from the lease sale and subsequent production are returned to the U.S. Treasury, and half go to the state where the lease occurs. The parcels were nominated for leasing earlier this year. This is the first sale of potash leases by the BLM since 1992.