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CSX phosphate/fert volumes up in 2010; Mosaic stoppage impacts 4Q

CSX Corp. reported that phosphate and fertilizer volumes were up 8 percent for the year ending Dec. 31, 2010, to 313,000 units (units = railcars, containers, or trailers) versus the year-ago 289,000 units. Revenues, however, were up 25 percent, to $465 million from the prior year’s $373 million. Revenues per unit were up 15 percent, to $1,486 from $1,291. This was the highest percentage for all commodities except coal, which saw an 18 percent increase.

Phosphate and fertilizer volumes were down 3 percent in the fourth quarter, to 76,000 units from the year-ago 78,000. However, CSX said this was due in part to the temporary loss of some short-haul phosphate business in Florida. Specifically, CSX told analysts that this was due to The Mosaic Co. having to temporarily halt mining at South Fort Meade because of a lawsuit by the Sierra Club. Mining has since resumed on a temporary basis, and Mosaic’s appeal of the lawsuit is pending. Despite the volume dip, phosphate/fertilizer revenues were up 29 percent for the quarter, to $126 million from the year-ago $98 million. Revenues per unit were up 32 percent, to $1,658 from $1,256. This was a higher percentage increase than for any commodity carried.

Asked about higher phosphate prices and rates, Clarence Gooden, CSX executive vice president of sales and marketing and chief commercial officer, told analysts that CSX is going to price its phosphate business to the market and market demand. “So the better the demand, the better the price, and it will see rail inflation.” Asked if the phosphate increases are just seasonal, he said he thought they had reached a new base.

CSX-wide, fourth-quarter net income was up 42 percent, to $430 million ($1.14 per diluted share) on sales of $2.82 billion, up from the year-ago $303 million ($.77 per share) on sales of $2.32 billion. The EPS numbers were up 48 percent; CSX said this represented a record fourth quarter for the company.

CSX also said it delivered record results for the year, with net income up 37 percent to $1.56 billion ($4.06 per share) on sales of $10.64 billion, up from net income of $1.14 billion ($2.89 per share) on sales of $9.04 billion.

CSX also said it expects to produce record financial results in 2011. It plans to invest $2 billion in the business during the year, with two-thirds in infrastructure and rolling stock and the remaining split between strategic and regulatory investments.

CHS plans Montana fertilizer hub

Farmers Elevator-Eastern Montana Operations, a division of CHS Inc., Inver Grove Heights, Minn., announced Jan. 21 that a new hub fertilizer plant will be built at the Macon junction east of Wolf Point. After careful consideration and collaboration with management, the local producer board voted unanimously to move forward with the project. Groundbreaking is planned for early Spring 2011, followed by an approximate 10-month construction period.

The state-of-the-art facility will combine some 28,000 st of dry fertilizer storage with a warehouse for bulk chemical and agronomic products. The plant will share the loop track with Farmers Elevator’s current shuttle loader, where fertilizer will be brought in via shuttle train units.

“We’re excited about the prospect of enhancing our service to the producers in eastern Montana,” said Mark Dreesen, location manager, Farmers Elevator. “The new facility adds full retail agronomy service to our Wolf Point location at the same time it ensures a stable supply of product to our other seven agronomy locations.”

Farmers Elevator already has 12 locations in eastern Montana.

Trade groups critique Obama’s speech

Washington-Several industry and ag-related trade groups issued responses to President Obama’s Jan. 25 State of the Union speech. The American Chemical Council (ACC) welcomed what it referred to as “the strong commitment to job creation and economic recovery” in Obama’s address, but also pressed for the “right balance” with regard to federal regulations. “American chemistry is behind many of the innovations and new technologies that will help create jobs, drive economic growth, and achieve the goals articulated by the president: more clean energy sources; improved infrastructure; more efficient transportation options; medical advancements that help to bring down the cost of health care; and even a strong defense,” said ACC President and CEO Cal Dooley on Jan. 26. “While we were encouraged that the president again called for a review of the federal rules imposed on businesses, we urge the president and Congress to look beyond individual regulations, and to reform the process itself to ensure there is sound economic impact analysis and consistent standards for scientific quality, reliability and relevance. Only by improving the process, can we ensure rational, balanced regulatory outcomes.” The National Corn Growers Association (NCGA) also weighed in on the speech, praising Obama for stressing the importance of biofuels in reducing dependence on foreign oil, the importance of pending trade agreements, and the role U.S. farmers play in feeding the world. “We were encouraged that President Obama spoke about the needs of rural America and the importance of our country’s global leadership when it comes to agriculture,” said NCGA Chairman Darrin Ihnen. Specifically, Ihnen cited Obama’s mention of three free trade agreements important to the organization: South Korea, Panama, and Colombia. “We need quick action on these three agreements, which have been languishing in Washington for years,” Ihnen said. “These agreements will help our country’s economy by increasing exports and creating sorely-needed jobs.” Ihnen also noted that the success of biofuels “hinges on the success of ethanol from corn ?Çô on the growth of an ethanol industry that is leading the way, sustainably increasing in economic, environmental and energy efficiency.”

Vale denies rumors

Rio de Janeiro-Vale S.A. of Brazil said Jan. 21 that rumors regarding a bid to acquire a fertilizer company or negotiations with the purpose of making a bid to acquire such company are totally unfounded. Vale said it continues to focus on its multiple opportunities of organic growth. “Our multi-billion [dollar] investment plan for 2011, of US$ 24 billion, is anchored in a rigorous discipline in capital allocation and reinforces the confidence in long-term global fundamentals to generate shareholder value,” Vale said in a statement. Vale did not specifically name a company that it was rumored to be seeking. However, there was much speculation last week that Vale or BHP Billiton might be interested in The Mosaic Co. now that Cargill Inc. is planning to shed its majority stake in Mosaic (GM, Jan. 24, p. 1). While BHP has been seeking to become a major potash player, it let word leak when it was trying to buy Potash Corp. of Saskatchewan Inc. that it was not that interested in phosphate, which is a considerable chunk of Mosaic’s portfolio.

Freeport spends $150 M on sulfur project

New Orleans-Freeport-McMoRan Copper & Gold (FCX) said Jan. 26 that it is completing the construction of a sulfur burner at its Safford, Ariz., facility that will provide a more cost-effective source of sulfuric acid used in solution extraction/electrowinning operations, as well as lower transportation costs. FCX said the project completion is expected in the second quarter of 2011 at a capital investment of approximately $150 million.

EPA expands E15 use

Washington-The U.S. Environmental Protection Agency (EPA) has announced E15 blends (15 percent ethanol/85 percent gasoline) to be safe for use in all cars and pickups built in 2001 and later. This decision builds upon an October 2010 EPA decision that limited E15 use to just 2007 and newer vehicles. With 2001 and newer cars and pickups included, EPA has approved the use of E15 for 62 percent of vehicles on the road today, according to car industry data.

Ohio township suing over ammonia tank

Columbus-The Ohio Department of Agriculture has acknowledged without further comment that a suit has been filed by Sharon Township over the disagreement about locating a 12,000-gallon anhydrous ammonia tank that local officials consider to be a safety hazard. Spokeswoman Erica Pitchford told Green Markets that ODA is still in the process of reviewing the proceedings, and that there would be no comment until that process is complete. The township is seeking an injunction to put on hold the state’s approval for installing the tank at a Medina County farm until regulations are established to protect residents from an ammonia release. According to the complaint, regulations for installing the tank do not limit its size, require a background check of the installer, or consider the township’s ability to respond if the chemical were released. The tank, which ODA insists meets all state regulations, has been the object of a community-wide protest meeting and a bill sponsored by a leading Ohio state representative to prevent state agriculture officials from approving any ammonia tanks in densely populated areas (GM, Oct. 25, 2010). The bill leaves final approval with the ODA director, but the applicant would also have to submit written notification to local government, fire, and law enforcement officials.

Refrigeration firm resolves ammonia charges

Andover, Mass.-American Refrigeration Co. is letting its customers know that the company has accepted responsibility and agreed to pay a $40,000 fine to resolve federal charges that a company technician dumped ammonia into a drain that led to a wastewater facility in New Hampshire and caused the release of untreated sewage. The facility spent four days getting operations back to normal. Michael Sirois, president, explained that the design/build refrigeration contractor regrets not having appropriate measures and supervision in place at the time that would have prevented the incident. Sirois said the agreement with the U.S. Attorney’s office in Concord, N.H., stipulates the fine plus a $400 special assessment and two years probation. The statement said the incident occurred during transfer of ammonia during servicing. The trained ammonia service technician knowingly poured a mixture of anhydrous ammonia and water down a floor drain that led to the municipal wastewater treatment facility. He was able to transfer most, but not all, of the ammonia to other parts of the refrigeration system. The technician did not obtain permission or contact any federal, state, or local environmental authority, nor did he consult with anyone else at ARC before making the discharge. When the mixture reached the treatment facility it destroyed the biological agents, disabling the treatment and causing the facility to violate its own (National Pollutant Discharge Elimination System (NPDES) permit. In addition to the fine and probation, American must also commission and pay for an audit of its environmental compliance program and comply with any recommendations the auditors make.

Mitsui agrees to acquire CHS stake in Multigrain

Tokyo-Mitsui & Co. Ltd. has issued a statement saying that it has agreed to acquire CHS Inc.’s 44.2 percent stake in Multigrain AG. Multigrain engages in the agricultural production business and the grain distribution business in Brazil. With this acquisition, Mitsui’s own shareholdings in Multigrain will increase from 44.2 percent to 88.4 percent. Mitsui said its additional investment will be US$225 million, with its total investment in Multigrain now being $459 million. CHS, while indicating a few weeks ago that it was considering a sale of its Multigrain stake (GM, Jan. 17, p. 15), has yet to confirm the sale.

Viterra confirms interest in Montreal terminal

Calgary-Viterra Inc. said Jan. 26 that it is in discussions regarding a possible transaction to lease and operate the Montreal Port Authority (MPA) Grain Terminal. The terminal is a licensed transfer elevator that operates year round and has a storage capacity of 262,000 mt. The terminal is located in the deepest inland seaport in North America and connects directly to both CN and CP rail networks. It provides direct and efficient shipping routes to various destinations in Canada, the U.S., and Europe. Viterra says the discussions are ongoing, and no transaction has been finalized at this time.