| Company Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 53.88 | 49.87 | 26.63 |
| CF Industries | CF | 75.92 | 69.50 | 17.00 |
| Mosaic | MOS | 53.23 | 47.42 | 16.97 |
| PotashCorp | POT | 104.02 | 98.00 | 34.34 |
| Terra Industries | TRA | 31.36 | 27.86 | 7.81 |
| Terra Nitrogen | TNH | 120.84 | 116.07 | 24.99 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 48.29 | 48.06 | 33.61 |
| Deere & Co. | DE | 147.39 | 144.48 | 83.66 |
| Scotts | SMG | 43.03 | 43.93 | 44.64 |
| UAP | UAPH | 30.97 | 30.78 | 21.71 |
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SPOT BARGE PRICES
CF to acquire 50 percent of Keytrade for $25 M; deal gives immediate global presence, says company
CF Industries Holdings Inc. and Keytrade AG announced Sept. 17 that CF has agreed to acquire a 50 percent ownership position in Keytrade, a 3 million mt/y global fertilizer trading organization headquartered near Zurich, Switzerland. The deal, which is expected to close in the fourth quarter 2007, has a purchase price of US$25 million.
“We are excited to be combining the capabilities of CF Industries and Keytrade,” said CF Chairman and CEO Stephen Wilson. “CF Industries has had a long, constructive relationship with Melih Keyman, the chairman and chief executive officer of Keytrade, and with his partners and team. We look forward to working together to expand our businesses for the benefit of all our shareholders. This strategic partnership provides CF Industries with a global platform from which to pursue our objectives of growth and diversification.”
“From Keytrade’s perspective, this partnership will help ensure growth potential beyond our trading activities,” said Melih Keyman, Keytrade chairman and CEO. “With our new strategic partner, we believe that Keytrade will be able to serve the needs of our trading partners much better with wider product support. We, too, are excited at the prospect of combining our global trading system with CF Industries’ strong production base and international aspirations.”
Keyman, a founder of Keytrade, will continue as CEO of the company and will run the organization on a day-to-day basis together with his founding partners Andreas Vaterlaus, Sergei Rudakov, and Yang Baoheng. Founded in 1997, the company buys fertilizer – primarily nitrogen products, but also phosphate and potash – in 35 countries and markets it in 65 countries. The company has extensive commercial relationships in both fertilizer supply and market regions.
Initially, CF will work exclusively with Keytrade to export phosphate fertilizer and import UAN solution. The companies are exploring additional opportunities to work together, including sourcing other products to serve the North American market, and establishing production, distribution, and/or marketing presence in attractive markets overseas.
As a result of the acquisition and Keytrade’s role in exclusively handling CF phosphate exports, CF has given notice to PhosChem, the U.S. phosphate export organization, that it will be leaving its membership. CF has only been a PhosChem member for about a year, joining Oct. 1, 2006 (GM June 12, p. 6). CF expects Keytrade will be handling phosphate exports by the beginning of 2008. CF spokesman Chuck Nekvasil told Green Markets that CF has no issues with PhosChem, and that this transaction simply makes better sense for CF and its shareholders in the long run.
Many attendees at last week’s TFI World Conference in Boston greeted the CF/Keytrade news with surprise. Some wondered why CF would need this investment, saying that it has used other traders in the past and it could readily do so in the future. However, CF said the acquisition quickly gets the company an international presence of its own. “We believe that a 50 percent ownership in Keytrade can provide CF Industries with an immediate global platform from which to pursue our growth and diversification objectives,” Nekvasil told Green Markets. “Strategically, we believe it’s important to develop such a platform to improve our global sourcing capabilities and market insights and to enter new markets and establish new offshore distribution channels. We believe Keytrade provides a unique opportunity for us to acquire an extensive global capability immediately.”
Wilson has mentioned the need to go international as a priority in past telephone conferences with analysts.
“We looked at the option of developing a direct CF Industries presence internally, but we believe that this acquisition, which gives us an extensive global capability immediately, makes much more sense,” added Nekvasil.
While some sources were taken aback by CF paying $25 million for a half-stake in a trader, others were not, noting that CF is having a banner year and that Wall Street is likely looking for it to spend money or funnel it back to shareholders as a dividend. Likewise, it has seen a huge surge in stock prices. CF shares closed at around $70.00 on Thursday Sept. 20, versus a year-ago number of around $17.00.
Another source noted that CF hired Anthony Will as vice president, corporate development, back in April. His mandate was to execute initiatives that will help CF achieve strategic objectives in the areas of growth and diversification (GM April 9, p. 9).
TFI World Conference sees increased attendance
Fertilizer industry players were out in force last week at TFI’s World Conference, where attendance was reported at 734 as of late Sept. 18, appearing to be up about 13 percent from prior year levels (GM Sept. 18, 2006, p. 1). Sources said this was one of the best attended TFI World meetings in recent years.
Keynote speakers addressed attendees on two major topics, food and fuel, with Jeffrey Sachs, Director with the Earth Institute at Columbia University, speaking on “the end of poverty – economic possibilities for our time.” Dr. Elisio Contini, Director for the Brazilian Agricultural Research Corp.’s Office of International Affairs of Embrapa, detailed Brazil’s history and success at using agriculture to create fuel, i.e., biofuels – ethanol and biodiesel.
Dr. Contini noted the implications for the fertilizer industry from further crop-to-fuel development, including demand increase with potential price increases; fertilizer for use in new crops; supply to new regions such as Africa; new agricultural and industrial technology, such as nitrogen fixing bacteria; and the speed of the process. As for the latter, the quick pace of new ethanol plants being built in the U.S. is an example.
Dr. Contini gave estimates of the fertilizer demand that would be necessary to replace 10 percent of gas or oil consumption. In the case of sugarcane for ethanol production, some 20 million hectares of additional crops would need to be grown, with 11 million mt of fertilizer used to replace 10 percent of world gasoline. For soybeans to produce biodiesel, he estimated some 200 million hectares of additional soybeans would need to be produced, with 65 million mt more tons of fertilizer consumed, to replace some 10 percent of oil.
Command center to deal with Agrifos water woes
Pasadena, Texas-The U.S. Coast Guard, the Environmental Protection Agency, the Texas Commission on Environmental Quality, and Agrifos have established a command center at Pasadena as a result of recent spills and discharges from the company’s gypsum stack, according to company spokesman Steve Pierce. The problems were said to be the result of extremely heavy rainfall this year – the most since 1943. The company was still attempting to determine the amount of contaminated water that flowed into Cotton Patch Bayou, which connects to the Houston shipping channel. While some environmental damage did occur, the company said there was no threat to public health. A spill occurred on Aug. 16, when water seeped under the containment wall; repairs were completed on Aug. 20. A second leak happened on Sept. 1 during a heavy downpour. As Hurricane Humberto approached two weeks ago, the company began discharging water treated with soda ash and lined the ditch with limestone gravel to reduce acidity to avoid another spill. Pierce said the gypsum stack was operating normally and the plant was still working at maximum capacity, because production helps reduce the water level. He said the company was working with EPA on mitigation and ways to avoid similar problems in the future. Pierce added the company was keeping a close eye on a system that formed over Florida last week and could develop into a tropical storm over the Gulf. At that time, landfall was expected to be to the east of Pasadena.
Miss Phos reports additional acid plant repairs
Pascagoula-Mississippi Phosphates Corp. said Sept. 14 that its recently idled sulfuric acid plant will experience additional downtime to correct defects in prior repair work. A boiler in the affected plant, which is one of two 1,500 ton-per-day sulfuric acid plants at the company’s phosphate fertilizer facility in Pascagoula, Miss., suffered a major failure in July 2007 and required extensive repair work. The repairs were completed and sulfuric acid production was resumed in late August. However, production was again interrupted in early September due to the faulty repair work. A substantial rework of the defective repairs has been initiated and is expected to be completed by Oct. 1, 2007. While the company is cautiously optimistic that the defective work can be repaired, as a precautionary measure it has ordered materials for a replacement component for the boiler. If required, the fabrication and installation of a replacement component could take up to approximately two months. Based on the projected availability of sulfuric acid, DAP production should range between 1,300 and 1,500 tons per day during the shutdown. The company expects to meet all outstanding commitments to its customers and suppliers during this period.
Shell Sulphur Solutions launched
Boston-Shell Sulphur Solutions was officially launched Sept. 18 at the TFI World Conference in Boston. Shell says the new unit brings together for the first time its global sulfur expertise and experience. They will be focused on delivering and developing world-class sulfur products and applications that provide innovative uses for excess sulfur, as well as meet social and environmental development targets. In addition to Shell’s elemental sulfur, patented products noted last week were SEF, or Sulfur Enhanced Fertilizer, which incorporates micron-sized particles of elemental sulfur within the two most widely used fertilizers – MAP and DAP; SEAMTM Asphalt Modifier, a patented mix additive technology that is both binder extender and asphalt mix modifier; and Sulfur Cement and Concrete, a durable concrete, producing an attractive, high-strength product with short setting times. “Shell has long been established in the sulfur industry, most notably through Shell Canada’s renowned experience,” said Egbert Veldman, Shell vice president, based in the United Kingdom. “The creation of Shell Sulphur Solutions means we can now better leverage this experience across the Shell Group and apply extra resources and R&D capabilities throughout the world to support the growing energy needs while achieving sustainable development targets.” Veldman said the new unit reflects Shell’s commitment to the sulfur industry and its valued customer base. “Together with a strong team of professionals, our aim is to offer new and existing customers a service we can all be proud of.” Veldman was previously vice president of Shell’s bitumen division. Shell Sulphur Solutions is a part of Shell’s B2B business. Sources estimated that the new sulfur unit created some 135 new jobs.
TruGreen fertilizer spill empties Iowa school
Des Moines-More than 300 students were evacuated from a Des Moines area middle school early Sept. 19 after a TruGreen truck overturned and dumped between 400 and 500 gallons of lawn chemicals outside their classrooms. School officials said there was never any danger to the students, but decided nonetheless to load them on buses and take them to a nearby high school. “We brought them all back in a little over an hour, fed them lunch and everyone was okay,” reported Joyce Thomsen, the district’s business manager. Thomsen said that the TruGreen minivan reportedly lost its brakes and the driver tried to avoid hitting cars on the road by heading for a ditch, running into a light pole and ending up on its side on school property, where the tank ruptured. She said TruGreen reported that it was a mixture of liquid herbicides and fertilizer that flowed along a sidewalk and driveway to the side of the school building. Emergency responders assured everyone that there was no danger from the spill. TruGreen is expected to complete the cleanup and check on possible groundwater contamination under the supervision of natural resource inspectors.
Phosphate ban concerns Wisc. ag interests
Madison, Wisc.-Agriculture is willing to support a bill in the state legislature to prohibit statewide the use of phosphate fertilizer on lawns if amended to preempt local governments from adopting their own ban, according to the Wisconsin Agribusiness Council. “We don’t like it,” Ferron Havens, council president and CEO told Green Markets. “But we’re trying to make the best of the situation (since) it’s definitely going to pass.” The bill (AB396) would affect only private and commercial lawns and would allow exemptions for newly established turf, but would have no affect on agriculture. Havens said the objective is to make sure the rule-making authority is maintained to the state agriculture department. Some dealers, he noted, are concerned about the possibility that bags of phosphate-containing fertilizer would have to be kept behind counters. “We don’t want to have to do that,” he added, indicating that signs on the product or at counters indicating “not for use on lawns” would be more acceptable. Several local governments already have their own controls, and it wasn’t certain how these would be affected. Dept. of Natural Resources officials have stated that the action would be unlikely to affect the water quality in the Lake Winnebago system. But others, including conservationists, considered it a starting point on which to build in the future. The press quoted Rob McLennan, DNR’s Winnebago watershed supervisor, as saying that because the lake system is at the bottom of 6,000 square miles of drainage area, the phosphate from lawn fertilizers compared to other nutrients would be minimal.
Spur to delist from US SEC
Vancouver, Canada-Spur Ventures Inc. said Sept. 11 that it intends to voluntarily terminate the registration of its securities under the U.S. Securities Exchange Act of 1934, and expects to file the required Form 15-F during the week of Sept. 10, 2007. Spur said the primary market for its shares is the Toronto Stock Exchange, where the average trading volume has accounted for more than 95 percent of Spur’s worldwide trading volume over the last year. Currently, Spur completes its financial statements in accordance with Canadian GAAP. Spur recognizes that the U.S. and Canadian GAAP are different in certain areas, and accordingly the company presents a reconciliation from Canadian GAAP to U.S. GAAP in its annual audited financial statements and will continue to do so in the future. Spur is continuously seeking to minimize its operating costs. The deregistration will have no impact on Spur’s primary listing of its common shares on the TSE. Spur will continue to publish financial reports, financial statements, press releases, and shareholder information, which will be available at www.sedar.com and on Spur’s web site at www.spur-ventures.com, and will continue to provide a high standard of corporate governance, information, and disclosure for all investors, including those in the United States.