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Growmark, Bunge form alliance to buy CF terminal

Growmark Inc. and Bunge North America, the North American operating arm of Bunge Ltd., announced on Jan. 20 that they have created B-G Fertilizer LLC to acquire a liquid and dry fertilizer storage terminal currently owned by CF Industries Holdings Inc. in Cincinnati, Ohio.

B-G Fertilizer LLC will use the facility, which has approximately 91,000 tons of dry and liquid storage capacity, to supply crop nutrients to retail fertilizer dealers. The two companies said the partnership will allow both to tap existing expertise within their organizations while also leveraging Bunge’s grain and oilseed network in Indiana, Ohio, and Kentucky.

The transaction is expected to close in the first quarter of 2011 and is subject to completion of due diligence activities and other customary conditions. Terms of the deal were not disclosed.

“We are excited about the possibilities the partnership with Bunge North America brings to the retailer community served from Cincinnati,” said Jim Spradlin, Growmark vice president, Agronomy. “Bunge has strong risk management experience as well as extensive blending and distribution experience in the Americas that when combined with Growmark’s domestic sourcing, sales, and risk management expertise will provide important synergies to both organizations.”

“The Bunge-Growmark partnership supports our corporate objective of pursuing beneficial acquisitions and business alliances,” said Rod Wells, Growmark director, Agronomy sales and operations.

“Bunge is pleased to be working with Growmark to provide value to customers through access to an efficient supply chain,” said Matt Thibodeaux, general manager, Bunge Fertilizer. “Together Bunge and Growmark can access ingredients from both international and domestic fertilizer production sources, ensuring the success of the Cincinnati facility.”

The transaction is the second involving CF and Growmark in as many weeks. On Jan. 6, CF announced that it had entered into a definitive agreement to sell four mainly dry product warehouses and related assets to Growmark and one of its subsidiaries (GM Jan. 10, p. 1). Those facilities are located in Albany and Mapleton, Ill., Cincinnati, Ohio, and St. Louis, Mo., and will be used by Growmark and its subsidiary to serve the needs of the organization’s retail customers that provide fertilizer to farmers. That deal was expected to close in January.

Storage capacities in the Jan. 6 transaction include 36,500 st in Albany, all dry; 61,000 st in Mapleton, all dry; and 39,000 st in St. Louis (Bussen spur), all dry. The Cincinnati terminal has 60,000 st of dry and 30,000 st of liquid capacity. Overall, Growmark said the Jan. 6 acquisition represents approximately 226,000 tons of dry and liquid plant food storage.

Growmark announced Jan. 7 that it had entered into an agreement with George Lamb whereby Growmark will acquire Lamb’s Seneca Terminal at Seneca, Ill. (GM Jan. 7, p. 10). That acquisition includes 45,000 st of dry fertilizer storage, dock, and acreage. Growmark plans to add liquid nitrogen storage at the site.

Headquartered in Bloomington, Ill, Growmark is a regional cooperative providing agriculture-related products and services, as well as grain marketing, in 31 states and Ontario, Canada. Growmark owns the FS trademark that is used by affiliated member cooperatives.

Bunge North America is a vertically integrated food and feed ingredient company, supplying raw and processed agricultural commodities and specialized food ingredients to a wide range of customers in the livestock, poultry, food processor, foodservice, and bakery industries. With headquarters in St. Louis, Bunge North America and its subsidiaries operate grain elevators, oilseed processing plants, edible oil refineries and packaging facilities, and corn dry mills in the U.S., Canada, and Mexico.

Bunge Limited, headquartered in White Plains, N.Y., is a leading global agribusiness and food company, with approximately 32,000 employees in more than 30 countries. Bunge buys, sells, stores, and transports oilseeds and grains to serve customers worldwide; processes oilseeds to make protein meal for animal feed and edible oil products for commercial customers and consumers; produces sugar and ethanol from sugarcane; mills wheat and corn to make ingredients used by food companies; and sells fertilizer in North and South America.

New acquisitions, fertilizer boost Viterra; seeks growth by buying independent retailers

New acquisitions, most notably in Australia, and strong fertilizer sales in the fourth quarter helped boost Viterra Inc.’s performance for fiscal year 2010, which ended Oct. 31, 2010. The company reported EBITDA of C$517.6 million, up from the prior year’s $323.7 million. Net earnings moved up to $145.3 million ($.97 per share) on sales of $8.25 billion from the prior year’s $113.1 million ($.89 per share) on sales of $6.63 billion.

Fiscal 2010 fertilizer sales were $791.1 million, down from the prior year’s $899.6 million. This was due to lower average fertilizer sales prices for the first nine months. Fertilizer volumes were up at 1.75 million mt with an average margin of $97.36/mt, versus the year-ago 1.53 million mt at $83.76/mt.

Viterra fourth-quarter net income was $52.7 million ($.24 per share) on sales of $1.95 billion, up from the year-ago net loss of $920,000 (negative $.05 per share) on sales of $1.42 billion. EBITDA was $137.9 million, up from the year-ago $40.2 million.

Fourth-quarter fertilizer sales were $163.5 million, with volumes of 370,000 mt and average fertilizer margins of $110.02/mt. This compares to the year-ago $106.1 million, 261,000 mt, and $72.02/mt. Fertilizer sales in Western Canada increased by $57.4 million or 54 percent due to favorable weather conditions. Viterra said fertilizer gross profits increased about $22 million during the quarter over the year-ago period. The company said above-normal temperatures in October allowed the completion of harvest, as well as significant applications of anhydrous ammonia. Fertilizer movements were predominately ammonia. The company experienced higher margins on ammonia as selling costs were consistent and natural gas costs were slightly lower. The majority of the product was sourced through co-owned Canadian Fertilizers Ltd., which provides significantly higher margins than purchased tons.

For fiscal 2011, Viterra expects demand and pricing to be strong due to high commodity prices and increased nutrient requirements due to excess moisture in 2010. Viterra estimates combined fertilizer margins of $100-$120/mt for the year, assuming strong spring fertilizer sales, typical fall sales volumes, natural gas prices of about $4.00/mmBtu, modest price erosion from mid-June to fall, and continued strong commodity prices.

Seed bookings and customer prepayments for crop inputs for the spring have been progressing well, with $313 million as of Dec. 31, 2010. The sales of equipment, in particular corrugated storage bins, are expected to remain strong into 2011 due to increased producer cash flow in recent years. However, management expects strong fundamentals will be somewhat tempered by an expected 5 percent reduction in Western Canadian seeded acreage to approximately 56-57 million acres from the 60 million average due to excess moisture. However, this is still up from about 52 million in 2010.

Viterra Agri-Products Senior Vice President Doug Wonnacott told analysts that prepays have been at historic levels in the first quarter of 2011, and have continued to increase since December. He said growers, reacting to higher grain prices, have been very keen to secure the appropriate seed and fertilizer. “And given the recent upward movement in fertilizer that we’ve seen down in the U.S., that’s provided further stimulus for growers to book and also take dry product to the farm. So, we see good healthy volumes. And on the margin side, as we’ve indicated, we’re looking at that $100-$120/mt level, which is above where we were last year at the $97/mt level.”

Wonnacott expects a 15-20 percent increase in canola seed sales, noting that last year there were some 8 million unseeded acres due to wet conditions. “We think a lot of that is going to come back as canola and our bookings on canola are up significantly.” Viterra put 2010 canola acreage at about 16.2 million acres, with 18-19 million acres expected in 2011.

Viterra told analysts it will grow its Agri-Products segment by acquiring more independent retailers. Since the third quarter of fiscal 2009, it said it has acquired seven retail locations in Western Canada. Viterra estimates that its Agri-Products segment currently represents 35 percent of the Western Canadian market, with the company targeting a 40 percent share.

On crop protection products, Wonnacott said the company has seen good volumes, though there has been a significant devaluation in prices. He said that in the glyphosate area, however, the company has a proprietary product that provides a 10 percent margin lift.

Agri Products Sector FY-10 FY-09
Gross Profit 350.1 294.2
EBITDA 153.8 132.2
Sales 1,796.5 1,650.0
Fertilizer 791.1 899.6
Crop Protection 384.2 407.0
Seed 207.4 184.4
Wool 265.0 34.8
Financial Products 25.7 20.4
Equipment/Other 123.2 103.7
Agri Products Sector 4Q-10 4Q-09
Gross Profit 72.7 40.7
EBITDA 30.0 7.7
Sales 325.1 246.7
Fertilizer 163.5 106.1
Crop Protection 45.4 47.1
Seed 1.5 1.2
Wool 49.0 34.8
Financial Products 8.1 7.8
Equipment/Other 57.6 49.6
* C$ millions

Intrepid releases prelim 4Q sales, production data; revises schedule for proposed solar mine

Intrepid Potash Inc. said Jan. 20 that it estimates the company produced between 215,000-225,000 st of potash, and sold between 210,000-220,000 tons of potash, during the fourth quarter ending Dec. 31, 2010. Production includes the seasonal production from the harvest of the Moab, Utah, solar evaporation ponds.

Intrepid estimates its average net realized sales price for potash during the quarter was approximately $380-$390/st. Intrepid estimates that it produced approximately 25,000-35,000 st of Trio(R) as it came out of the planned East plant maintenance turnaround in October, and sold approximately 20,000-30,000 st of Trio. Intrepid estimates that its average net realized sales price for Trio during the quarter was approximately $215-$225/st. Intrepid expects to release its audited, fourth-quarter 2010 and fiscal-year-end 2010 financial results after market close on Feb. 23, 2011.

For the full year ended Dec. 31, 2010, Intrepid invested approximately $90-$95 million in its capital investment program, including the successful execution and completion of the compactor at the mine in Moab, Utah, and the addition of two new mining panels at both the East and West mines in Carlsbad, N.M.

In 2011, Intrepid expects to invest approximately $140-$165 million related to its capital investment program, to be funded from existing cash and investments and operating cashflows. Significant capital investments in 2011 beyond sustaining capital of approximately $50 million will be focused on the Langbeinite Recovery Improvement Project at the East mine; the commencement of design, engineering, and construction of new compaction capacity at both the Wendover, Utah, facility and the North facility in Carlsbad; continued implementation of digital control systems; and the addition of new underground mining panels at each of the Carlsbad mines.

Intrepid says it was recently notified by the Bureau of Land Management’s (BLM) consultant that the schedule for the Environmental Impact Statement (EIS) review process for the proposed HB Solar Solution Mine has been extended in order for the BLM to complete preparation and review of the preliminary draft EIS. The revised schedule reflects issuance of a Record of Decision during the first quarter of 2012.

Intrepid received the groundwater discharge permit for the project from the New Mexico Environment Department (NMED) in July 2010, and is in the process of obtaining the NMED air quality permit for the project. Once the remaining regulatory approvals are obtained, Intrepid anticipates promptly commencing construction. The revised schedule will result in the shift of approximately $10 million of capital investment that would have occurred in 2011 into 2012, resulting in the remaining capital expenditures for the mine occurring in 2012 and 2013. Intrepid estimates that first production will commence approximately eighteen months after construction begins, with ramp-up to full production expected in the succeeding year, reflecting the benefit of a complete annual evaporation cycle applied to full evaporation ponds.

TFI pledges funds for S.D. nutrient program

Washington-The Fertilizer Institute (TFI) announced on Jan. 20 that it is providing $8,000 to partially fund an 18-month program to educate South Dakota agricultural producers on practices that minimize nutrient pollution. TFI said the funds would be used to implement a multi-faceted outreach program aimed at increasing farmer adoption of the 4R Nutrient Stewardship System (use of the right fertilizer source at the right rate, the right time, and in the right place). TFI’s money partially matches an EPA pass-through grant by the South Dakota Department of Environment and Natural Resources to the South Dakota Agri-Business Association (SDABA), the South Dakota Association of Conservation Districts, and the South Dakota Association of Cooperatives. Including TFI’s matching funds, the total value of the grant is $28,650. “We are pleased to be a part of this partnership to ensure fertilizers are used in a sustainable manner,” said TFI President Ford West. “Farmers are being challenged to stay profitable and increase crop yields to meet growing food demand while safeguarding water, air, and soil resources. 4R Nutrient Stewardship provides farmers with science based tools to achieve all of those goals.” The education initiative being funded through the grant will include member outreach and education, advertising, direct mail, point of sale materials, and displays at key trade shows. The program runs from January 2011 to August 2012 and is targeted to producers in three key South Dakota watersheds Big Sioux River, Vermillion River, and James River. “Our goal for this intensive outreach program is to jumpstart producers thinking of how they can adopt 4R nutrient stewardship on their operation,” said SDABA Executive Director Kathy Zander. “TFI commends the South Dakota Agribusiness Association and its partners for their leadership in spearheading this worthy effort,” said West.

K+S now owns 81 percent of Potash One

Vancouver-Potash One Inc. said Jan. 19 that it has been advised by K+S Canada Holdings Inc., an indirect wholly owned subsidiary of Germany’s K+S Aktiengesellschaft, that 78,802,378 common shares of Potash One have been deposited to K+S Canada’s offer to acquire all of the issued and outstanding Potash One shares for C$4.50 in cash per Potash One share. The Potash One shares deposited to the offer represent approximately 81 percent of the issued and outstanding Potash One shares as of Jan. 18, 2011. K+S announced plans for a “friendly” acquisition of Potash One last November (GM Nov. 29, 2010).

Water/flood forecasts updated for California, NP

Washington-California growers received good news on Jan. 18 when the U.S. Bureau of Reclamation reported that it expects to deliver more water supplies requested by Central Valley farms this season due to plentiful snows left by early winter storms and higher-than-expected water reserves left over from 2010. Although the first water allocations won’t be announced until February, the federal government on Jan. 18 released an initial forecast of 45 percent for farmers south of the Sacramento-San Joaquin River Delta, with the remaining agricultural, urban, and industrial customers expected to receive 75-100 percent of their requests. The agency reported that California’s first snow survey in December showed almost double the normal snow water content for that time of year, compared with 85 percent of the normal in the first report last year. Early last year, farmers south of the delta were forecast to receive only 5 percent of the water permitted through long-term contracts with the federal government, but that allotment was subsequently raised to 45 percent during the 2010 growing season due to heavy spring rains. In another water forecast last week, the U.S. National Weather Service on Jan. 18 predicted major flooding on the Red River in North Dakota and Minnesota due to above-normal snowpack. The report said the risk of major spring floods in the northern Red River basin near the Manitoba border is similar to the risks that were present during major floods in 2006, 2009, and 2010.

AFBF sues EPA over Chesapeake plan

Atlanta-The American Farm Bureau Federation (AFBF) on Jan.10 filed a lawsuit in federal court to halt the U.S. Environmental Protection Agency’s pollution regulatory plan dictating how much nitrogen and phosphorous can be allowed into Chesapeake Bay from agriculture and other sources. “We all want a clean and healthy Chesapeake Bay,” said AFBF President Bob Stallman. “This lawsuit is about how we get there. Farm Bureau believes EPA’s ‘diet’ for the Chesapeake is dangerous and unlawful.” AFBF says the agency is overreaching by establishing a Total Maximum Daily Load (TMDL), or so-called “pollution diet” for the 64,000 square mile area, regardless of cost. The suit declares Farm Bureau’s three basic objections to the TMDL rule: the activities of farmers, homeowners, and businesses in the six-state watershed are unlawfully “micromanaged,” sometimes down to the individual farmer; EPA relied on inaccurate assumptions and on a scientific model that the agency itself admits was flawed to establish the TMDL; and EPA violated the requirement that agencies allow meaningful public participation on new rules. “Farmers and ranchers already are taking real, on-the-ground actions every day to improve water quality, actions that have been shown by USDA reports to reduce soil erosion and provide other environmental benefits,” Stallman asserted. “Those actions will continue, regardless of what happens with this lawsuit.”

New floating dock nearing completion in Osceola

Osceola, Ark.-A $2.4 million floating dock system in Osceola, Ark., is expected to be operational within a month, and will save time and freight costs for fertilizer users in northeastern Arkansas, according to Poinsett Rice and Grain, the company completing the project. Poinsett Operations Manager Scott Foushee told local reporters that the floating dock system was developed because the company’s own grain docks on the Mississippi River were constantly being used, with Poinsett fielding multiple inquiries to offload other products from barges. “We just couldn’t stop loading the grain to start working with anybody else,” Foushee said. Partial funding for the project came from the Delta Regional Authority and the U.S. Economic Development Administration. Poinsett said it also plans to install truck parking and roads for access to the dock’s loading bin area. “You’ll see a freight savings on a fertilizer standpoint,” Foushee told the local press. “They won’t have to send their trucks to Memphis, they will be able to come here. Save just a little bit of freight.” Poinsett operates a total of six Arkansas facilities, located at Osceola, Cherry Valley, Diaz, Corning, and Waldenburg. Osceola Mayor Dickie Kennemore said the floating dock would add 30 jobs to the area. “Our number one job in this county is to create jobs,” Kennemore told reporters. “It will create some jobs here at the port. It will create some jobs with some of the agricultural supply companies in the area.”

Columbus, DA’s office settle ammonia claim

San Francisco-Sausage-maker Columbus Manufacturing has agreed to pay $850,000 and make safety improvements to settle a lawsuit with the San Mateo County District Attorney Office over an anhydrous ammonia release, but still could face another substantial fine by the U.S. Environmental Protection Agency (EPA). In its complaint, the district attorney’s office stated that Columbus failed to comply with California accidental release prevention requirements, including properly training employees, updating process safety information, and performing an adequate pre-startup safety review for new equipment. The incident in August 2009, in which approximately 200 pounds of ammonia were released, exposed over a dozen people and impacted local businesses for hours. According to the district attorney’s office, Columbus cooperated in the resolution of the action and is now evaluating the replacement of its existing ammonia refrigeration system with an ammonia glycol system, the ammonia component of which would be located within the interior of Columbus’ buildings. Columbus is also under orders from EPA to address safety concerns in the facility’s ammonia refrigeration systems. Agency officials have said that the company may also face substantial federal fines as a result of the dangerous accidental release.

UK potash project gets Sirius

London-Sirius Minerals Plc has acquired private UK-based York Potash Ltd. for £25.1 million. In addition, York’s founder, Chris Fraser, has been named the managing director and CEO of Sirius. Both York and Sirius are start-up junior potash exploration companies. York has signed various agreements with major landowners in relation to mineral rights covering more than 600km2 onshore and offshore between the towns of Whitby and Scarborough in North Yorkshire, England, where it has been analyzing the potential to develop a new world-class potash project. As a result of the York deal, Sirius now says it holds properties in the UK, North America (North Dakota), and Australia (Queensland and Western Australia). Incorporated in 2003, Sirius Minerals’ shares are traded on the London Stock Exchange’s AIM market. Its shares are also traded in North America on the OTCQX through the use of a sponsored ADR facility.