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BHP Says Will Not Seek Approval for Jansen in Calendar 2018

Breaking Industry News, Potash, Saskatchewan

BHP Ltd. said it will not be seeking the go-ahead for its Jansen potash project in Saskatchewan next year due to uncertain timing of the need for new supply of the nutrient.

“As we continue to work on improving the risk return metrics of the project, we will not be seeking board approval in the 2018 calendar year,” BHPs chief financial officer, Peter Beaven, said in an earnings call earlier today.

“While timing is uncertain, we have no doubt that the world will need new potash supply. When it does, we believe Jansen is best placed,” he said.”But Jansen will not proceed unless it passes our strict capital allocation tests.”

As recently as this past May, BHP CEO Andrew Mackenzie said the decision by the mining giant’s board could come as early as June 2018 (GM May 19, p.1).

BHP expects Jansen’s two production and service shafts to be finished probably by the end of 2019, at which point, it said it will have totally de-risked the project.

“At that point, we will only be three years away from first potash when we think it’s appropriate to make the right kind of cyclical investment,” said Mackenzie in today’s earnings call. “And that’s the big question which will be determined by how it [the market] looks, and we have said today that we will wait at least another couple of years, and if we need to wait longer, we will wait longer.”

BHP says it believes there will be a requirement for some form of new greenfield production “some time” in the 2020s. The mining behemoth on August 22 reported an underlying profit of US$6.73 billion, up from the year-ago US$1.22 billion.

Plant Nutrient results up for The Andersons

Breaking Industry News

Despite wet weather, The Andersons reported that the Plant Nutrient Group recorded improved results for the first quarter with pretax income of $6.7 million compared to the year-ago $1.7 million. The 2017 results included a $4.7 million pretax gain on the sale of its Florida farm centers in March.

Company-wide, The Andersons reported a first quarter net loss attributable to The Andersons of $3.1 million ($0.11 per diluted share), on revenues of $852 million. This result included pretax costs of $7.8 million related to closing the company’s retail stores, which is scheduled to be completed by the end of the second quarter. This result also represents an $11.6 million or $0.41 per diluted share improvement over the net loss of $14.7 million ($0.52 per diluted share), on revenues of $888 million recorded in the same period of 2016.

“Three of our four businesses posted better year-over-year results,” said CEO Pat Bowe. “While we are not satisfied with our overall results, we continue to work hard to improve execution, sharpen our cost focus, and position the company for profitable growth. We are closing our Retail business and sold underperforming Plant Nutrient Group assets in Florida. We also acquired a small specialty grain handling and milling business that further expands our food ingredient capabilities.”

Compass points to improved fertilizer results

Breaking Industry News

While Compass Minerals reported a downturn in first-quarter income due to the warm winter and its impact on the company’s Salt segment, Plant Nutrition segments reported improvements. The North America segment posted operating earnings of $7.6 million on sales of $49.2 million, up from the year-ago $5.3 million and $51.1 million, respectively. Sales volumes were up at 79,000 st from the year-ago 75,000 st, though they were on lower prices–$624/st, down from $689/st.

The new Plant Nutrition South America segment reported operating earnings of $1.8 million on sales of $61.3 million.

Company-wide, Compass posted net earnings of $21.5 million ($0.63 per diluted share) on revenues of $387.8 million, down from the year-ago $49.7 million ($1.46 per share) and $345.7 million, respectively.

LSB losses grow in 4Q, year

Breaking Industry News

Despite higher sales volumes for UAN, AN and ammonia, lower prices kept LSB Industries Inc. in the loss column for the fourth-quarter and year-ending Dec. 31, 2016.

The company reported a fourth-quarter loss from continuing operations of $25.2 million on net sales of $85.4 million, up from the year-ago loss of $11.1 million and $90 million, respectively.

The full-year loss from continuing operations was $88.1 million on sales of $374.6 million, down from the year-ago loss of $46.1 million and $437.7 million, respectively.

The company received cash proceeds of $358 million during the year from the sale of its Climate Control business. This gain pumped up 2016 net income attributable to shareholders to $64.8 million, from 2015’s loss of $38 million.

One dead from NH3 leak on Magellan pipeline

Ammonia, Breaking Industry News

An Oct. 17 anhydrous ammonia leak on the Magellan ammonia pipeline about eight miles north of Tekamah, Neb., has claimed the life of one local farmer and resulted in the evacuation of approximately 40 residents and the closure of area roads and highways.

Phillip W. Hennig, 59, of Tekamah was reportedly overcome by ammonia fumes while investigating the leak late on Monday. According to news outlets, the leak was first reported at 9:20 p.m. by local residents who smelled ammonia. Burt County emergency responders were on the scene at 9:40 p.m. and evacuated approximately 40 people in 23 homes from a two-mile radius around the site. Area roads were also shut down, including U.S. 75 between Tekamah and Decatur, Neb., which was expected to remain closed until Oct. 19.

Hennig’s body was recovered near the leak site at about 2:30 a.m. Tuesday by the Nebraska State Patrol’s Hazmat team, working with Tekamah Fire and Rescue. Hennig reportedly lived about a quarter-mile from the site, and a 911 caller shortly after 10 p.m. said a man was visible walking near the area of the leak. No other injuries were reported.

The cause of the leak is still undetermined. A spokesman for Magellan Midstream Partners of Tulsa, Okla., said the section of the eight-inch pipeline where the leak occurred has been shut off and the remaining ammonia allowed to slowly leak out before repair work begins. Local reports said 25 Magellan employees and 21 contractors were at the scene, in addition to state and federal regulators, including investigators with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration and the National Transportation Safety Board (NTSB).

Magellan issued two media advisories on Oct. 18. The first at 7:45 a.m. confirmed the leak and the fatality, and stated that federal and state agencies had been notified and that company representatives, emergency responders, and environmental crews were on site. The second advisory at 4:20 p.m. said efforts were still underway to “isolate and secure” the section of pipe where the leak occurred, and that air quality readings were improving but were not yet safe to allow residents to return to their homes.

“We express our deepest sympathies over the tragic death of the local resident last night,” said Magellan CEO Mike Mears.

Local reports said the displaced residents are staying at the Decatur Community Center or with relatives and friends. Magellan said it is “currently working with affected residents to cover all relevant expenses associated with the evacuation with the intent of returning our neighbors safely to their homes as soon as possible.”

Magellan’s ammonia pipeline stretches 1,100 miles from Borger, Texas, to Mankato, Minn., with multiple terminals located in Oklahoma, Kansas, Nebraska, and Iowa. “Our immediate focus is to eliminate ammonia emissions, safely secure the site, and reopen the local roads,” the company said on Oct. 18. “Operations of our ammonia pipeline will remain suspended until all repairs can be safely made. The cause of the incident remains under investigation.”

Ameropa AG – Management Brief

Management Briefs

Ameropa AG, Binningen, Switzerland, has announced the resignation of Nick Adamchak as managing director of Ameropa North America. The company said he has chosen to step down from his position but will continue to be associated with the company as a non-executive director on the board of Ameropa North America.

Rick Sompel has been appointed as Ameropa North America managing director, effective immediately, and will be relocating to Tampa, Fla. Prior to joining Ameropa, he was most recently director, business development, CF Industries Holdings Inc.

Ameropa said that as one of the industry’s few global fertilizer traders, it remains committed to the North American fertilizer market, and it will continue to be an integral part of the company’s global fertilizer program.

Ma’aden DAP sales up, NH3 down

News, News Briefs

Riyadh—Ma’aden Phosphate Co. (MPC), majority-owned by Saudi Arabian Mining Co. (Ma’aden), produced 669,000 mt of ammonium phosphate at its Ras Al-Khair complex in the second quarter, largely in line with first-quarter output. But output was 7 percent below the year-ago’s 716,000 mt due to a planned reduction in phosphoric acid production, the company said. Second-quarter sales of ammonium phosphate, mostly as DAP, rose 18 percent to 705,000 mt, compared with 599,000 mt in the first quarter, largely reflecting increased seasonal demand. Second-quarter 2015 sales were 709,000 mt. Six-month production was 4 percent higher than a year ago at 1,328 million mt, and sales were 3 percent higher at 1,304 million mt. Ma’aden said the MPC ammonia plant continues to operate above its design capacity, producing 300,000 mt in the second quarter. But second-quarter external sales were 25 percent lower at 154,000 mt than the first quarter’s 204,000 mt due to increased consumption at the ammonium phosphate fertilizer plant. Ma’aden sold 140,000 mt of ammonia externally in second quarter 2015. First-half external sales almost doubled, to 358,000 mt, up from 186,000 mt a year ago.

CF reports lower first-quarter earnings

Breaking Industry News

CF Industries Holdings Inc. on May 4 announced first-quarter EBITDA of $207 million and net earnings attributable to common stockholders of $26 million ($0.11 per diluted share), down significantly from last year’s first-quarter EBITDA of $486 million and net earnings of $231 million ($0.96 per diluted share). Adjusted EBITDA and adjusted net earnings for the first quarter were $300 million and $95 million, respectively, compared with $470 million and $220 million, respectively, in the year-ago quarter.

Net sales for the quarter increased to $1 billion from $954 million in last year’s first quarter, with the company citing increased sales volumes, the impact of CF’s capacity expansion projects, and the inclusion of CF Fertilisers UK (formerly GrowHowUK) in the company’s financial results.

These factors were partially offset by lower average realized prices across all segments, however. CF said first-quarter selling prices in North America were depressed during the low demand periods of January and February, but quickly rebounded through the end of the quarter as more robust demand developed due to the early arrival of spring.

“Selling prices were negatively impacted by greater nitrogen supply driven by global capacity additions, coupled with lower manufacturing and ocean freight costs, and softer global ammonia demand from industrial users including phosphate fertilizer production,” the company said. Cost of sales increased 46 percent in the first quarter compared to the year-ago quarter due primarily to the inclusion of CF Fertilisers UK, partially offset by lower realized natural gas costs.

“The fundamentals of our business remain strong despite challenging market conditions, and we are almost to the finish line with our capacity expansion projects,” said Tony Will, president and CEO. “The projects are expected to be fully on line later this year. These investments will increase our production capacity and corresponding cash flow by more than 25 percent.”

CF said its new ammonia plant at Donaldsonville, La., is now mechanically complete with pre-commissioning and commissioning activities taking place. The company’s new ammonia and urea plants at the Port Neal, Iowa, complex are expected to be mechanically complete by the end of the second quarter. CF expects to have total capital expenditures for 2016 in the range of $1.8-$2.0 billion, of which $1.3-$1.4 billion will be for capacity expansion.

CF also noted that CHS Inc. has begun purchasing products from CF at market prices as part of the strategic venture that commenced between the two companies in the first quarter. The estimate of the partnership distribution earned by CHS, but not yet disbursed, for the first quarter of 2016 is approximately $30 million.

Looking ahead, CF said nitrogen prices will remain under pressure due to new capacity coming online globally over the next 12 months. CF said it expects urea demand at the U.S. Gulf to continue to be relatively firm through the application season, however, with growers continuing to opt for corn over soybeans. CF projects 92 million planted corn acres in 2016, with possible upside given the favorable USDA survey for spring planting intentions.

Simplot boosts CRF coating production – Alert

Breaking Industry News

The J. R. Simplot Co., Boise, Idaho, has increased the availability of its controlled release fertilizer (CRF) coating Gal-Xeone™ in conjunction with newly expanded operations in Florida. All polymer coated products contained within the Best and Apex product lines will be converted to Gal-Xeone coating in the next several months. Simplot first introduced Gal-Xeone polymer coating capabilities in 2013, and has now expanded product availability through its relationship with Florikan – ESA of Sarasota, Fla. Plans are also in place for Simplot to commission coating operations at its Lathrop, Calif. facility later this spring.

Simplot says the Gal-Xeone polymer coating is a controlled-release technology that provides continuous nutrient delivery to match plant uptake needs for optimal plant health. This patented coating uses a technology developed with support from NASA to allow water to enter the prill, then carry the nutrient solution out through a precise, semi-permeable membrane. 

“Plants including turf and ornamentals are healthiest with constant nutrition over an extended period of time,” said Dr. Terry Tindall, Simplot director of agronomy. “Simplot Gal-Xeone polymer coating allows consistent, predictable delivery of plant nutrients using advanced technology not common with traditional fertilizers.”

Simplot said today’s environment demands attention to sustainability, and Gal-Xeone is based upon that principle. It says with proven and controlled nutrient release from two to 12 plus months, this sustained nutrient delivery improves plant health. At the same time, it reduces loss of nutrients due to volatilization and leaching while minimizing plant injury. Moreover, because of the precise release of nutrients, there is less labor and logistics expense in nutrient application.

Simplot said the product is a 4R Nutrient Stewardship® best practice and an efficient use of resources. It provides the right source of nutrients at the right time the plant can use them at the right place in the growing zone and at the right rate for absorption.

El Dorado NH3 plant mechanically complete – Alert

Ammonia, Breaking Industry News

LSB Industries Inc. today announced that the new 375,000 st/y ammonia plant at its El Dorado, Ark., is now mechanically complete. The company defines mechanical completion as it relates to the El Dorado ammonia plant as having concluded the installation of process vessels and rotating equipment, including associated piping and valves. Additionally, utility equipment systems such as cooling water, steam generation, raw water treatment, and air systems, along with related piping, have been installed.

Currently, all that remains to fully complete construction activities at the El Dorado ammonia plant is the connection of the electronic instrumentation wiring to the field instruments, along with the painting and insulation of the piping and process vessels, and the final grading and concrete containment for proper drainage of the process area.

As of Jan. 31, 2016, LSB’s investment in its El Dorado Expansion Project, which along with the ammonia plant, includes the construction of a new nitric acid plant and concentrator that was completed in 2015, totaled approximately $730 million. The company expects the remaining expenditures necessary to complete the pre-commissioning and commissioning of the ammonia plant and to put it into production to be in the range of $101-$125 million. Pre-commissioning will involve the flushing of any materials from the piping throughout the plant, in addition to the installation of the process catalyst inside the reactor vessels. The commissioning phase will entail the activation and filling of the utility systems, reduction of process catalyst, and final testing of process control systems.

“Mechanical completion represents one of the final critical phases in our EDC expansion project,” stated Daniel Greenwell, LSB CEO. “We were able to achieve mechanical completion in the timeframe that we outlined in September of last year, and we continue to expect ammonia production at El Dorado to begin early in the second quarter of 2016. We also expect that the cost of the project will not exceed the budget of $831 million – $855 million that we have previously disclosed. We believe that the ammonia plant will significantly enhance the financial performance of the El Dorado facility and have a positive economic impact to LSB’s overall performance. We look forward to sharing these results with our shareholders in the upcoming quarters.”