St. Louis—The U.S. Army Corps of Engineers on April 18 said eight Mississippi River locks between Muscatine, Iowa, and Clarksville, Mo., were expected to close beginning on that date, as recent heavy rains pushed the river above flood stage. The lock closures were expected to take place over a four-day period and could extend into the following week, which will prevent the movement of barges carrying fertilizer and grain in that section of the river. Barge navigation south of St. Louis, Mo., was expected to remain open. River levels at Clarksville were expected to reach 32.5 feet late on April 19, about seven feet above flood stage and the point at which the lock closure would take effect. Levels there were expected to climb to 35.6 feet on April 21, more than 10 feet above flood stage and just 2.1 feet short of the record crest at that location. River levels at Muscatine were forecast to reach 21.9 feet by April 22, nearly six feet above flood stage and 3.7 feet short of the record at that location. The Corps projected lock closures to take place on April 18 at Locks 17, 20, 21, and 22. Closures at Locks 16, 18, and 19 were scheduled for April 19, while Lock 15 was expected to close on April 21.
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K+S increases Legacy cap ex
K+S Group reports that its supervisory board has agreed to increase the capital expenditures budget for the Legacy Potash Project in Saskatchewan to C$4.1 billion from the C$3.25 billion earlier assessed based on the feasibility study conducted in November 2011.
The now presented plan includes investments into K+S’s own infrastructure, modifications of plant components and infrastructure as well as increased material and labor costs. The adjustments to the budget were identified in a very early stage of the project. “The additional findings strengthen the predictability, transparency, and controlling as well as our major project overall,” says Norbert Steiner, K+S chairman.
With the expected commissioning in summer 2016 the company still projects to reach 2 million mt/y production capacity at the new location at the end of 2017. The gradual extension of the annual capacity to 2.86 million mt/y of potash products will occur afterwards. So far the company assumed a production start at the end of 2015. The annual production capacity of the existing K+S sites is up to 7.5 million mt/y of potash and magnesium products.
Yara touts 1Q performance
Yara International ASA reports first-quarter net income after non-controlling interests of NOK 2,255 million (NOK 8.04 per share), compared with NOK 3,008 million (NOK 10.54 per share) a year earlier. Excluding net foreign exchange loss and special items, the result was NOK 8.51 per share compared with NOK 8.32 per share in first quarter 2012. First-quarter EBITDA excluding special items was NOK 4,094 million compared with NOK 3,933 million a year earlier.
"Yara reports a strong first quarter with stable margins and sales volumes," said Jørgen Ole Haslestad president and CEO. "Our production increased due to the Qafco expansions, the Lifeco re-start, and a record production performance in Yara’s NPK plants in the first quarter."
Additional ammonia and urea volumes from Qafco, Lifeco, and Yara Pilbara more than offset a 3 percent decline in Yara fertilizer deliveries. Urea sales increased by 4 percent, mainly reflecting higher sales of Qafco urea in North America and Brazil. NPK sales increased 2 percent, with deliveries of Yara-produced compound NPK up 4 percent. Nitrate sales were in line with last year, as increased European deliveries were offset by lower deliveries to markets outside Europe.
Ammonia prices increased by 37 percent, while realized urea prices were 1 percent higher than a year ago. Realized nitrate prices were in line with last year, while NPK compound prices were down 2 percent. NPK blend margins improved as the Brazil market approached normal levels compared with a weak first quarter 2012.
Following a slow start to the 2012/13 season, Western European nitrogen fertilizer industry deliveries increased in the fourth quarter and were stable in the first quarter, leaving season-to-date deliveries 4 percent ahead of last year. Yara’s European deliveries were impacted by poor weather in March, but have recovered so far in April as planting conditions have improved.
Pusri closes auction
The sale of 30,000 mt of granular by Pusri failed to meet the floor price while two prilled cargoes of 10,000 mt found buyers. Pusri had set a floor of $390/mt FOB for the Kaltim granular material. Buyers refused to move past that level, leaving Pusri no choice but to scrap the auction.
The prilled cargoes, however, did find buyers. The first 10,000 mt went to Trada at $389/mt FOB from a floor price of $380/mt FOB. The second lot went to Liven at $399.75/mt FOB. Pusri had moved up the floor price on this lot to match the Trada level. The prices ensure the tons will not be used to cover any offers made in the IPL/India tender. Sources had expected the winners to use the tons to service smaller regional buyers.
The granular tons not sold will most likely be offered again within the next week or so.
India closes urea tender
The IPL urea tender confirmed a soft urea market. The average price in the tender for firm offers was $390.73/mt CFR. The lowest offer came in at $379.70/mt CFR from Quantum for Mundra. The average of the three offers from Quantum to various ports is the lowest of offers at $381.20/mt CFR.
All told, traders presented 1.49 million mt as firm offers. Another 860,000 mt were offered as optional tons.
Sources say the Yuzhnyy equivalent netback is $350/mt FOB and $365/mt FOB Arab Gulf equivalent.
The Yuzhnyy price falls into line with reports last week of ever-lowering prices. The $350/mt FOB price, however, is significantly lower than anything traders were talking about. The last completed business was in the low-$360s/mt FOB. Following that deal, sources reported that bids were in the low-$350s/mt FOB and offers in the upper $350s/mt FOB.
The estimated Arab Gulf price is not attributed to the Arab producers. The Qafco offer of $400/mt FOB confirmed the pricing ideas from Arab producers, but remained too expensive for IPL to consider.
Sources expected this tender to be a battle between Yuzhnyy and Iranian producers. Whatever tons come out of the Arab Gulf for India are expected to be Iranian.
The lowest offers were made for “Open” sourced tons. Emmsons, Swiss Singapore and Quantum have all offered Iranian tons in the past. Sources say there is little chance the traders have found cheaper backers.
Jana fails to take seats on Agrium board; Jana not going away, says Rosenstein
Jana Partners LLC failed at the April 9 Agrium shareholders meeting to elect any of its five nominees to Agrium’s 12-member board of directors. Jana is Agrium’s largest shareholder, with a 7.5 percent stake in the company. Jana earlier withdrew from negotiations that would have lead to it having at least one board member (GM Feb. 18, p. 1).
Early in the shareholder meeting, Alex Moore, a proxy holder, lodged several preliminary complaints, requesting to review proxies and completed ballots, and objecting to the acceptance of white proxies that were deposited after the proxy cut off time. He also objected to Victor Zaleschuk, Agrium chairman of the board, continuing to chair the meeting, asking that an independent chair be named. Moore further objected to the meeting continuing should a new chair not be named.
After conferring with counsel, Zaleshuck said he would proceed with the meeting.
After all candidates were nominated, Jana Managing Director Barry Rosenstein spoke and went over a litany of complaints about Agrium.
Rosenstein alleged that Jana had received 59 million votes for one or more of its nominees as of the vote deadline on Friday, April 5. However, he maintained that on April 7, three days after the deadline, Jana learned that enough of those votes were revoked to apparently change the outcome of the vote.
“We don’t know otherwise why the company would have started lobbying people after the deadline to change their votes,” Rosenstein said. “Usually, when an election is over and you have more votes than the other side, you have won. Not in this case, however. Apparently offering to pay $0.25 a share was not enough to lock it up. We intend to investigate this vote switching after the voting deadline was secretly extended and, of course, the vote buying and to pursue all appropriate remedies.”
Rosenstein reiterated that Jana had looked forward to working collaboratively with the board, but he said management took a decidedly different tack. “I congratulate you. Your board proved that if you play dirty enough, violate all precepts of corporate governance, fair play, ethical behavior, and democracy, you can still lose the campaign but then barely manufacture a victory after the voting is supposed to be over,” he said.
“You are a board that has condoned lying about the shareholder support you had; switching comparables that you came up with yourselves; hiring a mercenary banker who previously argued against your corporate structure and then argued for it when paid by you; buying back stock in an inflated price when you knew that an earnings miss was coming; permitting your management team to threaten shareholders that they would all quit if we got on the board, which is in violation of Canadian Securities Law regarding selective disclosure; attacking me personally as ‘lucky,’ ‘a pain in the a**,’ and a “New York hedge fund billionaire,’ and whatever that was meant to imply; changing your proxy material to falsely claim distribution experience on the board for members who never claimed it before; surreptitiously moving up the voting date by a month and then, when you didn’t like their results, lobbying shareholders to change their votes after Friday’s voting deadline passed; and bribing brokers and financial advisers for favorable votes. In an era of improved corporate governance, this is the worst example of entrenched, power hunger-at-any cost, behavior I’ve ever witnessed,” he continued.
“The good news is that this tainted vote isn’t the end of the story,” Rosenstein concluded. “We remain Agrium’s largest shareholder and you will find that we are just as vocal and active outside of a proxy contest as we are within it. We would not hesitate to speak up should Agrium go back to
PotashCorp-ICL deal gets negative response from Israels Finance Minister
Israel’s new Finance Minister, Yair Lapid, has told senior staff that he is strongly opposed to Potash Corp. of Saskatchewan Inc.’s takeover of Israel Chemicals Ltd. (ICL). He said that Israel’s natural resources are public assets, and that the Israeli public should be the first to benefit from them.
Lapid also announced plans to establish a public committee to re-examine the state’s rights in natural resources managed by private companies. This has already been done in the gas and oil sector, where a new law passed two years ago substantially raised the government take. The timetable for establishing the committee is uncertain, but it could have a substantial impact on ICL.
It is unclear whether Prime Minister Benjamin Netanyahu was informed in advance of Lapid’s announcement. Netanyahu met in October with PotashCorp President and CEO William Doyle to discuss the planned acquisition. Due to the controversial nature of the deal, Netanyahu put off dealing with the matter until after the Israeli elections in January and the establishment of a new government.
Netanyahu did not publicly come out against the deal, and some reports said that he would support it under certain circumstances. However, the mounting public opposition may leave him with no choice but to go along.
Lapid’s announcement was praised by Knesset members from various political parties, as well as by the ICL union and leading environmental groups, all of whom have been campaigning against the deal.
Professor Eitan Sheshinski, who headed the government committee on the gas and oil sector, welcomed the decision by Lapid, noting that the government has long ignored the issue of its right on natural resources. In a radio interview, Sheshinski said that the time has come to implement a uniform policy on all natural resources. He noted that the payments by ICL were determined at a time when potash was selling for $80/mt.
Lapid was said to be angry over news reports in recent days that Idan Ofer was planning to relocate to London. The rationale was to pay lower taxes in general, and specifically on any future takeover of ICL by PotashCorp. Ofer controls a majority stake in ICL through his Israel Corp. holding company. Lapid was quoted in the Yediot Ahronot newspaper as saying that “you can’t get rich at the expense of the Israeli public and pay taxes elsewhere.”
Senior Israel Corp. and ICL officials mounted a lobbying campaign in recent weeks to get the proposed deal approved. Approval from the Israeli government − specifically the Finance Ministry − is necessary as the state has a veto by virtue of a “golden share” it holds in ICL as part of the company’s privatization process in the 1990s. Israel Corp. CEO and ICL Chairman Nir Gilad said that the proposed deal would be good for the Israeli economy and would bring one of the biggest players in the fertilizer industry to Israel.
Last month, PotashCorp hinted that it would sweeten its offer for ICL. One report in the local media said the Canadian company was prepared to pay more than $20 million for control of ICL. The offer was due to be presented this month, and reportedly would contain commitments to retain production levels, refrain from layoffs, list its share on the Tel Aviv Stock Exchange, and commit to strict environmental guidelines. PotashCorp would not confirm the reports, saying it does not respond to news stories.
PotashCorp currently holds a 13.9 percent minority stake in ICL, and has said it is not interested in retaining a minority stake on a long-term basis.
Just hours before Lapid made his announcement, ICL CEO Stefan Borgas said the company would be stronger after a deal with PotashCorp. He added, however, that there were no talks at the moment between the two companies on the matter.
Earli
Orica Ltd. – Management Briefs
Orica Ltd. has announced that Peter Duncan will retire as chairman of the board at the next annual general meeting in January 2014. Russell Caplan has been elected to succeed him at that time. Orica also announced the appointment of Maxine Brenner as non-executive director, effective April 8, 2013.
Caplan is currently a non-executive director of Aurizon Ltd. (formerly QR National Ltd.), chairman of The Melbourne & Olympic Parks Trust, and chairman of CRC CARE Ltd. He was previously chairman of the Shell Group of Companies in Australia and a non-executive director of Woodside Petroleum Ltd.
Brenner is a non-executive director of Growthpoint Properties Australia and a managing director of Investment Banking at Investec Bank (Australia) Ltd. She is a former member of the Takeovers Panel and Deputy Chair of Federal Airports Corp.
Bunge Ltd. – Management Briefs
Bunge Ltd. has appointed Todd Bastean to the position of CEO, Bunge North America, effective June 1. He is currently CFO of Bunge North America. He succeeds Soren Schroder, who will become CEO of Bunge Ltd. on the same date. Schroder will assume the role of CEO from Alberto Weisser, who earlier this year announced his retirement after 15 years leading the company.
Bastean started his career at Bunge in 1994 and became CFO of Bunge North America in 2010. Prior to 2010, he served as vice president and general manager of the operating company’s milling and biofuels business units, and as vice president and chief administrative officer of its grain and milling business units. He also held positions in strategic planning and auditing. Prior to joining Bunge he worked for KPMG Peat Marwick. He holds a bachelor’s degree in accounting from Western Illinois University.
Pierre Mauger recently joined Bunge Ltd. in the newly-created position of chief development and performance management officer. He will lead Bunge’s global business development activities, including M&A, strategic planning, and capital allocation, as well as the company’s performance management and analysis processes. He will also oversee Bunge’s global innovation function.
Mauger is currently a partner at McKinsey & Co., where since 2009 he has led the agriculture service line in Europe, the Middle East, and Africa. In this capacity he oversaw client relationships with leading global companies in the commodity processing and trading, agrochemicals, and fertilizer sectors, as well as with governments. Previously, Mauger served as a partner in the firm’s consumer goods practice. He joined McKinsey as an associate in 2000. Before that he worked as an auditor at Nestle and KPMG.
Mauger holds an M.B.A. from INSEAD and a B.Sc. in Economics and Business Finance from Brunel University in the U.K.
The Scotts Micacle-Gro Co. – Management Briefs
The Scotts Miracle-Gro Co. has named Larry Hilsheimer as executive vice president and CFO. He was executive vice president and CFO of Nationwide Mutual Insurance Co., a Columbus-based insurance and financial services company, from 2007-2009. He then served as president and chief operating officer of Nationwide Direct & Customer Solutions, and most recently was president and chief operating officer of Nationwide Retirement Plans.
Prior to Nationwide, Hilsheimer was vice chairman and regional managing partner for Deloitte & Touche USA LLP, and served on the board of directors of the Deloitte Foundation.
Hilsheimer received his bachelor’s degree in business administration with a major in accounting from the Fisher College of Business at Ohio State University, and his law degree from Capital University Law School.