Orascom Construction Industries (OCI) reported a 31 percent drop in net income for the third-quarter ending September 30, 2012, compared to the year-ago quarter, mainly citing a slowdown in its Construction segment. OCI said its Fertilizer Group had strong results. Company-wide, net income fell to $126.8 million on revenues of $1.37 billion from the year-ago $182.9 million on revenues of $1.36 billion.

OCI also noted that it has beefed up its ammonium sulfate business by acquiring distribution rights for product produced by Lanxess NV at its Antwerp facilities in Belgium. The rights were acquired from Fertiva GmbH, a unit of Eurochem. OCI says the deal entails up to 1 million mt of AS including granular. OCI unit, OCI Nitrogen currently distributes approximately 750,000 mt of AS produced by DSM NV in the Netherlands. Combined, the Fertilizer Group expects to annually distribute 1.75 million mt of AS both in standard and granular form, making it a leading supplier in Europe and Brazil.

OSHA today disclosed it has cited Mississippi Phosphates Corp. (MPC) with 40 safety and health violations in connection with the deaths of two workers in separate incidents at the company’s Pascagoula, Miss., facilities. The 40 citations carry a proposed fine of $165,900.

MPC responded that the company is undertaking a comprehensive review of OSHA’s report and will expeditiously address OSHA’s recommendations for improving the safety of its workplace. “Following the accidents, MPC voluntarily shut down its facility for more than two weeks, closely examining – and improving wherever possible – its safety and training procedures,” stated Richard Johnson, MPC vice president of operations. “While the OSHA inspectors were on site, recommendations were made and MPC diligently addressed them in a timely manner. MPC has completed the vast majority of the items noted during the inspection and has a plan to complete them all.”

An operator died on May 22 attempting to start up a steam turbine in sulfuric acid plant No. 2 when he was struck by flying metal debris from a turbine housing rupture believed caused by over pressurization. In a similar accident on June 1 another operator restarting a tipped steam turbine in sulfuric acid plant No. 3 was killed by flying metal debris.

Sources expected the MMTC urea tender of November 22 to close with prices in the $405-$415/mt CFR range. They were not too far off, the average price of all the firm offers was $416.52/mt CFR for the 1.6 million mt offered.
However, the lowest offer came from Swiss Singapore at $394.50/mt CFR for 50-60,000 mt and $399/mt CFR for 50-150,000 mt with an option of an additional 225,000 mt at the latter price. The next highest price came from Continental at $409.45/mt CFR and $412.45/mt CFR.

Sources reported that as soon as the tender closed, MMTC prepared its counter bids to all the offering companies to see if they would match the Swiss Singapore numbers. Past tender experiences have shown that a gap of $10/mt is often very hard to overcome. One trader noted before the tender closed, however, that there would most likely be a lot of people with extra tons on their hands that they need to move.

A major limitation on the ability of offering companies to lower their prices is the requirement that deliveries must be to West Coast ports. Sources were expecting to see Iran and the Black Sea dominate the offers. The extra steaming time from China adds costs that make lowering prices from China difficult and could eliminate tons from that country.

The only direct offer from an Arab producer came from Qafco at $400/mt FOB. With freight estimated at $18-$20/mt, sources said before the closing of the tender that if the offers came in around $415/mt CFR, there would be some room for Qafco to lower its price and earn an award from MMTC. With the low price at $390/mt CFR, the gap may now be too large to bridge.

India needs about 1 million mt to close out the year. If MMTC takes the full Swiss Singapore firm and optional tons, that would only get MMTC half way to its goal.

Talks are expected to continue into this week.

Quickly on the heels of the STC purchases of urea, MMTC called its own tender to close Nov. 22. India still needs about 1 million mt of urea to close out the year, say sources. China urea is expected to be a major player in the tender. Sources say there are still plenty of tons – about 500,000 mt – available in the bonded warehouses. If the price and quantities are right, MMTC could award the final 1 million mt needed by Indian farmers. If that happens, say sources, India will go quiet until the second quarter of next year, denying suppliers a major single buyer.

Jana Partners LLC, Agrium Inc.’s largest shareholder, today announced four independent director candidates it intends to propose together with Jana Managing Partner Barry Rosenstein for election to the Agrium board of directors: David Bullock, Stephen Clark, Mitchell Jacobson, and The Honourable Lyle Vanclief.

Jana says these individuals will add critical oversight to a board that for years has tolerated suboptimal capital allocation, failure to manage costs, structural issues, lack of transparency, and share price underperformance relative to a weighted average of Agrium’s peers and to its potential. Jana also disclosed that its stake has risen to more than 6 percent of Agrium’s shares.

Jana says three of the candidates are seasoned distribution executives with proven records creating value as operators, and in some cases directors, at companies recently cited by Agrium as peers for its distribution business (Retail), while none of Agrium’s current independent directors have such experience despite the substantial size and significance of Retail. These individuals also have direct experience operating distribution businesses in the U.S., Retail’s principal market, as well as other geographies.

Jana’s fourth independent candidate is the former Canadian Minister of Agriculture, who will bring to the board his experience dealing with complex agricultural issues in government as well as his prior direct experience operating a commercial farm.

Agrium Inc. commented today on the announcement by Jana Partners LLC that it plans to run its own slate of nominees for election to Agrium’s board of directors.

In a statement, Agrium President and CEO Mike Wilson said:

“The facts are straightforward. Agrium remains committed to its highly successful integrated strategy. Jana has been trying for over six months to obtain support for its idea that Agrium should spin off or sell its retail operations. Agrium’s shareholders have overwhelmingly rejected Jana’s ideas. As a result, we believe Jana’s attempt to run its own slate for Agrium’s board is almost certain to fail.”

“The fundamental question is whether or not a break-up of Agrium would create compelling, sustainable value for its shareholders. As we have made clear, the breakup of Agrium will destroy value rather than create it.”
“Before reaching the unanimous conclusion to reject a spin off of Retail, the independent directors of the board spent two months evaluating all of Jana’s ideas with our independent financial advisor. Since that time, our management team has devoted an extraordinary amount of time meeting with our analysts and our shareholders, including Jana, to review our integrated strategy and discuss Jana’s ideas.”

“We listen to our shareholders and the overwhelming majority continue to support the company’s position. Over the past year, Agrium has implemented three dividend increases, a C$900-million share buyback and supplemented our retail disclosure. Other than Jana, shareholders are not asking Agrium to consider a Retail spin-off or to evaluate any other structural changes. Shareholders have told us that they invest in Agrium in part because they want exposure to retail and the advantages of our integrated model.”