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Trade groups, fert businesses press EPA to drop its Florida nutrient rule and adopt the stateÆs own criteria

News

Some 48 organizations and businesses on March 1 sent a letter to U.S. Environmental Protection Agency (EPA) Administrator Lisa Jackson, urging her to approve the Florida Department of Environmental Protection’s (FDEP) Numeric Nutrient Criteria (NNC) rule and withdraw EPA’s own numeric nutrient criteria for Florida waters.

The letter’s signers include The Fertilizer Institute (TFI), the Agricultural Retailers Association (ARA), Agrium U.S. Inc, CF Industries, PotashCorp, International Raw Materials Ltd., and the J.R. Simplot Company. Also included are numerous state agribusiness associations.

The FDEP NNC rule, developed as an alternative to EPA’s contentious Water Quality Standards for the State of Florida’s Lakes and Flowing Waters, has received support from industry and was unanimously approved by the Florida Environmental Regulation Commission (ERC) and the Florida Legislature, and signed by Gov. Rick Scott (GM Feb. 27, 2012).

“Florida is recognized as a national leader in implementing a sophisticated suite of water quality and technology-based nutrient management programs to protect its water bodies,” the letter states. “In fact, FDEP has spent more than $20 million during the last decade to collect and analyze data related to the concentrations and impacts of nutrients in Florida’s water bodies. By utilizing this data and analysis, FDEP has worked tirelessly over the past year to develop scientifically defensible water quality standards. While there will be significant costs associated with these standards, we believe they are technically achievable standards that our members and other stakeholders will be able to meet while working in partnership with the state.”

EPA’s numeric nutrient criteria for Florida waters were promulgated in December 2010 after the agency was sued by a number of environmental groups for failing to enforce Clean Water Act standards in the state. Opponents of the EPA standards argue that they are too costly, over-reaching, and lack sound science. Unlike the federal standards, the FDEP regulations requires a study to determine if pollutants are actually causing biological harm in a particular water body before any enforcement action can be taken.

“EPA has acknowledged that states must take the lead in addressing nutrients,” the letter states. “After all, it is the states that are best suited to deal with issues related to their unique landscapes and climates.”

On March 9, TFI issued a statement regarding a National Research Council (NRC) study which found that EPA underestimated the costs associated with implementing NNC standards for lakes and flowing waters in Florida. The study also questioned the validity of several assumptions in the EPA cost analysis and found that EPA did not adequately report on the uncertainties that could affect the cost of the rule change.

“The Fertilizer Institute is not surprised by the findings of the National Research Council’s study which reveal that EPA underestimated the costs associated with implementing numeric nutrient criteria in the state of Florida,” said TFI President Ford West. “The potential cost to the agricultural sector has been a primary concern for TFI while addressing this issue. The National Research Council’s report validates the agricultural community’s position regarding the enormous cost associated with implementation of EPA’s rule.

TFI said the NRC study also supports its opinion that the state of Florida, not EPA, should be responsible for the development and implementation of water quality standards that are science-based while avoiding unnecessary costs to the state’s citizens. TFI said it “strongly believes” that the FDEP NNC rules are “the appropriate vehicle for improving water quality in the sta

Contract suggests BHP-Jansen on way; analysts, competitors still have their doubts

Alberta, News

ATCO Structures & Logistics Ltd., Calgary, said March 5 that it has been awarded a multimillion-dollar contract to design, build, and operate a 2,586-person turnkey workforce housing lodge for BHP Billiton’s Jansen Potash Project, 100 km north of Regina. It said the accommodation facility is the largest Canadian contract in ATCO’s history.

While BHP has already spent a lot of money on the Jansen project, its board of directors is yet to give it final approval. Recently, analysts, citing BHP’s earnings call, speculated that Jansen had become the lowest priority on BHP’s capital expenditures list, and as a result, might not be approved. The company denied this assessment.

In the meantime, competitors continue to put doubt on this and other greenfield projects. “Greenfield investments in potash are not a sure bet,” James Prokopanko, The Mosaic Co. president and CEO, recently told analysts. “Brownfields are beginning to come online, and will strengthen the hand of today’s leading producers.” He said as new potash comes online, it will undermine the economics of greenfields. “I expect overall, P&K prices to continue to be cyclical, with higher lows and higher highs driven by re-inflation of the dollar, tight grain and oilseed supplies, and the need for economic returns to justify capital investment in new production.”

Prokopanko said that while capital costs of Mosaic’s brownfield expansions could be in the range of $1,000 per capacity ton, an equivalent for greenfields could be as much as double or more that amount. Prokopanko believes it would go as high as $2,500 per capacity ton. He says such a facility would take seven years to construct – six tops – and that those figures do not include infrastructure and port facilities. He also said to justify a greenfield the potash price would have to be north of $600/mt at the mine.
Add to this, say sources, inflation and a tight labor market in Saskatchewan.

As for the ATCO-BHP project, ATCO says the core building includes a 1,200-person dining room, a separate private dining area, lounge, library, convenience store, medical centre, and full laundry service. Fireplaces located throughout the facility will provide a warm, comfortable setting. The two-story accommodation wings are connected by arctic corridors and feature 160 sq. ft. bedrooms with private washrooms. Each room will include a flatscreen TV, phone, and wireless internet capabilities. The first phase, comprising 500 rooms, will be operational in October 2012, with completion of the full 2,586-room camp and facilities scheduled for mid-2013.

ATCO said the facility features diverse, high-end amenities including two pre-engineered buildings, a 20,000 sq. ft. sports complex with gymnasium, squash courts, weight room, and a raised running track that overlooks the gym. A recreational director will organize fitness programs. A separate pre-engineered building will house a 200-seat movie theatre.

ATCO has partnered with Aboriginal groups in the Touchwood Hills area of Saskatchewan, including the George Gordon First Nation, Day Star First Nation, and Kawacatoose First Nation. An employment and training center will be established on First Nation traditional territory.

ATCO says it offers modular buildings, site services, and industrial noise control solutions worldwide. With manufacturing facilities in North America, South America, and Australia, and operations on five continents, the company has the expertise to deliver a rapid, turnkey solution anywhere it is needed.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 83.41 85.98 92.84
CF Industries CF 183.00 189.23 128.94
Intrepid Potash IPI 23.34 25.72 37.52
Mosaic MOS 55.57 58.01 81.56
PotashCorp* POT 43.72 46.91 58.29
Terra Nitrogen TNH 223.06 233.50 102.02
CVR Partners UAN 24.60 26.00 N/A
Distribution/Retail
Andersons Inc. ANDE 44.37 43.28 48.64
Deere & Co. DE 80.38 83.08 89.70
Scotts SMG 48.00 46.91 54.86
* represents three-for-one stock split

Yara, Qafco partner in Sahara Forest

News, Northwestern Europe

Oslo — Yara International ASA, Qafco and The Sahara Forest Project AS (SFP)have signed a cooperation agreement to build a pilot plant in the desert of Qatar, aiming to produce food, fresh water, clean energy and biomass using proven green technologies. The SFP is about creating re-vegetation and green jobs through profitable production of food, water, clean energy and biomass in desert areas by combining proven environmental technologies, using seawater, greenhouses, solar energy and a supply of CO2 and fertilizer. The estimated cost for the pilot plant is US$5.3 million and Qafco and Yara will provide the funding. The parties have already started preparations, and are on schedule to reach the target of having a fully operational pilot plant by December 2012. The project is designed to fit in an approximately 10,000 m2 area inside the Qafco 5 site in Qatar. It will integrate a combination of innovative technologies, such as solar thermal technologies with processes for saltwater evaporation, condensation of fresh water and production of food and biomass. The foundation of the pilot is greenhouses utilizing seawater to provide cool and humid growing conditions for vegetables. They will also produce freshwater themselves. The project will employ concentrated solar power, using mirrors to concentrate the energy from the sun and create very high temperatures. It will produce superheated steam that can power a conventional steam turbine, generating electricity. The pilot will also allow for cultivation of algae in a system of photo-bioreactors and open pond cultivation systems. One of the goals is also to demonstrate the potential for cultivating desert land and making it green.

New WASDE report offers little change from last month

News, News Briefs

Washington — The USDA on March 9 released its newest World Agricultural Supply and Demand Estimates (WASDE) report. The report showed unchanged supply and use stats for corn, sorghum, and barley from last month, but the projected range for the season-average corn farm price was narrowed slightly to $5.90-$6.50 per bushel. U.S. soybean supply and use projections for 2011/12 were also mostly unchanged this month. The U.S. season-average soybean price range for 2011/12 is projected at $11.40-$12.60 per bushel, up 30 cents on both ends of the range from last month. Global oilseed production for 2011/12 is projected at 445.7 million tons, down 6.7 million from last month. Foreign production, projected at 354.5 million, accounts for all of the change. The 2011/12 U.S. cotton supply and demand estimates include revisions to domestic mill use and ending stocks, with estimated mill use reduced 100,000 bales from last month, reflecting activity to date. With beginning stocks, production, and exports unchanged, ending stocks were raised to 3.9 million bales. The forecast range for the average price received by cotton producers is 88-93 cents per pound, only slightly changed on the lower end from last month. U.S. wheat ending stocks for 2011/12 were projected 20 million bushels lower this month as lower food use was more than offset by higher exports. Wheat exports were projected 25 million bushels higher based on shipments and sales to date. Prices received by wheat producers for the 2011/12 marketing year were projected at $7.15-$7.45 per bushel, unchanged from last month.

SQM reports record year in 2011; 4Q sees lull in potash-related sales

News, Potash Muriate

While Sociedad Quimica y Minera de Chile SA (SQM) saw a record year for revenues and net income in 2011, potash related sales during the fourth quarter saw the same kind of lull experienced by other potash producers.

For the year, SQM net income was up 43 percent to $545.8 million ($2.07 per share) on sales of $2.14 billion, up from 2010’s $382.1 million ($1.45 per share) on sales of $1.83 billion. Despite the drop in some potash-related volumes, overall SQM fourth-quarter net income was up 50 percent, to $158.9 million ($.60 per share) on sales of $538.9 million from the year-ago $105.8 million ($.40 per share) on sales of $505.7 million. The income uptick was attributed to higher prices.

“We are pleased with our performance throughout 2011,” said SQM CEO Patricio Contesse. “It proved to be a record year for revenues and net income, significantly surpassing 2010. We posted high volumes in our specialty plant nutrition, and record volumes in our lithium and iodine business lines. We also finalized some major capital investments, including our new potassium nitrate plant at Coya Sur and our new granulated MOP facility in Salar de Atacama, which will grant us increased flexibility with potassium products in the future.

“In addition to our traditional sales revenues where we showed strong results, we sold a portion of our mining rights to Sierra Gorda SCM during the fourth quarter, which also contributed to 2011 earnings. This type of transaction has been done in the past, and we will not overlook similar opportunities that may be presented to us in the future. SQM remains confident about the future of its business, and will maintain efforts to assure that future world needs are met in all of its major business lines. In short, SQM will ensure that shareholder value is maximized.”

For the year, Specialty Plant Nutrition (SPN) revenues were up 19.5 percent, to $721.7 million from 2010’s $603.7 million. Fourth-quarter revenues were $174.6 million, up
15.5 percent from the year-ago $151.2 million.

SQM said world demand for SPN products remained strong throughout 2011. Demand drivers included North American and European markets, led mostly by uses in tomato crops and other vegetables. The market saw limited supply in 2011, which, coupled with strong growth in demand, led to an increase in prices across all main markets. One potassium nitrate supplier, Haifa Chemicals in Israel, had a plant offline for part of the year due to a strike.

Average prices for SPN products increased over 14 percent from 2010. SQM said further margin improvements will depend mainly on the behavior of potassium-based fertilizers, especially potash. SQM believes its share of the potassium nitrate world market in 2011 was 49 percent.

SQM SPN volumes in 2011 were up 4 percent, to 849,300 mt from 2010’s 815,400 mt. Within the segment, potassium nitrate/sodium potassium nitrate volumes were up 3 percent, to 551,100 mt from 534,700 mt; specialty blends were up 7 percent, to 189,300 mt from 176,300 mt; sodium nitrate was up 32 percent, to 22,200 mt from 16,800 mt; and Other SPN products were off 1 percent, to 86,700 mt from 87,600 mt.

Potassium chloride/potassium sulfate sales for the year were $555.7 million, up from 2010’s $528.2 million, with volumes off 13 percent to 1.1 million mt from 2010’s 1.27 million mt. However, the company said for the year that MOP volumes grew about 7 percent over 2010, with the Brazilian market growing over 25 percent. Prices increased more than 20 percent overall in 2011, with price stabilization during the fourth quarter.

Fourth-quarter sales were off 24 percent, to $129.8 million from the year-ago $171.4 million. SQM said they were lower than expected due mainly to construction delays with the new MOP and granular MOP facilities in Salar de Atacama. The company said the

Viterra receives offer

Breaking Industry News

Canadian-based grain and fertilizer company, Viterra Inc. reports that in view of market activity in Viterra’s shares, the company acknowledges it has received expressions of interest from third-parties. It said there can be no assurance that any agreement or transaction will result. It said a further announcement will be made if appropriate.

Wire reports identified the bidder as commodity trading giant Glencore International PLC. Others said a bidding war could develop for Viterra, with other potential contenders being Cargill Inc., Archer Daniels Midland Co., and Bunge Ltd.

Koch, CF suspend loading

Breaking Industry News

Koch Fertilizer LLC notified customers on March 9 that it has suspended urea loading until further notice out of its Enid, Okla., plant. Also on March 9, CF Industries Holdings Inc. notified customers that it has suspended UAN loading until further notice out of its Woodward, Okla., facility.

No other details were provided, but industry sources had been discussing rumored production problems at some Oklahoma production facilities in recent weeks.

CVR seeks to raise $250 M

Breaking Industry News

CVR Energy Inc. is seeking to sell enough CVR Partner LP units to raise $250 million, according to its registration statement filed with the U.S. Securities and Exchange Commission. CVR Energy intends to use the after-tax proceeds of the offering primarily to pay a special dividend to CVR Energy stockholders, and also to strengthen CVR Energy’s balance sheet. CVR Energy currently owns CVR Partners’ general partner and approximately 70 percent of its common units.

Based on the closing price of CVR Partner units on March 6 ($24.96 per unit), the day of the filing, the $250 million would equate to about 10 million units. Based on these figures, CVR Energy would still be expected to retain control of the LP.