Rio de Janeiro — Vale S.A. said Feb. 8 that its board of directors approved the signing of a leasing contract of potash assets and mining rights with Petróleo Brasileiro S.A. for a period of 30 years, allowing for the continuation of potash mining in Taquari-Vassouras and the development of the Carnalita project, in the state of Sergipe, Brazil. Vale said the leasing contract will ensure the extension of operations at Taquari-Vassouras, the sole potash producer in Brazil and one of only two producers in South America, finalizing the development of the Carnalita potash project – still subject to approval by Vale’s board and the study and development of other areas within the concession. Vale said the contract is aligned with its growth strategy of becoming one of the leading global players in the fertilizer industry.
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Orica suspends ammonia plant restart
Orica has suspended the restart of its ammonia plant at Kooragang Island because one part of the plant is not operating to a satisfactory level. Orica said that the community, employees and environment were at no point at any risk as a result of the issue.
During the restart of the plant, the part of the plant that removes carbon dioxide as a byproduct was not working properly. The restart was suspended and investigations into the cause of the issue have commenced.
Site Manager Sean Winstone said: “We have said all along that we will take whatever time is required to restart the plant safely, and that we want to be assured the plant will perform properly for the long term. We will now investigate and remedy the issue before again resuming the restart. Restarting a plant the size of Kooragang Island is a complex process and it is not uncommon for issues of this nature to occur.”
CVR to sell shares to pay for dividend
CVR Energy Inc., a refiner and marketer of petroleum fuels and a majority owner of CVR Partners LP, a nitrogen fertilizer producer, announced today that its board of directors has approved a regular quarterly cash dividend of $0.08 per common share, the first of which will be paid following the end of the company’s first quarter on a date to be set by the board. The board reached its decision to initiate a regular quarterly dividend after an extensive review of the company’s financial performance and confidence in its future prospects and believes it is consistent with its continuing commitment to deliver long-term value for shareholders.
As part of that commitment, the board also intends to sell a portion of the company’s investment in CVR Partners to pay for a special dividend to shareholders and strengthen the company’s balance sheet. The board believes that a sale of a portion of the company’s interest offers the best opportunity to deliver significant value to shareholders in a reasonable time frame with minimal execution risk or structural impediments. The size, time and manner of the sale will be disclosed when the transaction is implemented.
“Given the projected cash generation of our refining business, the distributions we receive from our ownership in CVR Partners and our strong financial position, our board determined after careful review of all its strategic options that it was appropriate to return a meaningful amount of cash to our shareholders. We intend to introduce a regular quarterly cash dividend that is in-line with our refining peers and a special dividend funded from the sale of a portion of our interest in CVR Partners,” said Jack Lipinski, CVR Energy CEO. “We are proud of our performance, confident in our prospects and look forward to continuing our long-term strategy of providing outstanding returns for our shareholders.”
CVR Energy Inc. announced Jan. 13 that its board adopted a Stockholder Rights Plan with a 15 percent threshold and declared, in conjunction with that plan, a dividend of one preferred stock purchase right for each current share of the company’s outstanding common stock, which will be distributed to stockholders of record on Jan. 23, 2012 (GM Jan. 23, 2012). CVR owns a major stake in CVR Partners LP, which owns a nitrogen plant in Coffeyville, Kan.
The news came soon after billionaire investor Carl Icahn increased his stake in CVR to over 10 percent (GM Jan. 16, 2012). Icahn is known for his corporate takeovers.
Pryor ammonia upgrade completed
LSB Industries Inc. said Feb. 6 that its chemical plant facility located in Pryor, Okla., completed a planned improvement project to increase anhydrous ammonia production levels. This project began on Jan. 3, 2012 and was completed on Feb. 3, 2012 during which time the plant was not in production.
LSB said the permitted production level of ammonia at the plant is 700 short tons per day, but due to production limitations caused by restrictions in the flow of process gas through heat exchangers and other mechanical restrictions, the ammonia plant was unable to sustain production above 500 st/d during 2011. The primary purpose of the improvement project was to correct those restrictions. Management believes this was accomplished and that production lost during the improvement project should be more than offset during the balance of 2012. During this period, Pryor took advantage of the downtime to correct certain other identified mechanical issues which should minimize downtime later in the year.
Mosaic to cut potash production
The Mosaic Co. said Feb. 3 that it plans a reduction of up to 20 percent in planned potash production from February through May 2012. This curtailment will result in lower operating rates at Mosaic’s mines, but is not currently expected to result in any employee layoffs or material mine shutdowns.
"Cautious dealer sentiment continues to delay purchases and lower near-term demand for potash," said Jim Prokopanko, president and CEO. "Farmer economics remain strong, and we continue to expect an above average application season in North America and record-setting global potash shipments in 2012. While we are confident fundamentals will ultimately prevail, we’ve taken steps that reflect the near-term supply and demand balance for potash."
The Andersons buys New Eezy Gro
The Andersons Inc. said Jan. 31 that it has completed the purchase of New Eezy Gro Inc., a manufacturer and wholesale marketer of specialty agricultural nutrients and industrial products with operations in Carey and Sycamore, Ohio.
“The opportunity is a continuation of The Andersons’ strategy of investing in logical business, operational, and geographic adjacencies," says CEO Mike Anderson. "We will extend the same value system of providing exceptional customer service and enjoying lasting relationships to customers in this specialty agriculture arena."
New Eezy Gro, including its Golden Eagle Product line, will be part of The Andersons’ Plant Nutrient Group.
"The addition of New Eezy Gro supports our strategy of growing our business through an expanded product offering to serve more customers," says Bill Wolf, president, Plant Nutrient Group. "We are pleased to add this new business to our group as it significantly expands our total specialty and industrial product offerings to key customer groups in important markets."
"As part of The Andersons, our staff is pleased to offer our products and services with the assurance of quality solutions," said Jerry Taylor, founder and president of the privately-held New Eezy Gro.
New Eezy Gro was founded in 1984 and supplies liquid calcium nitrate and other specialty products to specialty agriculture and industrial markets, primarily in Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, Kentucky, and Pennsylvania.
ITC releases detailed report on its urea antidumping ruling; dissenting judges also present arguments
The U.S. International Trade Commission (ITC) recently released a report detailing its November ruling regarding the third sunset review of antidumping duties on urea imports from Russia and Ukraine. The six-member ITC voted on Nov. 15 (GM Nov. 21, 2011) that revoking the antidumping duties, which have been in place since the late 1980s, would likely lead to the continuation or recurrence of material injury to the domestic urea industry within a reasonably foreseeable time.
The report, Solid Urea from Russia and Ukraine Investigation Nos. 731-TA-340-E and 340-H (Third Review), lists the criteria used by the ITC and the reasons for its affirmative ruling. It also, however, lists the arguments posed by two dissenting ITC members who voted to revoke the antidumping duties.
The ITC noted that urea imports from the subject countries have “reestablished a presence in the U.S. market” since the last sunset review more than five years ago. The panel also noted that foreign producers in Russia and Ukraine “possess significant production capacity and excess capacity,” and that “foreign producers in both countries are highly export oriented.”
The ITC noted some stark changes in the domestic industry since the antidumping duties were first imposed. “The domestic urea industry has continued to shrink,” the report said. “It consisted of 24 producers during the original investigations, 12 producers during the first five-year reviews, 7 producers in the second five-year reviews, and 6 producers (with 7 plants) in these reviews.” The ITC said domestic urea production accounted for less than one-third of the U.S. market for urea during the most recent period of review.
As a result, ITC said imports play an important role in serving the U.S. urea market, with most import tons during this period of review coming from Canada, China, and Middle Eastern countries with readily available supplies of natural gas, such as Egypt, Saudi Arabia, Oman, Kuwait, Qatar, and Bahrain.
When examining the conditions of competition in the U.S. market since the last review, the ITC considered the likely volumes, price effects, and impact the domestic industry would face if the antidumping duties were revoked. Regarding likely volumes, the ITC said “cumulated subject import volume from Russia and Ukraine would increase significantly” if the antidumping duties were revoked.
“The attractiveness of the U.S. market is confirmed by EuroChem’s actions over the period of review,” the report said. EuroChem is the largest Russian producer of solid urea, and from 2008 to 2010 enjoyed a zero margin on urea exports to the U.S. because of its new shipper status.
“The record shows that EuroChem has added granular production capacity at its Russian facilities and has announced that the U.S. market is one of the primary targets for its granular product,” the report said. “EuroChem has also established a trading company in the United States, EuroChem Trading USA Corp., which will help facilitate its sales. Moreover, the record shows that EuroChem has started shipping solid urea to the United States and is offering it at prices that undercut the domestic producers’ prices.”
The ITC further noted that although global demand for urea is predicted to increase in the reasonably foreseeable future, global urea production capacity is forecast to outpace global consumption over the next few years. “This situation of global oversupply suggests that producers in the subject countries will need to seek out alternative export markets,” the report said. “The United States is the world’s fourth largest market for urea consumption and the largest importing country, making it the natural alternative market.”
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Yara acquires control of Burrup; natural gas supplier gets major stake
Yara International ASA said Feb. 1 that it has acquired 16 percent of Burrup Holdings Ltd. (BHL) for US$143 million, increasing its ownership share in the company to 51 percent. Yara already owned 35 percent of the company. Concurrently, Apache Energy Ltd., Houston, which supplies natural gas to the Burrup ammonia facility in Australia, has acquired the remaining 49 percent of the shares in BHL and signed a new shareholders’ agreement with Yara.
"We are pleased to secure majority ownership in our Burrup activity and enter a closer cooperation with Apache Energy, representing another important step in Yara’s strategic growth ambitions. Today marks the end of a challenging period for what we have always regarded as a world-class asset, and we look forward to integrating Burrup fully into Yara’s global production system. Furthermore, today’s agreement allows us to intensify work on the planned technical ammonium nitrate (TAN) project in the Burrup peninsula together with Apache," said Yara President and CEO Jørgen Ole Haslestad.
BHL’s wholly owned subsidiary, Burrup Fertilisers Pty Ltd (BFPL), operates an ammonia plant – completed in 2006 and located at the Burrup Peninsula in Western Australia – with an annual production capability of approximately 850,000 mt. BFPL entered into a revised long-term natural gas supply contract with Apache Energy in November 2011. The plant is one of the world’s largest ammonia facilities, producing 6 percent of the total world output of tradable ammonia.
The Burrup Nitrates project will now proceed – with 75.5 percent Yara ownership and 24.5 percent Apache ownership – to construct a TAN plant with annual nameplate capacity of 330,000 mt near the existing Burrup ammonia plant. Yara said the proposed TAN plant’s proximity to the Pilbara mining industry, together with adjacent ammonia supply, gives it a distinct advantage over other ammonium nitrate suppliers. Yara has an agreement to market the entire output from the plant.
"We will re-name our Burrup activity to Yara Pilbara, marking a more active role for Yara in the region as we move swiftly to establish Yara standards of corporate governance. We now look forward to working with public and private stakeholders to shape and strengthen the long-term future of the Pilbara region," said Haslestad.
Apache paid $439 million for its 49 percent stake, including customary closing adjustments. Initially, Apache had won 65 percent of Burrup (GM Jan. 2, 2012, Dec. 19, 2011), which was being offered by ANZ Bank, which was selling the property due to the financial woes of previous shareholders Pankaj and Radhiki Oswal of India. As the minority 35 percent holder, Yara had through Jan. 31, 2012, to top Apache’s bid, and opted to negotiate with Apache instead (GM Jan. 30, 2012).
In December, Apache entered into negotiations with Australian company Orica Ltd. about its possible participation in the ownership of the TAN plant. Yara will continue with those negotiations.
"This new ownership structure will stabilize the Burrup project after a period of significant uncertainty, and secure a long-term economically viable market for our natural gas production in Western Australia," said Thomas Maher, vice president of Apache’s Australia Region and managing director of Apache Energy Ltd. "This ownership stake provides a means to increase the value of our Australian gas reserves because ammonia prices historically have been correlated to the generally higher prices of corn and crude oil on international markets. We are pleased to be associated with Yara, which is one of the world’s largest producers of ammonia fertilizers and has a long-term off-take agreement for Burrup’s production."
Through Apache Energy Ltd. and other Australian subsidiaries, Apache is a leading producer of natural gas for the domestic Wes
Rentech Nitrogen Partners LP – Management Brief
Former Potash Corp. of Saskatchewan Inc. executive James Dietz Jr. has joined Rentech Nitrogen Partners LP’s general partner’s board of directors. Dietz has over 41 years of experience in the fertilizer and chemical industries, most recently serving as executive vice president and COO of PotashCorp from November 2000 until he retired in June 2010. While at PotashCorp he was responsible for the company’s worldwide operations, as well as procurement functions and its safety, health, and environment performance. Dietz previously served as president of PotashCorp Nitrogen, and held other executive positions at PotashCorp Nitrogen and its predecessor company, Arcadian Corp. He received a B.S. and an M.S. in Chemical Engineering from The Ohio State University.
CVR Partners LP
CVR Partners LP said Feb. 1 that Kevan Vick, executive vice president and fertilizer general manager for the general partner of CVR Partners LP and CVR Energy, has elected to retire after more than 35 years in the fertilizer industry.