The Tampa anhydrous ammonia price has dropped some $83/mt for February, according to reliable sources to $472/mt DEL from the January $555/mt DEL.
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Richardson to acquire Alberta facility
Richardson International Ltd., Winnipeg, Manitoba, announced Jan. 25 that it has entered into an agreement to purchase Great Northern Grain’s grain handling and crop input retail facility in Nampa, Alberta. The sale is expected to close by Feb. 9, 2012. Current employees at Great Northern facility will be offered the opportunity to join the Richardson team.
“We are excited to add the Nampa facility to our Richardson Pioneer network,” said Darwin Sobkow, vice president, Agribusiness Operations, for Richardson. “The Nampa facility will now give us a presence in both the eastern and western parts of the region and we look forward to providing greater service to customers.”
The Nampa grain facility currently has 17,300 mt of storage capacity, a full cleaning line for wheat and canola, and a 52-car spot on the CN rail line. The facility also has an 8,400-square-foot crop protection and seed warehouse for retailing crop input products.
This spring, Richardson will add an additional 14,000 mt of grain storage and increase the facility’s railcar spot to handle 104-car unit trains. The company will also add fertilizer storage and a 200 mt per hour blending system. These improvements, which will increase grain handling efficiencies and offer retail fertilizer services, are expected to be complete by fall.
The Nampa acquisition is Richardson’s fourth in the Peace River region in the last two years. In 2010, Richardson purchased crop input centers in Falher, Fairview, and Manning, and is also nearing completion of a 20,000 mt fertilizer storage shed with rail receiving at its Dunvegan facility in Rycroft, Alberta. With a 200 mt per hour blending capability and 300 mt per hour distribution rate, this new Dunvegan shed will be a distribution center for Richardson’s other Peace River sites.
“The Peace River area is a key production area in Western Canada,” Sobkow said. “Since 2007, Richardson has invested over $80 million in the Peace River region and we are committed to continuing to invest in this area to meet the growing needs of producers.”
Richardson is Canada’s largest, privately owned agribusiness, and has served farmers across the country for 155 years. Richardson has more than 1,700 employees and is a worldwide handler and merchandiser of all major Canadian-grown grains and oilseeds. Richardson is one of Canada’s 50 Best Managed Companies and is recognized as a global leader in agriculture and food processing.
Gavilon may be for sale
Gavilon Group LLC, the U.S. grain-storage and fertilizer company, whose largest shareholder is hedge-fund firm Ospraie Management LLC, has hired Morgan Stanley to explore strategic alternatives.
“Gavilon has strengthened and firmly established its position as a leading, global commodity company with a robust pipeline of growth opportunities,” a spokesman told Green Markets. “The company has decided to explore a broad range of strategic alternatives that may further its growth and create additional value for our stakeholders.” Strategic alternatives many times means a possible sale.
Gavilon is a spin-off of ConAgra Foods Inc. Another major Gavilon investor includes Orascom Construction Industries of Egypt.
Orica plant may be down for several weeks
Orica said Jan. 24 that it is not satisfied with the performance of one of the compressors at the Kooragang Island ammonia plant, which will result in a significant delay in the restart process. Orica is currently working with the compressor supplier to address the performance concerns.
Orica will not proceed with the restart of the ammonia plant until it is satisfied that the compressor can perform as designed. Orica anticipates this may take several weeks.
Separately, Orica has successfully restarted the High Temperature Shift Catalyst Vessel, which is the section of the plant that was the source of an emission of hexavalent chromium Aug. 8 last year. This was completed without incident and means that there will be no hexavalent chromium at the plant for the remainder of the restart process.
“We have kept the community updated on the restart of Kooragang Island at important stages of the process and the community’s safety remains absolutely paramount,” said Orica CEO Graeme Liebelt. “Restarting a plant of this type involves a number of important steps and we are completing each step systematically and without compromise.”
Orica said when the restart process recommences, there remains the chance that the community may again see gas flares from the vents. It said there is no risk to the local community, the environment or the plant from gas flares from the vents. It said the byproduct of the gas flares is water.
Orica said ammonium nitrate production remains unaffected. Orica has been importing ammonia to serve it’s AN plant.
PotashCorp drops Portsmouth as plant site amid strong community opposition
Public opposition – obviously strong by the protests voiced at what turned into a community meeting last week, Jan. 17 – has caused Potash Corp. of Saskatchewan Inc. to eliminate the Portsmouth Marine Terminal in Portsmouth, Va., from consideration for a sulfur melting plant.
“They spoke out loud and clear at the hearing,” Port of Virginia spokesman Joe Harris commented.
PotashCorp followed up the next day, Jan. 18, with a letter from Steve Beckel, general manager of PotashCorp Aurora, to Portsmouth Mayor Kenneth Wright saying Portsmouth was being eliminated as one of the options being considered, and that discussions were being terminated with the Port Authority in Portsmouth. The meeting apparently was a regular city council session, but quickly turned into a public hearing considering the potential PotashCorp plant. One unidentified resident offered that the “meeting was not being held specifically in reference to the project. It was a regularly scheduled city council meeting for the first quarter of the year.”
The announcement came amid growing opposition to the plant, which was proposed in an area close to several neighborhoods along the Elizabeth River. The proposal become public a week earlier (GM Jan. 16, 2012), and according to the local press caused a growing amount of anger over the idea. It reached the point that about 350 residents appeared at the meeting, where the City Council was urged kill the project.
PotashCorp had said that the project would bring a $100 million investment, create about 65 construction jobs, employ as many as 10 people, and generate an undisclosed amount of tax revenue for the city. The company also had promised to use special scrubbers to make the plant odorless, and said it would comply with environmental regulations.
According to Beckel’s letter, Portsmouth was only one of several sites PotashCorp was considering for what he described as a state-of-the-art facility that is safe, clean, and fully compliant with all relevant environmental standards.
“As you know, we had folks from our company at that meeting to listen to the viewpoints of local citizens and address them to the extent that we could,” Beckel wrote. “That’s how we do business at PotashCorp. We’re open. We’re transparent and we value communication and input from everyone around our business. There are many considerations in a site evaluation process, of which public consultation is an important component. For a variety of reasons, including the initial feedback from the community, we have decided to eliminate Portsmouth as one of the options we are considering, and to conclude our discussions with the Port Authority in Portsmouth.”
Portsmouth became a repeat of the sulfur plant proposed for Morehead City, N.C., last year, which was also dropped due to strong community opposition (GM Aug. 1, 2010).
Intrepid releases prelim sales and production figures for 2011; saw decreased farmer demand for K in 4Q
Intrepid Potash Inc. on Jan. 17 released preliminary sales and production results for the fourth quarter and full year 2011. Intrepid estimates that it produced 190,000-200,000 st and sold 175,000-185,000 st of potash during the quarter at an average net realized sales price of approximately $490-$500/st.
Intrepid noted that production results for the fourth quarter include the seasonal harvest from the Moab mine in Utah, and that potash sales during the quarter “were reflective of the decreased farmer demand for fertilizer” experienced in the latter half of the quarter.
“We believe this pause in demand was the direct result of farmers feeling a sense of economic unease over the general global market uncertainty resulting from the European debt crisis, political gridlock in Washington, and the slow pace of economic recovery,” Intrepid said. “Given this backdrop, farmers chose to focus on seed and equipment purchases and to defer purchase of their fertilizer inputs until the spring of 2012.”
For the full year ending Dec. 31, 2011, Intrepid estimates that it produced 805,000-815,000 st and sold 785,000-795,000 st of potash at an average net realized sales price of approximately $465-$475/st. Intrepid noted that it derives its average net realized sales price by subtracting freight costs from gross sales revenue, and then dividing that result by sales tons.
Intrepid’s cash cost of goods sold for potash for the full year, net of by-product credits, is estimated at $170-$180/st. The company said its higher per ton costs in the fourth quarter were largely driven by higher per ton costs from its East Mine due to maintenance and construction-related activities that impacted plant operations.
“Operating time at our East plant was reduced in part due to production disruptions associated with the construction of the Dense Media Separation (DMS) component of our Langbeinite Recovery Improvement Project (LRIP), as well as the initial commissioning of the new DMS plant and related technology,” Intrepid said. Commissioning of the DMS is expected to continue into early 2012.
Intrepid estimates that it produced approximately 30,000-35,000 st and sold roughly 25,000-30,000 st of Trio®, a product produced from langbeinite ore, during the fourth quarter, at an average net realized sales price of approximately $280-$290/st. For the full year, Trio® production was estimated at 140,000-145,000 st, with sales at 170,000-175,000 st, while the full year average net realized sales price was estimated at $230-$240/st.
Intrepid said its Trio® sales during the fourth quarter were limited by production and low inventory levels, with demand remaining strong. “We anticipate increased Trio® production once the DMS is fully commissioned,” the company said.
Intrepid also provided an update on its capital investment program. For the full year ended Dec. 31, 2011, Intrepid invested approximately $135-$140 million, which includes the DMS project and the installation and commissioning of a new compactor at its Wendover, Utah, facility. In 2012, Intrepid expects to invest approximately $225-$300 million funded from existing cash and investments and operating cash flows.
“Intrepid’s capital strategy remains focused on increasing reliability, efficiency, and productivity, all with the goal of decreasing per ton operating costs,” the company said.
Significant capital investments in 2012, beyond sustaining capital of approximately $50 million, will be focused on the construction of new compaction capacity at Intrepid’s North facility in Carlsbad, N.M.; the addition of new solution mining wells at the Moab facility; the completion of the granulation plant component of the LRIP project at the East plant in Carlsbad; and the company’s HB Solar Solution mine proj
Fertilizer was major driver for ViterraÆs 83 percent increase in fiscal year net income
Viterra Inc. reported record results for the fiscal year ending Oct. 31, 2011, and the performance of its Agri-products segment, and the fertilizer business within it, were key. Agri-product EBITDA was up 59 percent, to C$244.1 million on sales and other operating revenues of $2.38 billion, compared to the year-ago $153.8 million on sales/revenues of $1.8 billion.
Fertilizer sales were up 41.6 percent, to $1.12 billion from the prior year’s $791.1 million. Volumes were up 11 percent, to 1.94 million mt from 1.75 million mt, while the average fertilizer margin per mt went up to $133.53/mt from the prior year’s $97.36/mt. Crop input and seed sales were $388.2 million and $237.4 million, respectively, up from the year-ago $384.2 million and $207.4 million.
Company-wide, Viterra net earnings for the year were up 83 percent, to $265.4 million ($.71 per share) on sales of $11.8 billion, up from the prior year’s $145.3 million ($.39 per share) on sales of $8.26 billion. EBITDA moved up 36 percent, to $701.9 million from the year-ago $517.6 million. President, CEO, and Chairman Mayo Schmidt told analysts Jan. 19 that the company’s Southern Australia assets contributed over one-third of EBITDA, and that the business there has been fully integrated and achieved targeted synergies six months ahead of schedule. He said the Australian Agri-products business is modest to-date, only about 5 percent of market share; however, he believes it can grow organically by using techniques from its Canadian model and also by adding input distribution centers to existing grain handling facilities. He noted that Viterra is a market leader in Agri-products retail in Western Canada with a more than 35 percent market share, and offers growers a wide variety of products – most recently fuel oil.
Viterra announced Jan. 18 that its board has approved a 50 percent increase in its dividend rate, to $.15 per share per year compared to the previous rate of $.10 per share. The first semi-annual dividend under the new rate ($.075 cents) will be payable Feb. 22, 2012, to shareholders of record Jan. 30, 2012.
Revenues in the Agri-product division also increased in the fourth quarter due to favorable weather in Western Canada that resulted in a successful fall fertilizer application season. Fourth-quarter Agri-product EBITDA was $51.9 million on sales of $519 million, up from the year-ago $30 million and $325.1 million, respectively. Fertilizer sales were up 58 percent, to $258.5 million from the year-ago $163.5 million. Fertilizer volumes were up 11 percent, to 411,000 mt from the year-ago 370,000 mt, while the fertilizer margin per mt sold was $159.78/mt, up from $110.02/mt. Crop input sales were up slightly to $47.5 million from the year-ago $45.4 million, while seed sales were $4.35 million, up from $1.5 million.
Viterra said the harvest in Western Canada was essentially complete by the end of October. It estimates a 10 percent increase in the harvest of the top six grains, to 49.3 million mt from the year-ago 45 million mt.
Company-wide, Viterra did see a drop in fourth-quarter net earnings, and cites special factors. Net earnings were $9.5 million ($.03 per share) on sales of $3.1 billion, compared to the year-ago $52.7 million ($.14 per share) and sales of $1.95 billion. EBITDA was down at $70.2 million from the year-ago $88 million. The company recorded an $8 million goodwill impairment on Western Canada feed operations, reflecting the continued intense competition and overcapacity in the feed market. Asset disposal losses totaled $1 million, compared to a year-ago gain of $7 million when the company sold one of its North American grain facilities. The effective tax rate for the quarter was 36 percent, compared to the year-ago 18 percent.
Viterra expects the Agri-products segment to remain strong in fiscal 2012, citing historically high grain prices
Arianne Resources Inc. – Management Briefs
Arianne Resources Inc., Saguenay, Ont., has announced the appointment of Thomas Regan Jr. as strategic consultant for the company. He was president of PCS Phosphate and PCS Nitrogen (both subsidiaries of Potash Corp. of Saskatchewan Inc.) when he retired last summer. Regan joined PCS Phosphate in 1995 as vice president, administration, following its acquisition from Texasgulf Inc., where he served as vice president of international marketing and raw material purchasing. He became president of PCS Phosphate in 1999 and president of PCS Nitrogen in 2007. Regan has a Chemical Engineering degree from Pennsylvania State University.
Arianne is a Canadian exploration company whose primary mission is to explore and develop gold, silver, and other metal deposits in Canada and Mexico. Canada Phosphate is a wholly owned subsidiary of Arianne, developing the Lac a Paul phosphate-titanium deposits. The company says these deposits should produce a high quality igneous apatite concentrate grading 39 percent P2O5 with little or no contaminant.
Quantum Fertilisers – Management Briefs
Jim Crawford has left Quantum Fertilisers to pursue other options in the industry. In addition, the company’s Savannah office will be closed and relocated to Tampa. Tom Kendall, vice president, will assume Crawford’s duties at the new Tampa office.
Noble Group Ltd. – Management Briefs
Noble Group Ltd. CEO, Chairman, and Founder Richard Elman, 71, will soon install a new CEO at the helm of the company, according to a recent posting of an interview with Bloomberg on the Noble website. The article noted that Noble has grown into Asia’s biggest listed commodity trader by sales in its 25-year history, overtaking century-old rivals in Japan, including Marubeni Corp.
In November 2011, Noble posted its first quarterly loss in 14 years. Elman became acting CEO in addition to chairman when CEO Ricardo Leiman quit Nov. 9, 2011, the day after Noble announced the $17.5 million quarterly loss. Leiman’s departure followed those of other major executives – Executive Chairman Tobias Brown, Senior Executive Vice President Peter James O’Donnell, and CFO Stephen Jeffrey Marzo – all over the past 12 months.
The loss, particularly in its cotton and carbon credit markets, spurred Noble into a period of review, as well as into a downgrade by Standard & Poor’s to credit watch with negative implications.
Elman told Bloomberg he believes these issues are now in the past. He said the company, which is partially owned by China’s sovereign wealth fund, is in good shape and is expected to grow this year amid tough market conditions.