The Mosaic Co. said in a Nov. 7 Securities Exchange Commission filing that on Oct. 14 it received notice from CF Industries Holdings Inc. that it was exercising the bilateral, contractual right to end the CF-Mosaic 15-year ammonia supply agreement in its current form, effective Jan. 1, 2025.
The contract allows for either party to exercise rights on certain dates through 2032 that can result in changes to terms and conditions. Mosaic said it expects to continue to have adequate sources of supply for ammonia at competitive pricing, including from CF.
Under the supply agreement inked in 2014 and taking effect in Jan. 1, 2017 (GM June 23, 2017; June 10, 2016; March 24, 2014), Mosaic agreed to purchase 545,000-725,000 mt/y of ammonia from CF at a price to be determined by a formula based on the prevailing price of US natural gas. Mosaic supplemented the CF ammonia with its own production at Faustina, as well as imports.
Not so long ago, both natural gas and ammonia prices were low, with sources saying CF was the beneficiary of the arrangement. However in more recent times, while natural gas prices have gone up, Tampa ammonia has soared by comparison, giving the benefit to Mosaic, which has been trying to take the maximum amount of tonnage – 725,000 mt/y – under the contract.
Leading up to the contract, Mosaic weighed the possibility of building its own large ammonia plant to supply its needs (GM March 12, 2012).