Israel Chemicals Inc. (ICL) has announced three major deals in the past week. The moves included an acquisition, streamlining its Spanish potash operations, and developing a mine in northeastern England, where huge deposits of a mineral for use as a fertilizer were discovered.
The acquisition of Spain’s Grupo Empresarial Agromediterraneo S.L. (Fuentes) is designed to strengthen ICL’s position in the specialty fertilizer market. ICL did not disclose financial details, but local industry sources estimated the purchase at $85-$110 million.
The acquisition includes Fuentes’ line of proprietary liquid and soluble fertilizers and bulk blends, as well as its production facilities, which are located in Totana and Cartagena, Spain. The Spanish company had estimated revenues of Euros113 million in 2010. Following the acquisition, Fuentes and its subsidiaries will become a part of ICL Specialty Fertilizers, a unit of ICL Fertilizers, the Israeli company’s largest division.
ICL said the acquisition establishes the company as the leading supplier of specialty fertilizers in the fast-growing Spanish market, and is part of the company’s strategy to broaden its activities in the specialty fertilizer market. “The specialty fertilizer niche is growing 8 percent annually, which is much faster than the general fertilizer market,” said Oz Levi, chemical industry analyst at Leader Capital Markets, a leading Tel Aviv-based investment bank. He added that specialty fertilizers currently account for only 2 percent of the total fertilizer market.
ICL is a major player, producing some 600,000 mt annually out of total global production of 2 million mt. The Spanish acquisition came on the heels of the purchase earlier this year of specialty assets from Scotts Miracle Gro for $270 million.
As part of an effort to expand its operations outside Israel, the company announced plans to begin mining polyhalite ore at its mines located at Boulby, England. The decision follows geological studies conducted by Cleveland Potash Ltd. (CPL), the British-based subsidiary of ICL Fertilizers. The studies indicate that the polyhalite ore is located beneath the potash that CPL currently mines. The company is the only potash manufacturer in England. Polyhalite is not currently used commercially as a fertilizer, but ICL said that it could potentially be a substitute for potassium-based fertilizers for various crops, particularly fruits and vegetables sensitive to chlorine. Polyhalite also contains magnesium sulfate, which can be marketed without any future processing for direct applications to the soil or as a raw material for specialty fertilizers.
CPL noted that the process of mining the polyhalite will be simplified due to the fact that infrastructure and equipment are already located at the site, and that the reserves are located directly below the potash layer. As a result, the company expects to be able to mine hundreds of thousands of tons of the mineral during the first year at a relatively low cost.
ICL said that polyhalite is a unique mineral salt that can be used as a specialty fertilizer. In its natural state, polyhalite can be used as a specialty fertilizer for organic and other applications, or as a raw material for the production of specialty fertilizers. In addition, ICL’s tests have recently confirmed that polyhalite can be processed into new, advanced products with significant economic potential. “CPL could be producing up to 600,000 mt of polyhalite a year in 2015, and this could translate into annual revenue of $100 million,” predicted Leader’s Levi. He added that the extremely high margins would make production extremely profitable for ICL.
To take full advantage of the polyhalite opportunity, ICL intends to establish a plant near the Tees Valley for processing polyhalite into specialty fertilizers and industrial products. The British government announced that it views thi