Koch Nitrogen Fertilizer Holding Inc., a unit of Koch Nitrogen Co., announced Aug. 14 that it will acquire the nitrogen fertilizer business of Simplot Canada Ltd., including a fertilizer complex in Brandon, Manitoba, along with associated product distribution terminals in Watson and Tuxford, Sask., and Oak Bluff, Manitoba.
The sale is expected to close in September. No financial details were disclosed.
“This acquisition fits our vision of identifying growth opportunities where we can apply our capabilities to enhance the business,” said Steve Packebush, Koch Nitrogen president. “This production complex and associated terminals are ideally placed for meeting the needs of customers in Western Canada, as well as the important wheat-growing regions of the northern United States.”
“Simplot Canada has been an important part of our fertilizer business for 40 years, but the global market is no longer favorable to a single-plant nitrogen operation,” said Bill Whitacre, president of Simplot AgriBusiness. “We are confident that an international, multi-plant operator such as Koch Nitrogen will better serve our Canadian customers in the long term.”
The Simplot Canada complex produces ammonia, nitric acid, urea, UAN solutions, ammonium nitrate solution, ammonium polyphosphate, and ammonium thiosulfate. The complex and associated terminals employ about 200 full-time workers, as well as other seasonal contractors. According to the International Fertilizer Development Center, Brandon production capacities in metric tons include: anhydrous ammonia 430,000; nitric acid 200,000; urea 280,000; ammonium nitrate 250,000; and UAN 340,000.
Constructed in the mid-1960s, the Brandon facility is the only major fertilizer manufacturer in Manitoba. It has undergone several upgrades over the years.
While the sale marks Simplot’s exit from the Canadian production and retail fertilizer business in Canada, the company will continue to sell its phosphate products into Western Canada on a wholesale basis. Simplot sold its 11 retail outlets in Canada to Cargill Inc. in 2000 (GM Feb. 28, 2000, p. 1).
The sale leaves Simplot with major phosphate plants in Pocatello, Idaho, and Rock Springs, Wyoming; phosphate rock mines in Smoky Canyon, on the Wyoming and Idaho border, and in Vernal, Utah; nitrogen plants in Lathrop and Helm, Calif.; and Simplot Grower Solutions, which includes some 70 retail outlets in the West and Midwest. The company is also involved in the turf industry with its Best Brand. In addition, it has major positions at three ports – Rivergate Terminal in Portland, Ore., and terminals in Stockton, Calif., and Point Comfort, Texas. Simplot is also a major stakeholder in Calamco, the California-based cooperative.
This acquisition will be Koch Nitrogen’s first in Canada. However, other Koch Industries Inc.-owned companies have had interests in Canada dating back to the 1960s. Other Koch companies with interests in Canada include Flint Hills Resources LP, Georgia-Pacific Corp., INVISTA B.V., and Koch Chemical Technology Group LLC.
The news left some speculating that Koch may have synergies that could come into play with the Brandon plant. For example, Koch owns a refinery in Pine Bend, Minn. Coffeyville Resources uses petroleum coke from its Coffeyville, Kan., refinery to produce nitrogen products. Koch had not responded to inquiries at press time.
Koch Nitrogen and its affiliates manufacture, market, and distribute more than 6 million mt of fertilizer annually. Combined, these companies operate four fertilizer plants producing anhydrous ammonia, urea, and UAN, and 18 terminals in the U.S., and have interests and off-take responsibilities for nitrogen plants in Venezuela and Trinidad and Tobago.