Mosaic Dock Modifications to Aid in Keeping Down Ammonia Costs

While the Tampa anhydrous ammonia price bumped up $10/mt CFR to $225/mt CFR for September, the Mosaic Co., Plymouth, Minn., told analysts earlier this month that it is working to keep ammonia costs down. Specifically, the company is making a modest investment in a dock at its Louisiana ammonia plant that will allow it to ship more of its internally-produced ammonia to its Florida phosphate operations. The company expects to see the benefits from the modifications in 2020.

Mosaic said its own ammonia production is the most cost effective of its three sources – internal production, imports, and production from a long-term contract with CF Industries Holdings Inc., Deerfield, Ill. Mosaic struck the major supply deal with CF in lieu of building its own giant NOLA ammonia complex (GM Nov. 4, 2013). Under the terms, Mosaic is to take 600,000-800,000 mt/y for up to 15 years.

The CF product, which is fixed-price, fixed-volume, has wound up being the highest cost of the three options under current market conditions, with the company in early August estimating the CF cost in the $320s/mt CFR range.

By comparison, the Tampa import ammonia was sitting at $215/mt CFR in July and August. Mosaic said since it has cut phosphate production, the CF tons have contributed a higher percentage for its ammonia consumption, at approximately 40 percent in the second quarter. The company said a one-third ratio for each source is more normal.