The Mosaic Co., Plymouth, Minn., is seeking the continued idling of its Plant City, Fla., plant. Mosaic CFO Clint Freeland told attendees at the Morgan Stanley Global Chemicals Conference on Nov. 13 that the company has made the request to Florida state regulatory officials. Mosaic had said earlier that it expected to make a decision on Plant City by the end of the year (GM Nov. 9, p. 1; May 25, p. 1).
The company took the 2 million mt/y capacity plant down at the end of 2017 (GM Nov. 3, 2017). The plant had been producing at a rate of approximately 1.5 million mt/y. The idling was expected to be for at least a year.
At the time, Mosaic said it took the plant down to ensure minimal market disruption in light of offshore capacity expected to come online. It also expected that the move could result in higher phosphate margins and lower capital requirements.
In the meantime, Mosaic said it did see these benefits from the Plant City idling, and has also noted that the offshore ramp ups in Morocco and Saudi Arabia have been less than expected. Mosaic has also cited fewer Chinese exports as helping to tighten the market, as well as plans by Nutrien Ltd., Saskatoon, to idle capacity at Geismar, La., and Redwater, Alta., though that company will be increasing production at other U.S. facilities.
Freeland termed Plant City as a third-quartile cost structure facility. He said before Mosaic would bring the plant back up it would want to see a structural imbalance between supply and demand longer term, not just a one- or two-year event. “It would take some investment. We’d have to start rehiring a bunch of workers that would be there. So, it’s not an insignificant lift, if you will, to bring that back online.” The plant employed some 400 workers.
So as Plant City stands ready if there is a significant change in the phosphate market, Freeland said on the potash side of the ledger the company has a couple of million mt of capacity that it can bring online, after some investment, should there be a market shortfall.
Asked about future capacity expansions for Mosaic, Freeland said large-scale additions would be hard to see right now. However, he did hold out the possibility that the company might eventually build MicroEssentials capacity.
“One of the things that we also want to keep our eye on is demand around our MicroEssentials product, and is there additional opportunity there, and where is the best place for that. Is that in the United States, is it Brazil, is it elsewhere?…I think large-scale capacity addition is probably harder to see at this point, but maybe something kind of around the edges is supplemental to what we already have,” said Freeland.
To recap Mosaic’s prowess in Brazil, Freeland said it is a 35 million mt market, and Mosaic sells about 9 million mt in that market. He called Mosaic’s market share 25-30 percent, and said the company is involved in the full value chain, all the way from production to the farm. “We do buy potash and phosphates from outside the country to deliver there through our distribution business. We do buy MicroEssentials from North America to again deliver into the market, and that’s a really growing market for us.” He put it at about 1 million mt. Mosaic has an approximate 3 million mt/y of MicroEssentials capacity in Florida.
Freeland said the company will assess its in-country capacity in Brazil, which could lead to incremental investments in specialty products like MicroEssentials, with the question of whether this would be best produced and delivered locally.
Freeland said about half of its production in Brazil is done in-country. Noting higher transportation costs, he said the company has about $70/mt benefit over competitors on those tons.