Hurricane Idalia Has Minimal Impact on Fertilizer Operations

Nutrien Ltd., which has phosphate and nitrogen production facilities and retail outlets in the Southeast, reported no injuries or serious damage from Hurricane Idalia. The storm entered Florida on Aug. 30 as a Category 3 hurricane and by Thursday afternoon, Aug. 31, was exiting North Carolina as a tropical storm on its way to Bermuda.

“Hurricane Idalia impacted Nutrien’s White Springs, Fla., phosphate facility
shortly after making landfall on the morning of Aug. 30,” a Nutrien spokesman told Green Markets. “We are grateful that there were no injuries or serious damage to the facility.”

The White Springs facility maintained operations until Aug. 29, consistent with storm preparedness planning. “Efforts are underway to recommence mining operations, and while sulfuric acid operations are down subject to an as yet undetermined restoration of power by Duke Energy, once power is restored operations will start up again,” Nutrien said.

Nutrien said its Aurora, N.C., phosphate facility and Augusta, Ga., nitrogen facility were both operating. “Fortunately, we have had no injuries or serious damage to facilities at our retail operations in Florida or Georgia,” the company spokesman added. “We will continue to monitor conditions in close cooperation with state and local authorities while taking all actions necessary to maintain the safety of our people and integrity of operations.”

Florida was starting to dig out from the aftermath of Idalia, which weakened as it brought what some industry observers described as much-needed heavy rainfall to Georgia and the Carolinas. The hurricane caused billions of dollars in damage, left hundreds of flights grounded, and thousands without power.

Tampa International Airport was back in operation on Thursday morning. More than 1,000 flights were canceled into and out of the US on Wednesday, with many cancellations at Tampa and Atlanta airports, according to FlightAware, as reported by Bloomberg.

Reports of damaged buildings and flooding have poured in from Florida’s coastal counties, as well as at least one case of looting in Steinhatchee, about 16 miles southeast of where Idalia came ashore with 125 mph winds.

Some of the hardest-hit areas in the state had widespread power outages, with some businesses catching fire and others losing their roofs, said Kevin Guthrie, Executive Director of the Florida Division of Emergency Management. 

CSX suspended service on tracks across the region to assess any possible damage from the storm, including the I-95 route through Georgia and South Carolina; the Waycross, Ga.-to-Thomasville, Ga./Dothan, Ala. Bow line; and the CSX Manchester/Fitzgerald subdivision from Jacksonville through Mid-Georgia, according to Dow Jones.

Idalia was the second major hurricane to hit western Florida in a year. Last September, Hurricane Ian struck further south, killing at least 150 people and causing more than $112 billion in damage. At press time, Idalia’s Florida death count had been put at two. Wednesday’s storm came ashore in a sparsely populated area of the state’s Big Bend region and will likely cause $10-$20 billion in damage in Florida and across the US South.

“There were approximately 1 million people within 30 miles of landfall for Ian, while there are about 38,000 people within that distance for Idalia,” AccuWeather Inc. said. 

Hurricane Ian caused The Mosaic Co. to lose some 200,000 mt of phosphate production and forced it to take a week or two to make repairs (GM Oct. 7, Nov. 11, 2022).

Mosaic’s O’Rourke to Retire, Bodine to Step Up

The Mosaic Co. on Aug. 29 announced that James “Joc” O’Rourke intends to retire and that Mosaic’s Board of Directors has unanimously elected Bruce Bodine, 52, currently Senior Vice President – North America, to succeed him as the company’s CEO on Jan. 1, 2024.

O’Rourke relinquished the title of President effective immediately and will resign as CEO and a member of the Mosaic Board of Directors effective Dec. 31, 2023, after which he will serve as a Senior Advisor until mid-2024. Bodine has been elected President of the company and a member of the Mosaic Board of Directors effective immediately.

O’Rourke has helmed Mosaic since August 2015, when he succeeded James Prokopanko as President and CEO (GM May 18, 2015). He joined Mosaic as Executive Vice President – Operations in 2009 and added the role of COO to his title in 2012.

“Joc’s leadership over the past eight years strengthened Mosaic,” said Greg Ebel, Chairman of Mosaic’s Board of Directors. “The company today is larger, more geographically diverse, more resilient, and in excellent financial condition. My fellow directors join me in wishing him all the best as he transitions to a well-deserved retirement. The board has full confidence in Bruce and the other members of Mosaic’s talented Senior Leadership Team. Together they will build on Joc’s legacy of success on behalf of all Mosaic stakeholders.”

“I am proud of Mosaic’s accomplishments over the past decade, and I know Bruce will lead the company to still greater success,” said O’Rourke. “It has been a tremendous privilege to serve as President and CEO alongside Mosaic’s thousands of exceptionally talented people around the world.”

Bodine has worked for Mosaic and its predecessor company for many years and held several executive roles, including Senior Vice President – Potash, Senior Vice President – Phosphates, and Vice President – Supply.

Also on Aug. 29, Mosaic’s Board expanded its size from 11 to 12 seats and elected Bodine to fill the newly created vacancy and serve as a director for a term expiring at the 2024 annual meeting of stockholders.

Bodine also serves as a director of MVM Resources International BV, the general partner of Compania Minera Miski Mayo SRL, the joint venture that operates the Miski Mayo phosphate mine in Peru in which Mosaic holds a 75% interest.

EPA, Corps Issue Revised WOTUS Definition; Ag Groups Remain Highly Critical

The US EPA and Department of the Army on Aug. 29 announced a final rule amending the definition of “Waters of the United States” under the Clean Water Act (CWA). The revised rule comes three months after the US Supreme Court limited the agencies’ regulatory authority in its May 25 decision in Sackett v. EPA (GM May 26, p. 1).

The revised rule eliminates the “significant nexus” test that was part of the Biden Administration’s latest WOTUS definition, and also states that wetlands protected under the CWA must have a continuous surface connection to navigable waterways as required by the US Supreme Court’s ruling in Sackett.

The new rule implements the court’s opinion that the CWA protects only waters and wetlands that are relatively permanent and have a continuous surface connection to navigable waterways, leaving wetlands that aren’t directly connected to large rivers, streams, and coastlines either unregulated or regulated only by states.

“While I am disappointed by the Supreme Court’s decision in the Sackett case, EPA and Army have an obligation to apply this decision alongside our state co-regulators, Tribes, and partners,” said EPA Administrator Michael S. Regan. “We’ve moved quickly to finalize amendments to the definition of ‘Waters of the United States’ to provide a clear path forward that adheres to the Supreme Court’s ruling.”

EPA and the Corps said the changes are “limited” and apply only to those parts of the Biden Administration’s WOTUS definition that the Supreme Court ruled as invalid. The agencies said the Supreme Court decision “created uncertainty” for CWA implementation, and the revised rule will take effect immediately “to provide clarity and a path forward consistent with the ruling.”

EPA finalized the rule without issuing a draft for public comment, prompting criticism from several trade groups. The agency did so using the rarely-used “good cause” exception to notice-and-comment under the Administrative Procedure Act, which allows federal agencies to forgo public comment when officials think that a rule update is sufficiently urgent.

“The Fertilizer Institute (TFI) is disappointed in the continued lack of clarity in EPA’s newly released WOTUS rule, including the agency’s disregard both for the procedural need to invite public input for consideration and for May’s Supreme Court ruling determining which bodies of water fall under federal jurisdiction,” said TFI President and CEO Corey Rosenbusch in an Aug. 29 statement.

“It is unclear how a half-baked rule will provide any amount of durability or certainty to the regulated community,” Rosenbusch continued. “A recent survey of TFI members found that the number one concern for companies in the fertilizer industry surrounds regulatory certainty. By shortcutting the regulatory process, EPA fails to satisfy its stated intent. We want clear rules that facilitate long-term planning and the capital investments that allow us to continue providing the critical nutrients that feed the crops that feed our communities.”

“US corn growers are disappointed by EPA’s revised WOTUS rule,” said National Corn Growers Association President Tom Haag. “The agency failed to open the process to public comment and engagement, which would have been extremely valuable. Instead, the agency has released a rule that does not fully respect the holdings from the recent US Supreme Court case on WOTUS.”

“EPA had a golden opportunity to write a WOTUS rule that’s fair to farmers and stands the test of time, but instead chose to continue government overreach and revise only a small slice of the rule that was rejected by the Supreme Court,” said Zippy Duvall, President of the American Farm Bureau Federation.

“We’re pleased the vague and confusing ‘significant nexus’ test has been eliminated as the Supreme Court dictated,” Duvall added. “But EPA has ignored other clear concerns raised by the Justices, 26 states, and farmers across the country about the rule’s failure to respect private property rights and the Clean Water Act.”

“The ruling in Sackett v. EPA was a chance for EPA and the Army Corps to correct a deeply flawed, prematurely released rule and work to truly improve water quality outcomes,” said Ted McKinney, CEO of the National Association of State Departments of Agriculture. “It is baffling that the revised rule does not accurately address all the issues and questions raised by the Supreme Court in the Sackett decision, nor does it address many of the questions stakeholder groups raised about the WOTUS rule EPA released at the end of last year.”

The EPA and Corps will host a public webinar on Sept. 12 to provide information on the updated rule, but the link provided on EPA’s webpage indicates registration for the webinar is already closed. The agencies also plan to host listening sessions this fall with co-regulators and stakeholders to address any issues that may arise from the new rule.

Ceres Solutions, Co-Alliance Enter Due Diligence

Indiana-based cooperatives Ceres Solutions Cooperative, Crawsfordsville, and Co-Alliance Cooperative Inc., Indianapolis, on Aug. 25 announced that they are pursuing a three-month comprehensive due diligence process. Once complete, they will consider various strategic options.

The two are not strangers as the move comes after years of analyzing opportunities together and the successful performance of their joint venture, Endeavor Ag & Energy, which was formed three years ago (GM Sept. 25, 2020) and serves central Michigan in the areas of agronomy, propane, and feed.

“We believe that this collaborative effort will lead to mutual benefits for both cooperatives and their members,” said Rick Brubaker, Chairman of Ceres Solutions’s Board of Directors. “We are excited about the potential for growth and innovation that can emerge from this process.”

“This represents a significant step towards a more prosperous future for our members,” said Tim Burke, Chairman of Co-Alliance’s Board of Directors. “By assessing our capabilities and identifying synergies, we are poised to unlock new opportunities and enhance the services and support each cooperative currently provides to our respective members.”

Formed in 2007 as a partnership of local farmer-owned cooperatives, Ceres has 650 team members in 35 counties across Indiana and Michigan. It has 65 locations with approximately 41 providing agronomy and/or fertilizer. Ceres added T&T Fertilizer Inc., Goshen, Ind., in 2020 (GM Feb. 7, 2020). It also completed mergers with North Central Co-op, Wabash, Ind., in 2017 (GM Aug. 18, 2017), and Falmouth Co-op in northern Michigan.

Co-Alliance is the result of the merger of five cooperatives in 2002, but its roots date back to the 1920s. Co-Alliance said it is now one of the largest, most successful agribusiness and energy marketing and supply cooperatives in the Midwest. It has some 79 locations in Indiana, Michigan and Ohio, with approximately 51 of those dealing with agronomy.

Russia Weighs Unified Fertilizer Trader to Boost Pricing Power

Russia is considering setting up a unified trading company to export fertilizers in a bid to increase its pricing influence on global markets, according to Bloomberg, citing people familiar with the situation.

The idea was proposed in July by Uralchem PJSC’s founder Dmitry Mazepin and has since been discussed by Industry Minister Denis Manturov and Prime Minister Mikhail Mishustin. No final decision has been taken. It is not clear when the matter will be discussed again.

Spokespeople for the government didn’t respond to requests for comment. Uralchem’s press service said it’s unaware of the proposal.

While fertilizer companies haven’t been included in international sanctions over Russia’s war in Ukraine due to their importance for global food security, Baltic ports have stopped handling most products, contributing to a decline in shipments. An exodus of global shipping companies, some international banks, and insurers from Russia has also made it harder to send goods abroad.

Some large fertilizer makers don’t support the idea out of concern it will hurt business, two of the people said. Exports of most types of fertilizers have already recovered to their pre-war levels, so producers don’t see how the proposal will benefit them, the people said.

A unified trading company could give the government more control over export revenues and allow it to exert much greater influence over global pricing. Russia has been demanding smoother export conditions for its fertilizer producers in talks to restore a grain export deal allowing Ukraine to ship through the Black Sea. Moscow abandoned the deal last month (GM July 21, p. 1).

Companies currently trade their goods through Switzerland and other third countries. Russia previously had a potash trading alliance with Belarus that allowed it to control 40% of the nutrient’s global sales and prices via output caps. Potash prices slumped when the deal collapsed in 2013 (GM Aug. 5, 2013).

Lower Prices, Sales Volumes Impact PhosAgro

Russian fertilizer group PJSC PhosAgro on Aug. 29 reported a 49% decline in adjusted net income for the first six months, to RUB55.77 billion (approximately $581 million at current exchange rates) from last year’s RUB108.55 billion, missing analysts’ average estimate of RUB56.8 billion (Interfax Consensus).

Adjusted EBITDA declined 50% year-over-year, to RUB82.82 billion from last year’s RUB165.32 billion, also missing the analysts’ estimate of RUB84.8 billion. Revenue fell 37%, to RUB212.75 billion from RUB336.51 billion, with PhosAgro citing the drop in global fertilizer prices from their peak in early 2022.

Six-month production of mineral fertilizers and other chemicals increased 4% year-over-year, to 5.68 million mt from 5.45 million mt. PhosAgro said the production of MAP, DAP, and liquid complex fertilizers increased by 19%, to 2.4 million mt, driven primarily by an increase in production during the ramp-up to design capacity at its Volkhov production complex in southern Russia.

The group said Volkhov will reach its design capacity of 1 million mt this year. Volkhov also mastered the production of water-soluble MAP during the first half of the year and launched a project to increase the processing of phosphate rock. PhosAgro said it has invested a total of RUB34 billion in its Volkhov production site, where the first phase of production began in March 2021 (GM March 12, 2021).

PhosAgro’s total fertilizer sales in the first half of 2023 decreased by 4% year-over-year, to 5.52 million mt, mainly due to the stockpiling of mineral fertilizers for seasonal deliveries to markets in Latin America and Asia after meeting the needs of the Russian market. At the same time, its DAP/MAP sales rose 6% over the same period, driving high margins in the current price environment.

PhosAgro noted that sales volumes and regional product distribution in the second quarter of the year were in line with seasonal changes in demand, with increased sales of nitrogen-based fertilizer to markets in Russia, North America, and Europe. Overall, it said it increased fertilizer sales to North America, Latin America, and the CIS countries in first half of the year.

Looking ahead, PhosAgro noted that the third quarter has historically been marked by increased seasonal demand from key markets for nitrogen and phosphate-based fertilizers in India, Brazil, and other regional locations in Asia and Latin America. 

It believes the low levels of carryover stocks in North American and European markets will drive an earlier resumption of seasonal demand. As a result, prices have shown a strong increase since the start of the third quarter and may stabilize above second-quarter 2023 prices, the group said.

PhosAgro has earmarked what it says is a record RUB67 billion (approximately $698 million at current exchange rates) for its investment program this year and plans to invest more than RUB250 billion in the next five years.

Among its key projects, the group continues to develop its ore and raw material base, with the second start-up complex for the 10th horizon at the Kirovsky mine scheduled to come online in the fourth quarter.

In Cherepovets, a project has been launched to increase the processing of phosphate rock in addition to modernizing the ammonia, phosphoric acid, and sulfuric acid production facilities. And in Balakovo, projects will be completed in the fourth quarter to increase the production of feed phosphates and sulfuric acid as part of the third development stage at the complex.

PhosAgro’s Board of directors has recommended a dividend of RUB126 per share for the first half of 2023. The proposed dividend will be put to the vote at an EGM of shareholders on Sept. 30. The group said the payout could be RUB16.3 billion, “almost level with free cash flow of RUB16.7 billion for the second quarter.”

PhosAgro Production and Sales Volumes

‘000 mt 1H-2023 1H-2022 % change
Production      
Phosphate-based fertilizers and feed phosphates 4,226.9 4,054.0 +4
Nitrogen-based fertilizers 1,318.9 1,265.6 +4
Other products 138.8 130.7 +6
Total fertilizers 5,684.6 5,450.3 +4
Sales volumes      
Phosphate-based fertilizers and feed phosphates 4,117.9 4,335.3 (5)
Nitrogen-based fertilizers 1,316.2 1,346.4 (2)
Other products 82.9 82.0 +1
Total fertilizers 5.517.0 5,763.7 (4)

Acron Group Posts 55% Drop in 1H EBITDA

Moscow-based Acron Group posted a 55% drop in EBITDA for the first half of 2023, to RUB36.8 billion ($478 million) from the prior year RUB81.4 billion ($1.07 billion), the Russian fertilizer group reported on Aug. 28.

Six-month net profit dropped 74%, to RUB19.0 billion ($248 million) from RUB74.3 billion ($974 million) the previous year. Revenue was 40% lower year-on-year, to RUB87.96 billion ($1.14 billion) from last year’s RUB147.5 billion ($1.9 billion).

Acron reported a 7% increase in its fertilizer output in the six months ending June 30, 2023, to 3.67 million mt, up from 3.43 million mt in the same prior-year period (GM July 21, p. 28).

The group’s total commercial output, which includes apatite concentrate for sale to third parties and industrial products, increased 6% in the first six months, to 4.3 million mt from the year-ago 4.05 million mt. Sales volumes increased 1% year-over-year, to 4.208 million mt.

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