All Posts from March 10, 2023

Renewal of Black Sea Grain Initiative Under Discussion

Black Sea, News, News Briefs, Russia, Ukraine

The UN is expecting a Russian delegation in Geneva next week for discussions to renew the Black Sea Grain Initiative, Farhan Haq, a spokesperson for the UN’s secretary-general, said at a press briefing this week. The UN-brokered export pact is up for renewal on March 18.

The meeting will reportedly include discussions with Rebeca Grynspan, who has been working to clear obstructions for Russian exports, including fertilizer, according to Bloomberg. Grynspan is the Secretary-General of the UN Conference on Trade and Development.

Russia has shipped 40 million tons of grain abroad since July 1, Interfax reported on March 8, citing Roman Nekrasov, Director of the Crop Production Department at the country’s Agriculture Ministry. This means the country has already met at least two-thirds of the ministry’s 55-60 million ton grain-export forecast for the season, Bloomberg reported.

Russian Agriculture Minister Dmitry Partushev, in an interview with Kommersant, said Russia will have 30 million tons of grains from the current agricultural year, which runs from July 1, 2022, to June 30, 2023, to be sold in the next season thanks to the record crop and slow exports at the start of the season.

Cargill Inc., the world’s top agricultural commodities trader, said this week that rising grain exports from Ukraine are sparking optimism that the Black Sea Grain Initiative will be renewed.

The increase in Ukraine’s shipments of corn, wheat, and barley is helping push down world food costs after they jumped to a record in 2022. “There is political support from around the world to keep the corridor open,” Cargill CEO David MacLennan said in an interview with Bloomberg. “As long as that is the case, we will continue to help farmers and help product out of the country.”

Corteva Closes on Stoller, Symborg Acquisitions

Eastern Cornbelt, Featured, Houston, TX, News, Spain, Specialty

Corteva Inc., Indianapolis, Ind., announced on March 2 that it has completed the acquisition of Houston-based Stoller Group Inc. and Symborg, a microbiological technologies company based in Murica, Spain. Corteva said the acquisitions position it as a global leader in the biologicals industry.

“These acquisitions illustrate Corteva’s commitment to providing farmers with sustainable solutions that bring value and productivity to the farm,” said Chuck Magro, CEO of Corteva Agriscience. “We are pleased to officially welcome Symborg and Stoller employees to Corteva. We believe their knowledge and expertise, combined with Corteva’s innovations capabilities, will come together to form a leading biologicals business ready to accelerate and grow with the rapidly expanding biologicals market.”

Corteva’s intent to purchase Stoller for $1.2 billion in cash was first announced on Nov. 30, 2022 (GM Dec. 2, 2022). At the time, Corteva pitched Stoller as one of the largest independent plant science and biologicals companies, with projected 2022 revenues of more than $400 million from operations in more than 60 countries.

Corteva announced its intent to acquire Symborg on Sept. 22, 2022 (GM Sept. 22, 2022). Financial terms and conditions of the agreement were not disclosed. Upon closing, Corteva said Symborg locations in Spain and subsidiaries in the US, Mexico, Peru, Chile, Brazil, France, Turkey, China, and Australia would become key elements of Corteva’s Biologicals Portfolio.

Corteva first collaborated with Symborg to scale up and market Utrisha™ N and BlueN™ nutrient efficiency optimizer as part of a distribution agreement between the two companies. The natural-origin biostimulant enables plants to fix nitrogen from the air and make it available to the plant, providing an alternative, supplemental nitrogen source and potentially reducing greenhouse gas emissions from fertilizer use.

The biologicals market is expected to be the fastest-growing crop protection segment in the industry, Corteva said, representing 25% of the overall market by 2035. Corteva said the acquisitions, which will be accretive to EBITDA in 2023, reinforce its commitment to providing farmers with environmentally friendly, sustainable tools that complement evolving farming practices with proven effectiveness.

Intrepid 4Q Sales Fall on Lower Volumes, Higher Pricing; Adjusted EBITDA Slips

Earnings, Featured, News, Potash, Southern Plains, Specialty

Intrepid Potash Inc. reported fourth-quarter net income of $4.0 million on sales of $66.7 million, off from the year-ago $223.9 million and $71.9 million, respectively. The company’s 4Q 2021 net income was inflated by a $215.9 million valuation allowance for deferred tax assets, according to a company filing.

Adjusted EBITDA for the quarter was $23.1 million, down from the year-ago $24.8 million. Intrepid attributed the lower quarterly sales figures to deferred purchasing from buyers.

“During the fourth quarter, the trend of our agriculture customers showing preference for just-in-time purchases mostly continued until we saw a key fill program announced in early January,” said Intrepid Executive Chairman and CEO Bob Jornayvaz. “While some of the expected 2022 demand for our fertilizer products was deferred into 2023, during the fourth quarter the diversity of our sales mix into feed and industrial markets helped provide a stable floor for sales volumes.”

Potash sales totaled $43.8 million in the fourth quarter with an average net realized sales price of $693/st, up from the year-ago $38.8 million and $504/st, respectively. Intrepid produced more tonnage during the period, at 106,000 st versus 86,000 st in 4Q 2021, while selling 50,000 st compared to the year-ago 61,000 st, an 18% decline.

“Overall in 2022, high potash pricing drove very strong financial performance for Intrepid, which was among the best years in company history. Full-year adjusted EBITDA came in at $142 million, adjusted net income totaled $80 million, and our cash flow from operations totaled $89 million, which is net of the third-quarter $32.6 million customer refund,” Jornayvaz said.

“Using our strong cash flow generation, we were able to begin our investments in growth projects with the key goal of increasing our potash production and improving our per-unit economics,” he added. “Moreover, under our share repurchase program, we also returned approximately $22 million in capital in 2022, reducing our outstanding share count by roughly 5% compared to the second-quarter 2022 average.”

Fourth-quarter Trio® sales totaled $17.3 million with an average realized price of $461/st, compared to the year-ago $24.6 million and $388/st, respectively. The company produced 51,000 st in 4Q versus 53,000 st in the year-ago quarter, but sold just 28,000 st, down 42% year-over-year from 48,000 st.

Net income for full-year 2022 was $72.2 million on sales of $337.6 million, compared with the prior year’s $249.8 million and $270.3 million, respectively. Adjusted EBITDA was $141.8 million, up from $67.6 million in 2021.

Potash sales totaled $191.4 million in 2022 with an average realized price of $713/st, improving on the prior year’s $151.8 million and $353/st, respectively. The company sold 222,000 st of potash in 2022, off 33% from 2021’s 331,000 st, while producing 270,000 st for the 12-month period, down from 287,000 st in 2021.

Trio® sales for 2022 were $117.8 million with an average realized sales price of $479/st, rising from the prior year’s $96.1 million and $295/st, respectively. Sales volumes for 2022 fell 18%, however, to 197,000 st versus 239,000 st in 2021. Production was reported at 226,000 st for 2022, off from 228,000 st in 2021.

Intrepid expects the strong fertilizer market to continue into 2023, powered in part by ongoing potash supply uncertainty stemming from the war in Ukraine. The company’s key focus for the year ahead, according to Jornayvaz, will be the successful execution on its growth projects, with the goal of improving the cost side of Intrepid’s potash production unit economics.

“Looking at the broader macro environment for potash, there continues to be a structural potash supply gap owing to the Belarusian sanctions and concerns around Russian supply, which should continue to provide a relatively high floor for pricing in 2023 and beyond, even as incremental supply from other projects starts to enter the market,” Jornayvaz said.

“As for the outlook, we are pleased to share that this year is off to an encouraging start,” he added. “US farmers have wrapped up two consecutive years of very high profitability, are entering 2023 with strong balance sheets, and high prices for crop futures point to another year of robust farmer economics. For the first quarter, we have seen strong demand for our potash and Trio®, which we expect to continue throughout the year as farmers will likely be incentivized to maximize their yields.”

Potash 4Q-22 4Q-21 2022 2021
Sales (000 st) 43,756 38,807 191,378 151,751
Gross Margin ($000) 20,907 12,516 94,769 35,845
Sales Volume (000 st) 50 61 222 331
Production Vol. (000 st) 106 86 270 287
Avg Realized Price ($/st) 693 504 713 353
Trio® 4Q-22 4Q-21 2022 2021
Sales (000 st) 17,265 24,612 117,826 96,058
Gross Margin ($000) 3,429 7,913 39,123 16,442
Sales Volume (000 st) 28 48 197 239
Production Vol. (000 st) 51 53 226 228
Avg Realized Price ($/st) 461 388 479 295
Oilfield Solutions 4Q-22 4Q-21 2022 2021
Sales (000 st) 5,732 8,479 28,668 22,770
Gross Margin ($000) 1,315 1,420 7,516 3,477

Mosaic Fertilizantes to Expand Potash Production in Brazil

Brazil, Featured, News, Potash

Mosaic Fertilizantes, the Sao Paulo, Brazil-based business unit of The Mosaic Co., announced on March 7 that it plans to invest more than R$800 million (US$154 million) to increase potash production in Sergipe, northeast Brazil, to 450,000 mt in 2024 from 370,000 mt last year.

The expansion at the Taquari-Vassouras Mineral Chemical Complex in Rosário do Catete will focus on the extraction of sylvinite used in the processing of potash. The investment in machinery and local infrastructure is expected to extend the life of the operation to at least 2030, the company said, with investments in labor, contracting services, and purchasing materials contributing to Sergipe’s economy.

“Aware of the importance and viability of this operation for the domestic market, we decided to make this investment to extend the useful life of this operation and increase its production capacity in a market that should continue to grow,” said Corrine Ricard, President of Mosaic Fertilizantes. “We know how relevant it is to have a competitive operation in one of the countries with the highest growth rate in potash demand.”

Since taking over the operation of the Taquari-Vassouras Mineral Chemical Complex following the purchase of Vale’s fertilizer assets (GM Jan. 12, 2018; Jan. 5, 2016), Mosaic Fertilizantes said it has invested resources and technical efforts to study economically viable and long-term solutions for continuing the exploration of potash in Sergipe.

“All of this points to the continuity of commitment and commitment to the local operation, essential for the national agribusiness,” Ricard said. “We maintain a constant dialogue with employees, the community, and authorities about the evolution of our operation and about opportunities and challenges for the growth of the fertilizer industry in the region.”

In February (GM Feb. 24, p. 23), Mosaic Fertilizantes announced plans to invest R$400 million (US$80 million) in the construction of a 1 million mt blending and distribution facility at Palmeirante, in Tocantins state, expanding the company’s presence in Brazil’s northern agricultural region.

The site will start operations in 2025, employing around 200 people. The unit will produce 500,000 mt in the first year, the company said, reaching its targeted annual production capacity of 1 million mt in 2028.

Mosaic Fertilizantes said it is now Brazil’s largest distributor of fertilizer. When combined with direct sales from the production business, the company said its total sales volumes account for 23% of all fertilizer sales in Brazil.

Meristem Opens New Warehouse in Indiana

Eastern Cornbelt, News, News Briefs

Crop inputs supplier Meristem Crop Performance Group LLC, Columbus, Ohio, announced on March 2 that it has built and opened a new 20,000-square-foot warehouse in Westfield, Ind., in the northern suburb of Indianapolis, Ind.

The company said the new site “provides an eastern capability for Meristem,” with logistics and fulfillment supported by another Meristem warehouse in Fremont, Neb. The Westfield warehouse is already accepting and staging inventory for the 2023 crop season.

“We’re very excited about this next step in our modified direct-to-farm distribution solution to help us cut waste and drive down costs for Meristem farmer-customers,” said Mitch Eviston, Meristem Founder and CEO. “This big, new, efficient warehouse is at the heart of our mission to assure that we can efficiently get farmers what they need when they need it.”

John Gertz, Meristem’s Chief Operating Officer, said customer pick-ups and outbound shipments at the Westfield warehouse began during the last week of January. “After coming through the ups and downs of logistics during the pandemic, we knew we needed to build excellence in order fulfillment, and with these warehouses east and west, we are well on the way,” he said.

Meristem has hired Nikki Decesare and Jim Clay to run the new warehouse. Decesare and Clay will join Meristem veteran Ashley McCann, Sales and Customer Care Manager, to spearhead the company’s new customer care initiative, which Meristem said is designed to “assure a first-class customer experience and product stewardship for every farmer-customer.”

“As we’ve grown to reach several million acres all across the country, we’ve gained a lot of insight to what’s needed to bring a positive experience to farmers, plus continue our drive to make it efficient,” McCann said. “Communication is key, and that’s why we’re also hiring another three customer care associates to assure that we stay connected to customers.”

FY2022 Production, Sales Up for PhosAgro

Earnings, News, Nitrogen, Phosphate, Russia

Russian fertilizer group PhosAgro PJSC, Moscow, reported that its production of fertilizers and other chemicals reached 11.1 million mt in 2022, a 4.6% increase compared with 10.59 million mt the previous year (GM Feb. 3, p. 27).

Fertilizer sales volumes in 2022 grew 6% year-over-year, to 11.1 million mt from 10.43 million mt in 2021. FY2022 sales volumes were an all-time record, the group said in a March 3 statement.

Phosphate-based fertilizer and feed phosphate sales volumes increased by 8%, to 8.4 million mt from the prior year’s 7.76 million mt, while nitrogen fertilizer sales volumes were up 2%, to 2.55 million mt from 2.5 million mt the previous year.

PhosAgro attributed the sales volume growth to the increase in production volumes and strong demand for fertilizers in Russian and global markets.

The increased sales volumes of end products, combined with higher average sales prices in world markets and a focus on sales of high-margin fertilizers, helped boost PhosAgro’s FY2022 revenue by 35% compared with the previous year, the group reported.

At the same time, revenue grew faster than the cost of sales, which rose by about 23% during the 12 months. Revenue reached RUB569.5 billion ($8.3 billion), up from RUB420.5 billion the year before.

FY2022 adjusted EBITDA increased 39%, to RUB266.9 billion ($3.9 billion) from RUB192.1 billion. Adjusted net profit for the year rose 40%, reaching RUB182.3 billion, up from RUB130.5 billion.

PhosAgro’s results for the fourth quarter of 2022, however, were weaker than last year. Lower phosphate fertilizer prices and a stronger ruble led to a 14% drop in revenue, Interfax reported.

Adjusted EBITDA for the final quarter was down almost 28% at RUB44.5 billion, and below the Interfax Consensus estimates of RUB46.3 billion. Downward pressure came from rising commodity prices, higher inflation, and a higher Mineral Extraction Tax (MET) for apatite-nepheline ore production compared to the year before, according to the report.

Fourth-quarter adjusted profit fell 29% on the previous year, to RUB32.1 billion, slightly missing analysts’ expectations of RUB32.6 billion.

Looking ahead, PhosAgro said the market for nitrogen-based fertilizers in the first quarter of 2023 has been marked by excess supply due to high levels of carryover stocks in European countries, as well as in North and South America, which the company said continues to have a negative impact on prices.

The group said phosphate-based fertilizers have now stabilized. “Prices can expect support from an increase in seasonal activity in South America, and in Brazil in particular, as well as in the US domestic market following a significant reduction in imports in 2022,” PhosAgro said.

The group reported that its net debt as of Dec. 31, 2022, had increased to RUB180.3 billion ($2.6 billion), up from RUB153.7 billion as of Dec. 31, 2021. The group’s net debt/EBITDA ratio, however, decreased to 0.68x at the end of 2022 versus 0.80x at the end of 2021.

Based on the FY2022 results, PhosAgro’s Board of Directors has recommended paying dividends of RUB465 ($6.11) per share from retained earnings, and approved April 4 as the dividend record date. The dividend will be discussed at a general meeting on March 24.

PhosAgro Production and Sales Volumes

‘000 mt FY2022 FY2021 % change
Production      
Phosphate fertilizers and feed phosphates 8,224 7,894 +4
Nitrogen fertilizers 2,547 2,412 +6
Other products 302 280 +8
Total 11,073 10,585 +5
       
Sales Volumes      
Phosphate fertilizers and feed phosphates 8,403 7,762 +8
Nitrogen fertilizers 2,551 2,495 +2
Other products 144 177 (19)
Total 11,098 10,434 +6

EPA Hits Back Against WOTUS Challenges

Featured, News, Texas, U.S.

The US Environmental Protection Agency (EPA) has hit back against Texas and other states suing to vacate the agency’s new “Waters of the United States” (WOTUS) rule, saying the states have sued to halt a rule that isn’t much different from the status quo.

“Plaintiffs’ claims of harm are premised on either a complete disregard for the Rule’s similarity to the status quo they seek to maintain,” or overstate the differences between the status quo and the new rule, EPA said in a response filed on March 4, according to Bloomberg Law.

In the case, Texas v. EPA, the state is asking the US District Court for the Southern District of Texas to issue a preliminary injunction against the new WOTUS rule, which is set to take effect on March 20. The state claims it faces too much regulatory uncertainty because of the rule, but EPA in its response said Texas failed to show that it has standing to sue because uncertainty isn’t sufficient to establish standing, Bloomberg Law reported.

Officially announced on Dec. 30 (GM Jan. 6, p. 1) by EPA and the Army Corps of Engineers, the new WOTUS rule claims to restore protections that were in place prior to 2015 under the Clean Water Act (CWA), but with “updates to reflect existing Supreme Court decisions, the latest science, and the agencies’ technical expertise.”

The rule was published in the Federal Register on Jan. 18. Since then, some 26 states (GM Feb. 24, p. 30) and a coalition of 17 agricultural and industry groups (GM Jan. 27, p. 1) have joined at least five lawsuits seeking to vacate the rule, claiming it is overly vague and exceeds EPA’s regulatory authority.

EPA, however, said “the differences between the challenged rule and the status quo regime are slight, and neither Texas nor industry has shown a harm arising out of any of those slight differences.” EPA further argued that if Texas were to succeed in its claims against the new rule, it could “unlock the door only to party-specific relief,” not a nationwide scrapping of the rule.

EPA also argued that the plaintiffs haven’t demonstrated that they will be harmed because of higher compliance costs caused by the new rule, because these compliance costs come from existing regulations already in effect, not the new rule, according to Bloomberg Law.

The lawsuits also argue that the new WOTUS rule is premature because of a pending US Supreme Court ruling in Sackett v. EPA, a pivotal WOTUS test case involving a couple that for 15 years has been prevented from building a home on their 0.63-acre property in Priest Lake, Idaho, because EPA claims part of the property contains wetlands and is therefore subject to regulation under the CWA.

In its response, however, EPA said Sackett has no bearing on Texas’ alleged harms. “The states contend that their injuries (to the extent they exist) are ‘exacerbated’ by the pending Sackett litigation, which will ‘likely significantly impact the Rule’s implementation,’” EPA said. “That is the definition of conjecture. The question here is whether the states have suffered irreparable injury caused by the rule, not how a forthcoming court decision may affect its implementation.”

Millennial Potash Corp. – Management Brief

Management Briefs, Potash, Vancouver

Vancouver-based Millennial Potash Corp. (MLP) announced on March 6 that Rick Lacroix has joined the company’s Board of Directors. Lacroix most recently served as a director for Allana Potash Corp. in Toronto, Ont., and was also a director at Millennial Lithium Corp., Vancouver, B.C.

He previously spent more than 30 years with Potash Corp. of Saskatchewan, including as Senior Vice President, and was also a former director of Canpotex and former Chairman of Canpotext Bulk Terminals. Lacroix has a B.S. in Electrical Engineering from the University of Saskatchewan.

“We are very pleased that Mr. Rick Lacroix has decided to join the Millennial Potash Board,” said Farhad Abasov, who was appointed Chairman of the Board for MLP in February (GM Feb. 10, p. 27). “We are looking forward to Rick’s contributions to our Board as we accelerate our exploration and development activities at our Banio Potash Project in Gabon.”

MLP also announced that it has granted a total of 100,000 incentive stock options exercisable for a period of five years at an exercise price of $0.50 per share. In addition, the company said it has elected to terminate its option on the Mohave Gold Project and has provided a notice of termination to M3 Metals Corp.

Fertilizers Europe – Management Brief

Europe, Management Briefs

Fertilizers Europe, the Brussels-based European producers’ organization, announced the appointment of Antoine Hoxha as its new Director General, effective March 1. He replaces Jacob Hansen, who served as Director General for 12 years before resigning last month to return to his native Denmark (GM Feb. 10, p. 27).

Hoxha’s former position was as Fertilizer Europe’s Agriculture and Production Director. He has been with the association since 2010, prior to which he worked for eight years in other fertilizer industry roles.

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.