All Posts from September 11, 2006

Lange-Stegmann, Agrotain break ground on $20 M urea storage and granulation production center

Featured, News, Urea

Lange-Stegmann and subsidiary Agrotain International broke ground for a $20 million project in August, which includes the St. Louis Urea Center and a Stabilized Nitrogen Technology Granulation Production Center. The latter can produce 125,000 st of Super U, Agrotain-enhanced urea. The new projects are expected to be complete by summer 2007, according to Project Manager Dan Kuttenkuler. They are being constructed on site beside Lange-Stegmann’s existing facility in St. Louis.

The urea center will add up to 60,000 st of urea storage capacity to the existing Lange-Stegmann operation, which already has 80,000 st of dry storage and 15,000 st of liquid storage. Lange-Stegmann, a wholesale distributor marking its 80th anniversary this year, currently handles 400,000 st of products, including fertilizer and other bulk commodities, annually. The new additions are expected to take that number up to 1 million st.

Major urea importers are expected to partner with Lange-Stegmann in keeping the urea center supplied. The company noted the need for the facility in light of the decreasing amounts of domestic urea production in recent years and the increasing need to source imports. In addition to being at a transportation hub with access to Class 1 Railroads, the company notes that location is the most northern lock-free barge offloading site on the Mississippi River. The facility will be able to receive unit trains up to 100 railcars, with a 24-hour turnaround.

On the Agrotain side, the new state-of-the-art facility will utilize a falling curtain granulation process and will allow Agrotain International, the largest producer of Stabilized Nitrogen in the world, to make sized urea containing its nitrogen stabilizer. Currently in the U.S., the company produces Super U, UMAXX, and UFLEXX at plants in Ohio and Illinois. Additionally, Agrotain StabilizedNitrogen Fertilizer is produced at 5 more U.S. sites and 8 internationally.

Demand for Agrotain has surged since the technology was acquired by Lange-Stegmann from IMC Global Inc. in 2000. The company says the product now has a 5 percent market penetration in North America.

In 2000, the product was available in three countries – now it is available in 55, said Allen Sutton, Agrotain vice president, development, and the company’s top researcher, who has been involved with the product since day one. Agrotain has major partnering agreements with major players in Canada, Brazil, Australia, New Zealand, Europe, and Asia. The next area of focus is expected to be Argentina, India, and the Mideast, said Andrew Semple, Agrotain vice president, global marketing.

Agrotain came on the market in 1996, quickly being named by R&D Magazine as one of the Top Most Technologically Significant Inventions. Recently, Agrotain won the 2005 reader’s choice award for No-Till Farmer Magazine’s Best Product of the Year in the fertility category.

Agrotain can keep urea and UAN from volatizing or losing nitrogen, keeping more of the nutrient for the plant and losing less into the atmosphere or waterways. Agrotain-based products are also seen as a substitute for ammonium nitrate.

The actual Agrotain urease inhibitor that helps delay the release of the nitrogen is made at a plant in Pennsylvania. It is warehoused near Dallas, Texas, where it is available for export from Houston.

Koch closes with Simplot; Koch Fertilizer Canada debuts

Featured, News

Koch Nitrogen Fertilizer Holding Inc. has finalized the purchase of Simplot Canada Ltd., which includes a fertilizer complex in Brandon, Manitoba, along with associated product distribution terminals in Watson and Tuxford, Saskatchewan, and Oak Bluff, Manitoba (GM Aug. 21, p. 1). These assets will be operated under the Koch Fertilizer Canada Ltd. name.

Bob Rader, a 25-year Koch company employee, has been named managing director for Koch Fertilizer Canada and will relocate to Brandon. Rader was most recently managing director for market development and strategic planning for Koch Nitrogen.

“We are excited about this acquisition and will begin to position the business to meet the ever-changing global market,” said Steve Packebush, Koch Nitrogen Fertilizer president. “Now that the acquisition is complete, we can begin identifying ways to improve efficiencies and enhance reliability to better meet the needs of customers in Western Canada and the northern United States.”

With this acquisition, Koch Nitrogen Co. and its affiliates manufacture, market, and distribute more than 7 million mt of fertilizer annually.

FertiNitro ratings affirmed, removed from watch

News

Fitch Ratings said Aug. 31 that it has affirmed and removed FertiNitro Finance Inc.’s ‘B-‘ rated US$250 million 8.29 percent secured bonds, due 2020, from its Rating Watch Negative. The Negative Rating Watch addressed Fitch’s concerns that a change in Venezuela’s petrochemicals law would force FertiNitro to redirect portions of its fertilizer output from the world export markets to the Venezuelan market, with sales subject to pricing dictated by the government. According to the offtake agreement between Petroquimica de Venezuela, S.A. (Pequiven) and FertiNitro, Pequiven is obligated to re-sell, on a gradually decreased percentage, its 50 percent share of the plant’s production outside Venezuela at market prices. Fitch believes that the most recent amendment to the petrochemicals law (published in July) is not likely to cause project revenues to decrease substantially during the remainder of 2006 and in 2007. Still, Fitch said significant uncertainty remains regarding additional modifications to, and adverse interpretations of, the fiscal, legal, and regulatory framework that could potentially impair production and export revenue. Fitch will continue to monitor legislative and regulatory developments in Venezuela and take rating action as appropriate.

Fitch noted that in May the plant completed a 180-day Second Reliability Test, which had been deferred from 2003 with lender consent. Fitch said that through July the project achieved the highest utilization rates since completion, with urea production reaching 101 percent of the Offering Circular target and ammonia reaching 98 percent.

In 2005, collections on sales rose 4.7 percent on stronger ammonia and urea prices. Higher prices in the global markets offset the reduced shipments that resulted from scheduled shutdowns of the urea and ammonia trains in the summer. Higher operating costs combined with the extinction of tax credits and loss carry-forwards, which resulted in tax payments of $21.5 million and decreased cash available for debt service in 2005 to $116 million from $146 million in 2004. Ample accumulated cash balances enabled FertiNitro to pay $36.9 million of deferred bank loan principal in April 2005, ahead of schedule, in addition to the programmed semi-annual amortization payment of $21.7 million. A cumulative net draw of $8.3 million from the restricted cash account enabled FertiNitro to meet total debt service payments of $129.9 million in 2005.

FertiNitro ranks as one of the world’s largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 3,600 mt of ammonia and 4,400 mt of urea. It is owned 35 percent by a Koch Industries Inc. subsidiary, 35 percent by Pequiven, 20 percent by a Snamprogetti S.p.A. subsidiary, and 10 percent by a Cerveceria Polar, C.A. subsidiary.

El Dorado extends AN contract with Orica, SEC eyes LSB restatement

Ammonium Nitrate, News Briefs

El Dorado Chemical Co., a unit of LSB Industries Inc., has extended its original ammonium nitrate supply agreement with Orica to Dec. 31, 2010. The extension provides for liquidated damages to be paid by Orica to EDCC under certain conditions if Orica purchases less than 180,000 st during 2006 or less than 210,000 tons in any year thereafter.

In other company news, LSB has received notice from the Securities Exchange Commission of an informal inquiry regarding its change from LIFO to FIFO of certain heat pump inventory in its Climate Control segment, resulting in LSB’s December 2005 restatement of its audited financial statements for year ended Dec. 31, 2004.

LSB has been involved in new litigation this year. Most notable is its attempt in Arkansas to retrieve $2.8 million in business interruption and property claims relating to the outage of an El Dorado, Ark., nitric acid plant during part of 2004 and 2005. To date, LSB has recovered $5.2 million from insurers.

LSB’s Cherokee Nitrogen subsidiary has filed suit in Alabama State Court in Etowah County, Ala., against Meecorp Capital Markets LLC and Lending Solutions Inc. for recovery of actual damages plus punitive damages relating to a loan transaction. Meecorp counterclaimed for the balance of an alleged commitment fee of $100,000, an alleged equity kicker of $200,000, and $3.4 million for loss of opportunity. Cherokee says it is vigorously pursuing this matter and believes it will win, with very remote chances for the defendant.

LSB has recently settled litigation with Southwest Securities Inc., which alleged it was due a $1.7 million fee for helping to retain financing for LSB. LSB said it only had a sixty day agreement with Southwest and that the financing came ten months after the agreement. LSB settled the case for $300,000.

Masinexportimport Foreign Trade Co. recently brought suit against LSB, saying that it is owed over $1.5 million from drafts payable from former LSB subsidiaries. LSB says all of its interest in the units, LSB Corp. and Aerobit Ltd., were sold in 2002, and that it plans to vigorously defend the matter.

Yara acquires 50 percent of Balderton Fertilisers

News Briefs

Oslo-Yara International ASA has acquired 50 percent of the Geneva-based trading company Balderton Fertilisers SA. Yara says the acquisition will strengthen Yara’s existing ammonia and fertilizer trade business and will support further growth through improved sourcing capabilities and new distribution channels. Balderton is one of the leading fertilizer and ammonia trading companies in Europe, trading approximately 1.8 million mt of various products in 2005. Balderton’s strong positions in the Black Sea region, the Mediterranean, and Africa compliment Yara’s positions in other parts of the world. Going forward, Yara will both purchase third party fertilizer products through Balderton and use Balderton as a complimentary sales channel for Yara’s own produced products in markets where Yara does not currently have a presence. “After successfully having done business together for many years, both companies wanted a closer cooperation in order to support the continued profitable growth of both companies,” said Yara President and CEO Thorleif Enger. The parties have agreed not to disclose the purchase price at this stage.

UAP closes on Terral acquisition

News Briefs

Greeley, Colo.-UAP Holding Corp. said Sept. 5 that it has closed the acquisition of Terral AgriService, Inc. and certain assets of Terral FarmService Inc. and Wisner Elevator Inc. UAP previously announced its intent to acquire Terral (GM July 17, p. 9), pending due diligence and the negotiation of definitive agreements. Terral, a leading chemical, fertilizer, and seed distributor with over 3,000 customers, has been operating in Northeast Louisiana for over 60 years. The acquisition will contribute several key assets, including five distribution facilities throughout Northeast Louisiana, as well as key management and sales personnel. As part of the transaction, Brad Terral, vice president of Terral FarmService and Wisner Elevator, will remain with the business for two years. “We are very pleased to have closed on our purchase of Terral,” said Kenny Cordell, UAP CEO. “This acquisition is an ideal fit with UAP’s stated growth strategy, as it will expand our distribution reach and increase our market share in chemicals, fertilizer and seed. We are confident in our ability to quickly integrate the two companies and capitalize on the rich heritage of Terral.”

Agrium potash miner injured in accident

News Briefs, Potash

Calgary-A 29-year old man was hospitalized in Saskatoon last week with a spinal injury and two broken arms after an accident at Agrium Inc.’s Vanscoy potash mine, according to the local press, which said the man’s injuries were not believed to be life threatening. The man was reportedly working underground and was injured by falling rocks. Agrium said it is working with Saskatchewan’s Mine Branch to do a full investigation of the accident. Agrium spokesman Richard Downey told Green Markets that once the review is complete it will be shared with the industry to reduce the chance of this type of accident occurring again. The man’s family requested his name be kept confidential, and Agrium is honoring their wishes.

Growmark sales up; fertilizer, volumes off

News Briefs

Bloomington, Ill.-Growmark Inc. estimates that sales for the year ending Aug. 31, 2006, will be $3.4 billion, up $700 million from last year. Net income is expected to be $73.5 million, up from the prior year’s $73.2 million, which included a $51 million gain from the sale of CF Industries Inc. stock. The company’s energy business had a record year and helped offset the company’s agronomy business, which saw a six percent decrease in fertilizer and crop protection volumes. Seed sales were a bright spot, with sales topping $130 million, a $20 million increase. Higher sales were generated from higher seed corn and biotech trait sales. Growmark said it has gained 560,000 acres of new corn and soybean seed business in the past two years. With relatively flat planted acreage, Growmark CEO Bill Davisson told shareholders Sept. 1 that this is business taken away from competitors. Davisson also said that Growmark FS, its agronomy subsidiary on the eastern seaboard, has increased sales to $120 million and has positive income. He said the unit is in the midst of a facilities restructuring program, which includes closing, relocation, and construction of new facilities. Growmark said it would return more than $49 million in patronage and refunds to members. In addition, there will also be a special redemption of preferred stock. In total, more than $60 million of cash will be distributed, a Growmark record.

Kinder-Morgan goes private

News Briefs

Houston-Transportation company Kinder Morgan Inc. on Aug. 28 said it signed a definitive merger agreement under which Chairman and CEO Richard Kinder and other members of management, along with investment groups Goldman Sachs Capital Partners, American International Group Inc., The Carlyle Group, and Riverstone Holdings LLC., will acquire the company in a transaction valued at $22 billion. This includes the assumption of approximately $7 billion in debt. Shareholders will receive $107.50 in cash for each share.

Piney Point plant sold to New York investors

News Briefs

Bradenton, Fla.-After Manatee County, Fla., officials declined a sweetheart deal, a group of New York City investors agreed to purchase Mulberry Corp.’s defunct Piney Point phosphate processing plant for $4.3 million, according to Herb Donica, the attorney for the trustee of the property. In addition, the group, HRK Holdings LLC, agreed to pay $3.8 million over an extended period for cleanup and additional maintenance, costs that would have been paid by the state, which has already spent nearly $100 million to secure the site. “We offered it to the county (Manatee) for practically free for use as a reservoir, but they turned us down,” Donica said. “They said it was too much liability.” Donica added that the Florida Department of Environmental Protection (FDEP) offered to purchase an insurance policy from Lloyds of London for the county’s protection, but the county still declined. The Southwest Water Management Authority had urged the county to make the purchase. Fresh water in the Tampa Bay Area is a scarce commodity, and most of the cities and counties are on permanent water restrictions. The stacks and holding ponds at the site became a hazard after Mulberry walked out and informed the FDEP it could no longer afford to maintain the plant and ponds. The company filed Chapter 11 bankruptcy, but that was later converted to Chapter 7 and FDEP took over responsibility for the cleanup, which will continue until 2007 and will require special maintenance until 2010. FDEP emptied the ponds through a series of releases and treatments of the highly contaminated and acidic water. When the ponds on the stacks were emptied, they were lined so they could hold clean rain water. The ponds would have been the largest fresh water reservoir in the state if they had been purchased by Manatee County. The new owners did not say what they planned to do with the property, but it is zoned industrial and is near Port Manatee.

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