All Posts from March 12, 2021

OCI Updates on ESG Goals/Plans; Plant Idling, Biogas-based Ammonia, More DEF in Mix

Ammonia, Europe, Featured, News

OCI NV, Amsterdam, on March 8 announced goals and more plans to decarbonize and capitalize on the global hydrogen opportunity, adding to the news released on March 5 that it had signed agreements to advance the use of ammonia and methanol as shipping fuels (GM March 5, p. 1).

OCI said it has established group-wide targets to reduce Scope 1 and 2 CO2e emissions intensity by 20 percent by 2030 (on a 2019 baseline) and achieve carbon neutrality by 2050. It said it has an accelerated operational excellence program to deliver on energy and production efficiencies at limited or no cost, while resulting in additional $75 million per year of EBITDA in the next 3-5 years. The company said a large proportion of its targets are achievable with limited incremental capital spend.

“So, our priorities right now are the small, easy wins, and I can comfort you that we have 10 or 15 initiatives that are all small and easy wins and pretty obvious and accretive,” Executive Chair Nassef Sawiris said in a company conference call March 8.

OCI highlighted its position as a producer of both ammonia and methanol, saying it has the youngest asset base among its peers, and that it has heavily invested in its legacy projects such as OCI Beaumont in Texas and OCI Nitrogen in Geleen, the Netherlands, with the latter sitting in the top tier of ammonia plants in Western Europe.

OCI revealed that it plans to shut down its oldest and highest emission nitric acid plant in Geleen in second-half 2021 with no financial impact, given its ability to adjust product mix. It said it has achieved an industry leading position in NOx and N2O emission reduction in its nitric acid plants due to historical abatement investments.

OCI also noted that it is the only producer with facilities and extensive distribution and storage capabilities in the U.S., Europe, and the Middle East & North Africa (MENA), all of which are located on major global shipping lanes next to key bunkering hubs.

In addition, nearly all of OCI’s assets have access to ample and cost-effective solar and wind energy, facilitating a shift to renewable production processes and playing a key role in supplying major hydrogen-deficit markets such as Europe, as well as developing an ammonia fuel supply chain to support Asia’s green transition.

OCI’s European assets, which include an ammonia import terminal in Rotterdam, are strategically positioned to play a major role in fulfilling Europe’s hydrogen import needs as demand ramps up.

OCI said it has a pipeline of partnerships and projects in development to enable low-carbon ammonia and methanol production. In the Netherlands, it is already producing ISCC-certified low carbon ammonia from biogas to supply AnQore, an acrylonitrile producer. It said the greenhouse gas footprint is at least 50 percent lower compared to gray ammonia, and can be decarbonized further. OCI is also partnering with Essar Oil U.K., ExxonMobil, TWE, Nouryon, and ADNOC on other projects.

In the U.S., OCI said its Iowa Fertilizer Co. facility at Wever can produce up to 1 million mt/y of DEF, a premium product, and that it is positioned geographically to transport the product to key customers. It said in 2020, DEF volumes by the N-7 marketing joint venture with Dakota Gasification and Dyno Nobel achieved a 34 growth rate in volumes. OCI said it sees few near-term alternatives to DEF for emission abatement for the truck and rail industries, and that demand is expected to grow 15 percent over the medium term.

Asked if the company would be willing to shift downstream production from agriculture, CEO Ahmed El-Hoshy said “we will do it – absolutely we’ll do it.” He said the company is always looking to maximize value, and as an example, he said if blue or green ammonia were higher priced it would cut back urea production.

OCI is also setting up its governance to meet ESG goals. There will be dedicated board oversight by the HSE and Sustainability Committee, and executive compensation will be tied directly to ESG goals.

OCI also noted that it has launched a Diversity and Inclusion program at both the board and group levels to drive female representation. It increased female representation on the board to 23 percent in 2020, up from 17 percent in 2019. It has a group-wide target for women in senior leadership to be 25 percent by 2025. It said it increased the ratio of female-to-male hires by 16 percent year-over-year in 2020.

Mosaic P&K Revenues, Sales Volumes Up in February

Brazil, Earnings, News, Phosphate, Potash, Tampa

The Mosaic Co., Tampa, reported increased sales revenues for all three industry segments for the month of February compared to the year-ago quarter. However, with respect to sales volumes, only the Potash and Phosphate segments saw increases, up 26 and 15 percent, respectively. Mosaic Fertilizantes volumes were off 4 percent.

Potash Feb. 20 Feb. 19
Sales Volumes (000 mt) 617 489
Sales Revenues ($/M) 143 118
Mosaic Fertilizantes Feb. 20 Feb. 19
Sales Volumes (000 mt) 711 737
Sales Revenues ($/M) 261 255
Phosphate Feb. 20 Feb. 19
Sales Volumes (000 mt) 614 532
Sales Revenues ($/M) 297 172

Warner Fertilizer Purchased by Hemisphere Ltd.

Featured, News, South Central

Hemisphere Limited LLC, a management company based in Somerset, Ky., announced in early March that it has entered into a contract to purchase Warner Fertilizer Company (WFC), Kentucky’s largest, locally owned independent fertilizer retailer, with 11 locations across 13 counties.

Also headquartered in Somerset, WFC was founded in 1965 and currently offers bagged and bulk fertilizer, crop protection products, farm supplies, and seed for corn, soybeans, small grains, turf, and other field crops. The company’s Kentucky facilities are located at Somerset, Nancy, Monticello, Russell Springs, Tompkinsville, Campbellsville, Albany, Liberty, Stanford, and Columbia.

WFC has approximately 55-58 full-time employees and an additional 20-25 seasonal employees, with annual wages and benefits averaging $2.1 million over the last five years. The company has been ranked on CropLife magazine’s Top 100 U.S. ag retailers list.

WFC services include custom application, spreader/no-till equipment rental, soil testing, and agronomic consultation from certified crop advisors. The company also produces its own branded and bagged fertilizer at Somerset under the Warnco name, which is distributed in Virginia, Tennessee, North Carolina, West Virginia, Michigan, and Pennsylvania.

Hemisphere was established in February 2020 as a holding company for a variety of businesses owned by Demetrios Haseotes, an entrepreneur in Pulaski County who also serves as Hemisphere’s CEO. Hemisphere’s businesses include oil refining, wholesale petroleum storage and distribution, real estate development, truck and maritime transportation management, and Circle K convenience stores.

Hemisphere has also been expanding into the agribusiness sector. Haseotes purchased Continental Refining Company LLC in Pulaski County in 2011, and recently announced plans to convert the facility to the production of biodiesel and other byproducts using regionally sourced soybeans. Hemisphere also owns Midland Farms, a New York-based fluid dairy producer.

“Hemisphere’s long-term strategy is to design and adopt value added products and services into WFC’s existing offerings, including the addition of products to serve new farm and garden clients as a ‘one-stop’ source,” the company said in press release. “WFC’s locations will be designed for optimal product visualization and placement, with selling space inside and outside each of its facilities.”

Corteva Stops Sales of Dicamba Herbicide

News, News Briefs

Corteva Agriscience, Wilmington, Del., announced in late February that it has decided to discontinue sales of its dicamba herbicide FeXapan® in the U.S. and Canada. FeXapan’s registration was canceled last June for the 2020 growing season, along with Bayer’s XtendiMax and BASF’s Engenia dicamba herbicides (GM June 5, 2020).

The U.S. Environmental Protection Agency (EPA) in October announced its approval of new five-year registrations for XtendiMax and Engenia, but not for FeXapan (GM Oct. 30, 2020). EPA also extended the registration of a fourth dicamba herbicide, Syngenta’s Tavium Plus VaporGrip Technology.

Corteva said it will focus instead on its Enlist® weed control portfolio. “We continue to see strong demand and broad adoption of Enlisttechnology for seed and Enlistherbicide crop protection solutions,” the company said. “This decision allows Corteva to focus customer and applicator training, sales, and distribution resources on our leading Enlistweed control system.”

Corteve said it will continue to support customers who have selected Roundup Ready 2 Xtend® technology from a Corteva seed brand. Those customers may use dicamba herbicides offered through other brands, while still accessing other soybean herbicides from Corteva and benefiting from the strong yields of Corteva brand dicamba-tolerant soybean products,” the company said.

TFI Outlines Policy Priorities for 2021

News, News Briefs, U.S.

The Fertilizer Institute (TFI) on March 10 released a statement outlining its public policy priorities for 2021 as it works with the Biden Administration and a closely divided 117thCongress. TFI’s priorities are broken down into six areas: safety and security; energy and economic growth; environment; innovation; trade; and transportation and infrastructure.

“Our number one goal is to ensure the fertilizer industry is able to continue feeding the world sustainably within a legislative and regulatory environment that allows for industry growth and innovation,” said TFI President and CEO Corey Rosenbusch. “The policy priorities identified and approved by our members illustrate the industry’s focus on the safety and security of employees and the communities in which they operate, a commitment to environmental stewardship, and the efficient use of energy.”

On environmental policy, TFI highlighted continued efforts to encourage farmers to use sustainable fertilizer practices through adoption of the 4Rs. TFI said ag retailers are also well-positioned to assist farmers interested in participating in voluntary, market-based carbon markets that incentivize the implementation of fertilizer best management practices proven to help sequester carbon in the soil.

“The fertilizer industry is essential to our modern way of life, and our members have made minimizing the environmental impact of crop nutrients a key pillar of how they operate,” Rosenbusch said. “We want to see that reflected in public policy. It is absolutely critical that any climate change policies or initiatives must not impact our ability to provide farmers with the crop nutrients they need.”

On the issue of greenhouse gas emissions, TFI said U.S. production of nitrogen fertilizers is both energy intensive and trade exposed. “We need to make sure that policies are not put into place that send production to areas of the world that do not use more efficient production methods and lack the same type of environmental protections we have in the U.S.,” Rosenbusch said. “Greenhouse gas emissions are a global issue, and discouraging efficient production in the U.S. in favor of a dirtier process overseas actually harms the environment more than it helps.”

On the issues of trade, TFI said it supported the USMCA and remains hopeful that the Biden administration will seek to update other existing trade agreements and create new ones that promote open markets and fair competition.

On infrastructure, TFI said fertilizer distribution bottlenecks due to road and bridge closures or delays, as well as crumbling locks and dams, have the potential to be devastating. “Fertilizer needs to be delivered to growers exactly when and where they need it, and there is not much room for error,” Rosenbusch said. “When the optimal window opens it has to happen, and the industry must be ready and ensure the materials are all in place.”

U.S. EPA – Management Brief

Management Briefs, U.S.

The U.S. Senate on March 10 confirmed Michael S. Regan as the new U.S. Environmental Protection Agency (EPA) administrator. Regan began his career at EPA and worked in environmental and renewable energy advocacy before becoming secretary of North Carolina’s Department of Environmental Quality. The appointment of Regan was applauded by both The Fertilizer Institute (TFI) and the Agricultural retailers Association (ARA).

“TFI welcomes Administrator Regan’s established record of listening to all stakeholders, a history of working to find practical solutions to environmental issues, and of using sound science and data to guide the decision-making process while serving in North Carolina’s top environmental post,” said President and CEO Corey Rosenbusch. “We feel confident that Administrator Regan possesses the skills and leadership necessary to tackle tough issues while ensuring the fertilizer industry can continue to innovate to lessen environmental impacts as we help to grow the food, fuel, and fiber to feed our country and world.”

“ARA applauds the Senate’s confirmation of Administrator Regan,” said ARA President and CEO Daren Coppock. “He has a proven record of listening to all stakeholders, including the agricultural industry, and making decisions based on sound science and risk-based, peer-reviewed data. We look forward to working with the administrator and his team to continue to support policies that will benefit the environment while allowing ag retailers and their farmer customers to conduct their operations with necessary modern agricultural tools. This will ensure a safe, affordable, and abundant domestic food and fuel supply is readily available.”

FBN Launches Animal Health and Nutrition Platform

News, News Briefs

Farmer’s Business Network Inc. (FBN®), San Carlos, Calif., the direct-to-farm ag tech platform and farmer network, announced the acquisition of Prairie Livestock Supply and ProPig/ProCattle, two animal health and nutrient businesses based in Worthington, Minn.

Prairie Livestock Supply provides pharmaceuticals for swine, beef, dairy, and poultry. The company employs 40 veterinarians, animal health sales specialists, and nutritionists. FBN said the acquisition will give members in select states access to clinical veterinary services for beef, swine, and dairy through a partnership with Southwest Veterinary Services, a new offering made possible by the acquisition.

“The combined capabilities we can now bring to the table can help solve the most complex animal health challenges, whether it’s for a 100-head or 100,000-head operation,” said Steve Dudley, DVM, CEO and veterinarian at Prairie Livestock Supply. “We are excited to extend our network of producers, veterinarians, manufacturers, and technologists as we bring more choice and transparency to livestock operators nationwide.”

FBN said the acquisitions market the launch of its animal health and nutrition platform, which will provide members with a full line of animal health medications and supplies from branded and generic manufacturers; veterinary services and autogenous vaccine capabilities through Southwest Veterinary Services; feed supplies, including dry mineral, liquid supplements, medicated feeds, and lick tubs; and nutritional services. FBN said it is offering zero percent interest financing on all animal health and feed purchases.

“Independent family livestock producers are at a critical crossroads,” said Charles Baron, FBN VP of Livestock and co-founder. “Improving both the producer economics and environmental sustainability of livestock is the best way to ensure farms are family run for generations to come. FBN is now uniquely able to do both.”

More Ag Businesses Join Agrellus Sales Platform

Uncategorized

Agrellus Inc., the Lubbock-based e-commerce business and online marketplace for crop inputs, has added two more businesses – Micro-Bac International in Round Rock, Texas, and 1Source Ag in Toluca, Ill. – to its sales platform.

Micro-Bac has been in business for more than 30 years providing bacterial bio-remediation and environmental cleanup products from its manufacturing facility near Austin, Texas. 1Source Ag is an agricultural inputs supplier in Illinois.

“For almost 40 years, Micro-Bac has been committed to serving ranchers and oil producers with our innovative microbiological products,” said Braden Gilbert, Vice President of Sales. “In our pursuit to provide safe environmental solutions, we have recently released a line of bacterial products for farming operations that we are excited to bring to farmers via the Agrellus platform. We believe our 100 percent organic product will create an abundance of success for many farmers all across the nation.”

Agrellus has been expanding the number of platform partners in recent weeks. In late February, the company reported the addition of several ag retail companies, including Crescent Star Ag, Spearman, Texas; Horton Seed Services, Leoti, Kan.; and Wells Ag Supply, Fonda, Iowa (GM March 5, p. 30).

Agrellus offers seed, fertilizer, chemicals, irrigation parts, fuel additives, and custom application services from its online platform, which was launched in early 2017. Agrellus utilizes existing ag retailers and retail locations on its online and mobile platform, and charges no membership fee for participating retailers or grower members.

ICL Updates on MOP, Polyhalite Markets, Capacity Increases

Israel, News, News Briefs, Polyhalite, Potash, Specialty

ICL Group CFO Kobi Altman told analysts on March 4 that the group assumes potash demand will continue to be healthy, fundamentals remain positive, and demand will continue to grow. He was speaking at Bank of America’s Global Agriculture and Materials Conference on March 4.

Altman expects much better potash prices this year. “We’ve already seen this, currently, nice increases, in the U.S., in Brazil versus the first half of 2020, where I think we marked kind of a 15 years’ bottom for pricing,” he said.

The CFO also pointed to the better price environment in the annual contract market, with the China contract price up $27/mt and India up $17/mt.

Like other suppliers, Altman said ICL believes the lack of follow-up signings following Belarus Potash Co.’s (BPC) settling new supply contracts with customers in both countries is because other suppliers are “waiting and seeing,” and also that there is not a lot of inventory in the channels.

ICL up until the end of last year had no potash inventory and is selling what it produces, he said, which he believes is also the situation with other suppliers.

ICL President and CEO Raviv Zoller told analysts last month that the group was in no rush to finalize contracts in the Asian market (GM Feb. 12, p. 17), a position Altman re-iterated this week.

At the beginning of this year, ICL had set price guidance for the group looking at around $270/mt for granular potash and about $250/mt for standard product; however, the company noted that since then there has been some improvement in the overall pricing environment.

Altman said that in general, the price environment that ICL saw for potash in the first part of 2020 was below an economical viable range, and did not reflect a sufficient return on investment for the existing potash players.

“The current price environment is around mid-cycle level,” he said. “So, I believe a world-wide average price of around $300/mt is the longer-term average that we can expect. And these prices provide reasonable return to existing players.”

He said ICL believes the existing potash capacity that is available today is enough to satisfy the world demand for “the next decade at least,” and it does not believe that an average price of $300/mt can justify large investments that would be required for greenfield projects.

With regard to its own potash production capacity, ICL said it is ramping up its Spanish operation toward 1 million mt, which will take group-wide potash production capacity toward the end of this year to around 5 million mt/y – “maybe 5-plus million mt.”

ICL said last month it expected potash production at Sodom at the Dead Sea to be between 3.9-4 million mt in 2021 (GM, Feb. 12, p. 31)

“We believe this will well-position ICL as a player in the potash market,” said Altman, adding that ICL is not looking to increase its exposure to this market.

“Our managerial focus is around expanding into the specialty businesses, but we are happy with the 5 million-mt capacity that we will have toward the end of this year and into the future,” he said.

The focus of the potash division will continue to be on cost leadership as the group is “a price taker,” as it cannot influence the world prices environment, said the CFO.

“The way for us to optimize our [potash] business result is to optimize the average realized price of where we sell in the various markets,” he said.

ICL also highlighted the increase in scale of its polyhalite mine at Boulby, in northeast England.

But 2020 has been a difficult year to promote “a one-of-a-kind new product,” Altman told analysts. “With the pandemic we had to stop the technical support to customers and were unable to visit them. Despite this challenge, we sold 50 percent more in 2020 than we sold in 2019.”

Altman reiterated that ICL is targeting sales from Boulby of around 1.3 million mt “in just a few years,” and highlighted the group would continue to promote the FertilizerpluS product family on a global basis. FertilizerpluS products have additional ingredients added to the basic polysulfate product – the marketed form of ICL’s polyhalite – and various other offerings.

Polysulfate production at Boulby was up 12 percent year-over-year in 2020, reaching 709,000 mt, despite the negative impact of COVID-19 (GM Feb. 12, p. 17).

Reflecting on Anglo American’s Woodsmith polyhalite project under development just some 20 miles down the road from ICL’s Boulby mine, Altman told analysts that ICL is clearly monitoring progress there, and “understands Anglo’s interest in the product” as “the market for polysulfate is clearly growing.”

But the CFO said ICL believes it will still “take years” before Anglo is taking products from Woodsmith to the market.

He also believes the basic cost structure of the Woodsmith operation is going to be “very significant” because of the challenges that Anglo has with the locations and underground tunnels, as well as other factors.

“So, their overall cost basis is going to be much higher than what we have at Boulby, which will also create for us a significant competitive advantage,” said Altman.

Koch to Invest $150 M at Enid, Cites Urea, EEF Demand

Featured, News, News Briefs, Southern Plains, Specialty, Urea

Koch Fertilizer (KF), Wichita, said on March 10 it is investing approximately $150 million at its Enid, Okla., nitrogen facility to increase urea production and enhance the reliability of existing production units, as well as improve rail infrastructure and ammonia truck loading facilities.

The project will increase production of ammonia upgrade products. Once complete, KF Enid will be able to supply up to 1.8 million st/y of ammonia upgrade products. Construction is anticipated to begin in 2021, with startup occurring in 2022.

“We continue to see growing interest in upgraded products, like urea and enhanced efficiency fertilizers (EEF),” said Scott McGinn, KF Executive Vice President. “By increasing our production capacity and flexibility, we can better serve our customers long-term with the products they prefer.”

The news is not a complete surprise, as the company said in late 2019 that it was in the engineering phase for a possible upgrade at Enid (GM Sept. 6, 2019). At that time, it was thought the increase would be just urea. The company put total ammonia upgrade capacity at 1.5 million st/y, which would indicate the just announced investment would add 300,000 st/y.

As part of the improvements, KF Enid will expand its onsite rail tracks and shipping capability, which will improve efficiencies for the company and its rail freight suppliers.

Additionally, it is upgrading its ammonia truck loading facilities, including relocating them within the facility. The company said the improvements not only will enhance loading reliability and safety, but also improve the customer experience with faster loading times and staging lanes during peak loading periods.

“We strive to create the best customer experience, and our loading system was falling short,” said Mike Kleis, KF Enid Vice President Operations and Plant Manager. “The new loading facility will create an overall better experience for truck drivers and allow them to load faster during peak seasons.”

This investment builds on the $1.3 billion Enid expansion and modernization improvements made from 2014-2017 (GM Oct. 20, 2017). The centerpiece of that expansion was a new 900,000 st/y urea plant. The company also added 90,000 st of urea storage, an electric power substation, and DEF production, and tripled its SuperU production capacity.

The Enid facility was constructed in 1974 and was purchased by Koch in 2003 as part of the Farmland Industries Inc. bankruptcy.

In addition to the new Enid upgrade, KF recently announced a $90 million investment in its Beatrice, Neb., plant (GM Nov. 13, 2020) which includes 75,000 st/y of additional UAN capacity, and a $140 million investment in its Fort Dodge, Iowa, plant (GM Nov. 20, 2020), which includes an 85,000 st/y increase in ammonia capacity.

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