All Posts from April 12, 2019

Mosaic Idles Two Brazilian Phosphate Mines, Cites New Regulations

Brazil, News, News Briefs, Phosphate

The Mosaic Co., Plymouth, Minn., on April 11 said Mosaic Fertilizantes will idle production at its Tapira and Catalão phosphate mines in Brazil in order to comply with new Brazilian regulations governing mine tailings dams. Mosaic said it currently has the rock and finished product inventory necessary to meet near-term market requirements, and that during this period and as necessary, it will also ship phosphates from its operations in Florida and rock from its Peruvian mine for use in Brazilian production to meet customer needs in Brazil, leveraging its global capacity.

The company said Mosaic Fertilizantes, with the technical approval of the National Mining Agency (ANM), last month filed an application for the extension of the deadline for submission of the Stability Condition Statements (DCE) for three of its dams. The requested extension was to allow expert consultants to finalize additional recommended studies and geotechnical analysis, which will be completed in April. The company did not receive final agreement from the ANM regarding the requested extension.

Without final agreement from the ANM, and in alignment with the new ANM standards, the company has implemented the Emergency Action Plan for Mining Dams (PAEBM) for the BL1 and BR dams in Tapira (MG) and the BR dam in Catalão (GO), which were classified as emergency level 1, the least critical of the three-category rating system.

The company said Mosaic Fertilizantes will make every effort to obtain the DCEs as quickly as possible. Geotechnical research, analysis with external consultants, and remediation plans will continue until the dams meet the new standards.

Mosaic reaffirmed that the dams do not present imminent risks of disruption and reiterated its commitment to the communities and regions where it operates.

The new regulations are in response to a major dam break that occurred recently at a Vale SA iron ore mine. Mosaic told analysts in an earnings call on Feb. 26 (GM March 1, p. 26) that it has 22 dams in Brazil, 11 of which are tailings dams. It said with respect to new regulations that went into effect on Feb. 18 that 21 of its 22 structures were in compliance, though two had upstream lifts that require remediation plans.

At the time, the company said one tailings dam at Araxa, while meeting old criteria, did not appear to meet the new regulations, and it agreed to keep that phosphate mine out of operation until the dam is remediated. In the meantime, it said the other 21 structures had a certificate of stability by external consultants. The company said it had arranged for third-party assessments by for all dams within the next 90 days.

Impairments Weigh on Itafos; Conda Reports Positive Results

Canada, News

Some $146.6 million in impairments on its junior properties weighed on Itafos, Toronto, for the fourth quarter and full year ending Dec. 31, 2018. However, Itafos Conda, which the company acquired Jan. 12, 2018, was in the plus column for the quarter and year.

Idaho-based Itafos Conda, which the company acquired from the former Agrium Inc., Calgary, prior to its merger with Potash Corp. of Saskatchewan Inc., Saskatoon, to become Nutrien Ltd., Saskatoon, has the capacity to produce 550,000 mt/y of MAP, super phosphoric acid (SPA), merchant grade phosphoric acid (MGA), and ammonium polyphosphate (APP).

Nutrien will buy all of the Itafos Conda MAP and provide it with anhydrous ammonia through 2023. The company produces 40 percent of its sulfuric acid and buys the rest from third parties. Itafos Conda uses some 2 million mt/y of phosphate rock, and is involved in expansion plans.

Itafos Conda reported fourth-quarter net income of $16.6 million on revenues of $92.9 million. Adjusted EBITDA was $20.9 million. Fourth-quarter MAP volumes were 101,652 mt, with an average realized price of $473/mt. SPA volumes were 41,079 mt and $1,006/mt, MGA acid (MGA) at 113 mt and $1,106/mt, and APP at 8,602 mt at $396/mt.

The company said the facility achieved its highest-ever production rates in October 2018.

Itafos Conda full-year net income was $84.2 million on revenues of $276.5 million, with adjusted EBITDA of $63.6 million. Full-year MAP sales were 327,851 mt at $439/mt, SPA 128,369 mt at $942/mt, MGA 394 mt at $985/mt, and APP 26,527 mt at $420/mt.

Itafos said global phosphate markets were subdued in first-quarter 2019 due to cold and wet weather in North America and a heavy import line up at NOLA, as well as lower expected imports from India. It noted this has been somewhat offset by the flooding impact on Incitec Pivot Ltd. in Australia, production cutbacks by The Mosaic Co., and fewer exports from China.

Company-wide, due to the impairments, Itafos posted a fourth-quarter net loss of $153.3 million ($1.08 per diluted share) on revenues of $100.6 million. Adjusted EBITDA was $7.6 million. The company had a full-year loss of $113.5 million ($0.82 per share) on revenues of $302.2 million, with an adjusted EBITDA of $34.1 million.

While Itafos Arraias in Brazil achieved commercial production on July 3, 2018, the company said operational challenges occurred thereafter, resulting in lower-than-optimal levels of capacity utilization. The company said lower production volumes due to the implementation of an efficiency improvement program drove fourth-quarter revenues of $7.7 million and a negative adjusted EBITDA of $9.3 million. Full-year revenues were $25.7 million, with negative adjusted EBITDA of $18.6 million. It had a fourth-quarter net loss of $148.1 million and full-year loss of $161.8 million.

Moving forward, Itafos Arraias has a repurpose plan, which is to optimize production with a multi-product portfolio of higher grade SSP, micronutrient SSP, and value-added premium PK compound products. The company plans to procure higher-grade phosphate rock from third parties, and once operational, from Itafos Farim.

Itafos Arraias in Tocantins, Brazil, has production and sales capacity for 500,000 mt/y of SSP and SSP+ products, as well as approximately 40,000 mt/y of excess sulfuric acid. All of the product is sold in Brazil. The company had been sourcing its phosphate rock from three mines it owns within 10 miles of its production facilities.

The company said it successfully completed its biannual sulfuric acid plant turnaround on schedule and budget. It hopes to maximize the sale of excess acid to a growing industrial customer base and to offset energy requirements through its cogeneration capabilities.

On the Brazil market front, it noted that the closure of Petrobras ammonia plants will leave Yara International ASA in significant control of the local market.

Of the $146.6 million in impairments, some $132.3 million was booked to Itafos Arraias, $11.2 million to Itafos Farim, and $3.1 million to Itafos Santana. The company said the Itafos Arraias impairment was primarily due to the delay in ramp-up to optimal capacity utilization and associated capital expenditures and working capital requirements, combined with lower projected run-rate EBITDA due to margin compression.

Nonproducing junior projects include Itafos Farim, phosphate in Guinea-Bissau; Itafos Santana, phosphate in Para. and Brazil; Itafos Araxa, phosphate and rare earth oxide in Minas Gerais, Brazil; and Itafos Mantaro, phosphate in Junin, Peru.

Itafos Conda 4Q-18 MAP SPA MGA APP
Revenues $ 000 48,033 41,337 125 3,405
Production Volumes mt 101,385 42,738 112 8,621
Sales Volumes mt 101,652 41,079 113 8,602
Realized Price $/mt 473 1,006 1,106 396
Itafos Conda 2018 MAP SPA MGA APP
Revenues $ 000 144,084 120,925 388 11,113
Production Volumes mt 360,004 148,235 353 33,082
Sales Volumes mt 327,851 128,369 394 26,527
Realized Price $/mt 439 942 985 420
Itafos Arraias 4Q-18 SSP SSP+ Sulfuric Acid
Revenues $ 000 4,560 1,067 2,070
Production Volumes mt 29,227 2,806 29,459
Sales Volumes mt 33,739 6,672 13,609
Realized Price $/mt 135 160 152
Itafos Arraias 2018 SSP SSP+ Sulfuric Acid
Revenues $ 000 16,594 3,653 5,406
Production Volumes mt 146,035 23,982 59,370
Sales Volumes mt 106,922 23,134 37,751
Realized Price $/mt 155 158 143

Yara Proposes Dividend, Share Buyback

Europe, News, News Briefs

At its upcoming Annual General Meeting (AGM) on May 7, Yara International ASA, Oslo, is proposing a dividend of NOK 6.50 per share be paid for the financial year 2018. It also plans for the existing share buyback program to be replaced by a new program, renewing the board of director’s authorization to acquire up to 5 percent of Yara’s shares before the next AGM.

Yara International ASA – Management Brief

Europe, Management Briefs

Yara International ASA, Oslo, will fill three board positions at its Annual General Meeting on May 7. Vice Chair Maria Moræus Hanssen has announced that she is stepping down due to a change of position. In addition, the board plans to add two additional shareholder-elected members.

Those nominated for two-year terms include Kimberly Lein-Mathisen, Adele Bugge Norman Pran, and Håkon Reistad Fure. Current board member Trond Berger is nominated as the new Vice Chair.

Canadians Partner on 4R for Africa

Africa, Canada, News, News Briefs

The Co-operative Development Foundation of Canada and Fertilizer Canada have partnered to advance sustainable agriculture in Ethiopia, Ghana, and Senegal as part of the 4R Solution Project. The project is supported by Global Affairs Canada and focuses on the incorporation of the 4R Nutrient Stewardship (Right Source @ Right Rate, Right Time, Right Place®) into fertilizer management practices in order to increase incomes for over 80,000 smallholder farmers.

“Fertilizer Canada is pleased to be partnering with CDF Canada and the Government of Canada to facilitate knowledge transfer and implementation of 4R Nutrient Stewardship practices in Ethiopia, Ghana, and Senegal,” said Garth Whyte, Fertilizer Canada President and CEO. “4R Nutrient Stewardship is a Canadian innovation, however, it is easily adaptable to local soil conditions, making this project ideal for adoption by smallholder farmers to increase crop yields and profitability.”

“For over seven decades, CDF Canada’s work has translated the generosity and values of Canadian co-operatives and credit unions into sustainable socio-economic opportunities for people around the world.” said Benoit Andre, Executive Director of CDF Canada. “We are very pleased to partner with Fertilizer Canada and Global Affairs Canada to advance a sustainable and resilient agriculture that creates new opportunities for the farmers of Ethiopia, Ghana, and Senegal.” Canada has a network of 8,500 cooperatives that have engaged internationally for more than 70 years through CDF Canada.

“Improving the socio-economic opportunities for smallholder farmers, particularly women, is the core of the Government of Canada’s efforts to enhance prosperity in Sub-Saharan countries,” said the Hon. Marie-Claude Bibeau, Minister of Agriculture and Agri-Food. “With this project, our government is providing $15 million of funding to bring a Canadian innovation in agriculture – 4R Nutrient Stewardship best management practices – and the development expertise of the Co-operative Development Foundation of Canada to address food security and economic wellbeing of smallholder farmers in Ethiopia, Ghana, and Senegal.”

JDCPhosphate Becomes Novaphos, Moves toward Commercialization

Florida, News, News Briefs, Phosphate

Junior phosphate technology company JDCPhosphate Inc., Fort Meade, Fla., announced on April 8 that it is changing its name to Novaphos. In addition, it is moving to the the commercialization stage for its Novaphos technology (formerly Improved Hard Process), which enables sustainable production of high-quality super-phosphoric acid (SPA) using low-quality phosphate rock without creating toxic phosphogypsum waste (GM Aug. 10, 2018).

“Our new name is intended to signify Novaphos’ readiness to move into the next phase of its business,” said Timothy Cotton, Novaphos CEO.  “We will work with industry partners to commercialize our technology for making phosphate products that are vital to global food production.”

Novaphos also announced that it had made additional process improvements that further enhanced the efficiency and reliability of the technology. During the first quarter of 2019, Novaphos built on previous success at its demonstration plant in Fort Meade to make additional improvements to the technology. The company said it is now achieving phosphate yields of about 80 percent. Acid quality also continues to improve, with impurities at about 2 percent of SPA-equivalent acid, with strong potential for further improvement at commercial scale.

Novaphos continues to run its demonstration plant using only low-quality phosphate rock tailings, containing an average of about 14 percent phosphate as P2O5, with high levels of silica and other impurities, including magnesium oxide.

“The latest improvements to the Novaphos technology are very significant,” said Ron Cambre, Novaphos board member and former CEO of Newmont Mining. “Based on my long career in mineral processing, including phosphates, I am excited to see the technology poised to start addressing the fundamental needs of the phosphate sector while minimizing toxic waste.”

Novaphos said the patented technology uses a carbo-thermal reduction and oxidation process to recover phosphate from low-quality phosphate sources, including previously processed mine tailings. The process avoids direct acidulation of phosphate rock, minimizing the amount of waste and completely avoiding phosphogypsum production.

The process co-produces a commercially useful aggregate for construction and road building called J-Rox, which are the solid balls that remain after phosphate has been extracted during processing. Novaphos has been granted multiple U.S. and international patents covering its Novaphos technology. Novaphos said it is expanding its base of intellectual property based on its most recent process improvements.

Novaphos, which is privately held, said it has started a process of engagement with major phosphate producers and engineering companies to fully commercialize its technology. Current investors include the Florida Opportunity Fund, The Agrifos Group, Stonecutter Phosphate Investors LLC, FCR Armilar Venture Partners III, Avenira Ltd. (a junior phosphate rock mining company), Mitsui & Co., and the Megy family (GM July 14, 2017).

Gensource Board Initiates Poison Pill

News, News Briefs, Potash, Saskatchewan

Junior producer Gensource Potash. Corp., Saskatoon, reported on April 9 that its board of directors has approved the adoption of a shareholder rights plan dated April 8, 2019. The plan has been conditionally accepted by the TSX Venture Exchange.

Gensource said the purpose of the plan is to provide both shareholders and the board sufficient time to adequately consider a takeover bid and to ensure the fair treatment of shareholders in connection with such a bid.

It said the plan is similar to those adopted by other Canadian public companies, and that the board and management are currently not aware of any party contemplating or preparing a proposal to acquire control of Gensource, but feel that the possibility for such a situation exists and that it is in the best interests of the company and its shareholders to adopt the plan, often referred to as a “poison pill.”

At the close of business on April 8, existing shareholders were granted rights to acquire additional common shares. The rights were granted for no cash or non-cash consideration. These rights are attached to each share as long as the plan remains in effect. Each new shareholder who acquires the company’s common shares, either pursuant to a new issue by Gensource or in the secondary market, will also be entitled to the rights attached to such common shares for no additional consideration.

The purpose of these rights is to allow shareholders, other than the takeover bidder, to purchase, at a set exercise price, one common share of Gensource for each common share held. This right is triggered only if a party acquires or announces its intention to acquire 20 percent or more of the outstanding shares of Gensource and this proposed acquisition does not meet the requirements of a permitted bid set forth within the plan.

Under the plan, only bids that meet certain specific requirements intended to protect the interests of all shareholders will qualify as permitted bids. Permitted bids, among other things, must be made to all shareholders of Gensource, must remain open for 105 days, and must be made by way of a takeover bid circular prepared in compliance with applicable securities laws.

The board’s approval of the plan is subject to the TSX Venture Exchange’s final acceptance and the ratification by the shareholders of Gensource at a meeting of shareholders within six months of the date upon which the plan was approved.

Gensource hopes to begin construction on the first Vanguard One 250,000 mt/y potash production module in south central Saskatchewan in 2019 (GM Jan. 11, p. 28, Oct. 19, 2018).

Itafos Invests in Wildlife Mitigation

News, News Briefs, Pacific N.W., Phosphate

Itafos Conda LLC, which runs Agrium’s former phosphate mining and processing operations in Eastern Idaho, has invested nearly $1.2 million to form the Southeast Idaho Wildlife Mitigation Fund in conjunction with the U.S. Bureau of Land Management’s approval for its Rasmussen Valley open pit mine, which has an estimated seven years supply of ore.

For the first time in Idaho history, the mine plan implements a habitat equivalency analysis that places a dollar cost on the value of wildlife habitat that will be lost to the mine’s development.

In January 2018, Itafos acquired the Conda Phosphate Operations near Soda Springs for $100 million from Agrium Inc., Calgary, which now is part of Nutrien Ltd., Saskatoon

The U.S. Federal Trade Commission required Agrium to divest its Idaho mine and Conda plant to ensure that Nutrien did not unduly control phosphate fertilizer manufactured in Idaho but sold in the Midwest. Conda produces about 550,000 mt/y annually of MAP, super phosphoric acid, merchant grade phosphoric acid, and specialty products.

In addition to the Rasmussen Valley Mine, Itafos has indicated to the BLM that it is interested in securing the required permits to develop the Husky-North Dry Ridge surface mining project in Caribou County and the Paris Hills underground phosphate deposit not far from Bear Lake on the Idaho/Utah border. Those two properties were previously owned by Agrium and Stonegate Agricom, respectively.

The Rasmussen Valley Mine on the Caribou/Targhee National Forest about 18 miles northeast of Soda Springs in Caribou County posed challenges to BLM because of its potential for environmental impacts on nearby tributaries of the Blackfoot River, whose headwaters are near the mine. Half of the approved mining activities also will occur within the Idaho Fish & Game’s Blackfoot River Wildlife Management Area.

The federal phosphate lease for the Rasmussen Valley Mine was held by Nu-West Industries Inc., doing business as Agrium Conda Phosphate Operations. Nutrien retained all the historic and depleted legacy mine sites that belonged to Agrium and will be responsible for any mine cleanup activities at those sites.

The Rasmussen Valley Mine lease grants exclusive rights to develop 541 acres of new disturbance with fewer environmental impacts, extending the mine’s life by an additional 10 months from its original application.

The approved plan includes a 2.4 mile-long pit to recover phosphate. Access points, power lines, and haul roads will be constructed. Parts of the mine plan were completely redesigned to resolve and eliminate environmental issues. It includes developing a water management plan and constructing ancillary facilities, including a fuel storage area, water supply wells, and runoff sediment control structures.

The Sagebrush Steppe Land Trust – a non-profit conservation organization serving seven southeastern Idaho counties – will coordinate and administer the Southeast Idaho Wildlife Management Fund to increase the conservation value and productivity of wildlife habitat in the area. A habitat improvement team consisting of natural resource, land management, and tribal trustees will award funds to successful applicants.

“This fund provides tremendous opportunities for land owners and managers to enhance, restore, and conserve wildlife habitat on their property,” said Sagebrush Steppe Land Trust Executive Director Matt Lucia.

Trustees include Idaho Fish & Game, Idaho Department of Lands, Idaho Department of Environmental Quality, Caribou/Targhee National Forest, BLM, U.S. Fish & Wildlife Service, and the Shoshone-Bannock Tribes.

An application period opened on April 1 and will close on May 31. An open house will be held on May 1 at the Idaho Fish & Game’s regional office in Pocatello to inform the public about request for proposal requirements, the scoring process, and time lines for awarding and distributing funds.

EuroChem Eyes Tatarstan Nitrogen Producer

Europe, Methanol, News, News Briefs, Nitrogen, Russia

EuroChem Group AG, Zug, Switzerland, confirmed that it is evaluating a proposal for indebted nitrogen fertilizer and methanol producer Ammoni in Russia’s Tatarstan Republic, according to a Bloomberg report, but said it is too early to comment further.

It is understood to be one of two companies eyeing Ammoni, Russia’s Kommersant business daily, citing undisclosed sources, reported early this week. Russian oil major Lukoil is reported to be the other interested party. Others, reportedly including Uralchem, were said to have shown some earlier initial interest in the Ammoni assets.

Both EuroChem and Lukoil are said to be offering $1 billion for the Tatarstan-based producer, although the nature of the deal is unclear.

Ammoni’s shareholders are understood to have been looking for an investor for some time, and also have considered selling the entire company, according to the sources cited by Kommersant. Russian state-owned development bank VEB.RF, which holds a 22.8 percent interest in Ammoni, is reportedly owed RUB100 billion (approximately $1.5 billion) by the company.

Ammoni, based at Mendeleevsk, approximately 1,000 km east of Moscow, was established in early 2016 to operate newly-launched production facilities, and evolved out of nitrogen producer Mendelyeevskazot LLC. Ammoni has nameplate capacity of 715,000 mt/y of ammonia without methanol production or 487,300 mt/y of ammonia with integrated production (and 233,800 mt/y of methanol), 717,500 mt capacity for granular urea, and 380,000 mt/y for ammonium nitrate, according to its website.

EU Provisional UAN Duties in Force

Caribbean, Europe, News, News Briefs, Russia, U.S., UAN

As announced last month, the European Commission has imposed provisional antidumping duties on imports of urea ammonium nitrate (UAN) originating from Russia, Trinidad and Tobago, and the U.S. into the European Union, with the measures coming into force on April 12, the day following the publication of the implementing regulation in the Official Journal of the EU, as is the Commission’s practice.

The Commission has imposed rates of duty ranging from 34 percent for all Russian producers except Acron, which faces a 31.9 percent duty; 22.6 percent against U.S. producers, including CF Industries Holdings Inc.; and 16.3 percent against Trinidad and Tobago’s Methanol Holdings (Trinidad) Ltd. and for all other Trinidad and Tobago producers. EuroChem’s Novomoskovsky Azot and Nevinnomyssky Azot face a 34 percent duty. The antidumping levies are expressed on the CIF Union border price, customs duty unpaid.

The Commission launched its antidumping investigation in August of last year, following a complaint filed by Brussels-based Fertilizers Europe on behalf of 55 percent of the EU UAN solutions industry production (GM Aug. 17, 2018).

Last month, the Commission reported that it had found sufficient evidence that UAN imports from the three countries are being dumped in the EU, and that exporting producers from those nations practice dumping (GM March 22, p. 1). It also upheld that there is enough evidence of alleged injury to the EU’s UAN industry, including a decline in market share and “a negative development of other key performance indicators.” It consequently announced its intention to impose provisional antidumping measures on imports of UAN originating from the three affected countries.

The provisional antidumping measures will apply for a period of six months, during which time the Commission will complete its investigation. It has until Oct. 11 to announce the imposition of any definitive measures, which usually last for five years. The Commission said in view of its findings at this provisional stage, the registration of UAN imports coming into the EU from the three countries, which began on March 22 for a three-week period, has now ceased (GM March 22, p. 1).

It said no decision on possible retroactive application of antidumping measures has been taken out at this stage of the proceedings, and that such a decision will be taken at the definitive stage.

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