Binding Sales Agreement Inked for Sale of Stake in Eritrean SOP Project

China’s state-owned construction firm Sichuan Road and Bridge Group Co. Ltd. (SRBG) has agreed to a binding agreement to buy 50% of the Colluli Mining Share Co. (CMSC), from Australia’s Danakali Ltd. for US$166 million, according to a Jan. 12 statement by Danakali.

The sulfate of potash (SOP) project, located in Eritrea, East Africa, is 100% owned by CMSC, a 50:50 joint venture between Danakali and the Eritrean National Mining Corp. Danakali announced in October that it had executed a term sheet with SRBG for the sale (GM Oct. 7, 2022).

Danakali said the parties aim to complete the transaction in the second quarter of 2023.

Danakali expects to receive US$122 million from the deal after taxes, and pending shareholder approval it plans to distribute 90% of net proceeds to shareholders. It expects to continue as a listed company to identify new projects and potential alternative growth opportunities.

Bion Announces Beef/Waste Treatment Project

New York City-based Bion Environmental Technologies Inc., a developer of livestock waste treatment technology, and Olson Farms/TD Angus, North Platte, Neb., on Jan. 9, announced a letter of intent to develop a 45,000-head sustainable beef cattle feeding operation near North Platte, Neb.

The project will consist of three of Bion’s 15,000-head modules that will include barns with solar panels, manure collection and conditioning, biogas recovery and upgrading, ammonia capture and production of organic fertilizer products, and clean water recovery.

Bion said all processes and performance will be third-party verified, USDA-certified, and recorded on blockchain, which will support a transparent and sustainable-branded premium product with dramatic reductions in impacts to air, water, and soil.

Bion and Olson Farms/TD Angus will work together to create a definitive joint venture in early 2023, with construction anticipated to commence in the second half 2023. That timeline is expected to produce initial beef and coproduct revenues by the end of 2024 that will ramp up quickly in 2025 to up to 135,000 head of annual production.

Yara Meets Its European Fertilizer Demand Despite Gas Crunch

Yara International ASA, Europe’s largest fertilizer maker, said in an interview with Bloomberg that it has averted supply shortages in recent months, despite curbing production capacity. Numerous European fertilizer plants were forced to shut in 2022 as costs surged for natural gas. However, prices began to retreat late last year, helping Yara keep operating approximately 57% of its ammonia production capacity as of the third quarter, versus 35% it had warned about in August.

European farmers spread most of their fertilizer for the growing season in spring.

“I’m not aware of any significant shortages that we had in the last few months,” Yara CEO Svein Tore Holsether said. “We’re working around the clock to make sure we can supply to as large extent as possible for this season as well.”

Warm winter weather sent European gas prices to a one-year low last week, although he cautioned “how quickly that can change.” The company also has to weigh other factors before restarting operations, as it is expensive to stop and start plants. Yara will give its next capacity outlook in February.

It has also called for joint action to reduce fertilizer and food dependency on Russia following the outbreak of the war in Ukraine and stopped sourcing potash from Belarus, formerly its key supplier, in line with sanctions. Still, Belarusian potash is finding its way into markets through different channels and routes, he said.

SQM Invests in Australia’s Azure Minerals

Mineral developer Azure Minerals Ltd., West Perth, Western Australia, said on Jan. 10 that Chile’s SQM Inc., via its wholly-owned subsidiary SQM Australia, will make a cornerstone investment of up to A$20 million to acquire a 19.99% interest in Azure through a two-stage transaction. SQM has made an initial A$4.2 million investment.

Subject to the satisfaction of certain conditions precedent, SQM will invest a further A$15.8 million to hold a 19.99% interest in Azure. The junior said the SQM investment is a strong endorsement of the lithium potential of the company’s Andover Project in Western Pilbara and highlights the upside potential for Andover to grow into a globally significant lithium mining and processing operation. Andover also contains deposits of nickel, copper, and cobalt.

Univar Draws Interest from Apollo, Platinum

US chemical distributor Univar Solutions Inc. has attracted interest from potential bidders, including Apollo Global Management Inc. and Platinum Equity, according to Bloomberg, citing individuals familiar with the matter. Univar ended talks with Brenntag SE earlier this month (GM Jan. 6, p. 2; Dec. 2, 2022), saying it would continue talks relating to “other indications of interest.”

The private equity firms have been studying the business, according to the sources. The interest is reported to be preliminary and there is no certainty they will proceed with bids, the sources said, adding that Univar has not made a final decision on a sale and could opt to remain independent.

A take-private deal for Univar would incur less antitrust risk than a merger with a peer, and would likely make it easier to restructure.

With one of largest private transportation fleets for chemicals in the world, Univar has a market value of about $5.5 billion. The stock rose 3.3% to $33.60 at 3:07 p.m. in New York trading on Wednesday, Jan. 11.

The company, which is led by CEO David Jukes, merged with rival Nexeo Solutions Inc. in 2019 and then sold its plastics business in that same year.

Representatives for Apollo, Platinum, and Univar declined to comment.

Trammo GmbH – Management Brief

Trammo GmbH, Zurich, Switzerland, on Jan. 11 announced that Walter Singer has joined the company as Vice President, Urea Product Manager. He will be responsible for worldwide trading activities in urea and other finished fertilizers. The initial focus will be on the European market with supply sourced from Uzbekistan, Kazakhstan, Azerbaijan, and Turkmenistan via Trammo’s Multi-Modal Terminal in Batumi, Georgia, which has opened a new logistics corridor for transit of finished fertilizers and other products by vessels, barges, and railcars from Central Asia to the West.

Trammo said that Singer, who has been involved in the commodity trading business for more than 20 years, brings a wealth of experience to the company. He joins Trammo from EuroChem Group AG, Zug, Switzerland, where he was Global Head of Urea, responsible for managing the urea product line and trading operations.

“On behalf of the company and its Board of Directors, I would like to welcome Walter to Trammo,” said Vildan Bekirov, Trammo’s Executive Vice President, Product Manager of Sulfur and Finished Fertilizers. “Walter has strategic and trading experience in finished fertilizers to help grow the business and will add immediate value to the group.”

“We are delighted that Walter has joined the company and will help us build on the success of our terminal in Batumi, Georgia, as a route for the transit of urea and other finished fertilizers from Central Asia,” said Edward Weiner, Trammo President and CEO. “Finished Fertilizers have been in Trammo’s DNA for over a half century, and we are excited to be expanding the business.”

Twenty-One Companies in Running for USDA Fertilizer Production Grants

USDA on Jan. 9 announced that it will soon begin accepting public comments on environmental and related aspects of 21 potentially viable projects to increase fertilizer production across the US totaling up to $88 million. These applicants have requested grant funding through the first round of USDA’s newly established Fertilizer Production Expansion Program. The $500 million program was announced last year (GM Sept. 30, 2022).

USDA is considering fertilizer production projects in Alabama, Arizona, Colorado, Florida, Iowa, Louisiana, Massachusetts, Minnesota, Missouri, Montana, Ohio, Oregon, Texas, Washington, and Wisconsin. The public is invited to provide comments regarding the 21 FPEP applicants listed below.

USDA said to consider providing project-specific comments or information relevant to the National Environmental Policy Act of 1969 (NEPA) or Section 106 of the National Historic Preservation Act of 1966 (NHPA) that should be considered as part of the review process on these projects.

Submit project-specific comments to FPEP@usda.gov by Feb. 8, 2023, at 11:59 p.m. Eastern Time. While commenters may not receive a direct response, comments will be considered. For questions about this process, please email FPEP@usda.gov.

The USDA said the program is part of a whole-of-government effort to promote competition in agricultural markets. The funds are being made available through the Commodity Credit Corp.

The grant program will support fertilizer production that is: independent, and outside the orbit of dominant fertilizer suppliers; made in America; innovative; sustainable; and farmer-focused.

Eligible entities are for‐profit businesses and corporations, nonprofit entities, Tribes and Tribal organizations, producer‐owned cooperatives and corporations, certified benefit corporations, and state or local governments. Private entities must be independently owned and operated to apply.

The maximum award is $100 million. The minimum award is $1 million. The grant term is five years.

Alabama

Pursell Agri-Tech LLC, Sylacauga – working capital for existing, commercially operational production; no new construction involved.

Arizona

        Bio Gro Inc., Buckeye – 27-acre site will have tanks or concrete beds and holding pond, which will total 2.6 acres of concrete construction.

Colorado

        Table to Farm Compost LLC, Durango – Compost production to be scaled up from December 2022 to December 2027. Only construction for the project is power interconnection.

Florida

        Sunshine Organics and Compost LLC, Jacksonville – Funds would be used on one acre for mostly equipment, though a portion will be used to expand existing infrastructure and to build concrete retaining walls around composting area.

Iowa       

        Landus Cooperative, Boone – Assistance to build state-of-the-art facility to manufacture and distribute chemical and seed products. Facility will manufacture a foliar, slow-release nitrogen product that will decrease in-ground nitrogen application rates and increase overall environmental and financial efficiency of farms.

        Progressive Ag Cooperative, Northwood – New fertilizer facility will include a total dry fertilizer capacity of 12,712 st in a rod-less bin design with 11 bins in total (5 macro and 6 micro bins) and cover 14,000 square feet. Factory equipment will also be included.

Massachusetts

        AMT Bioproducts Corp., New Bedford – Project involves construction of Abbeville production facility, which will be approximately 16,000 square feet. Project involves pouring of concrete pads for loading dock and for the plant.

        Black Earth Compost LLC, Manchester – Construction of 60×150-foot building adjacent to Manchester Town landfill that will manage the initial stages of transforming food scraps into compost. Project includes various equipment that helps get the finished compost to farmers to be cured on their land.

Minnesota

        Northstar Lime LLC, Crookston – Renovate a 46,000 square foot building and construct a new building (42x40x34x24 feet). Install devices including one to create biochar as well as filtration bag house. Additional equipment needed for moving materials from outside to inside for processing.

Missouri

        Elm Dirt LLC, Grandview – Rent a 45,000 square foot warehouse on 0.5 acres in Kansas City and purchase additional equipment to allow the manufacture of more liquid fertilizer. Any warehouse improvements would be minor. Project will purchase and install tanks, pallet racks, liquid solid separators, and infrastructure inside warehouse.

        Ostara St. Louis Ltd., St. Louis – A portion of the project funds will be used to complete construction of Ostara St. Louis Ltd.’s fertilizer manufacturing plant. A total of 14,000 square feet of building footprint expansion on the site are expected to be part of the project. This construction will be supported on a concrete slab built on augur cast piles and will be housed in a pre-engineered metal building. The remainder of the funds would be used for working capital to support staffing up, commissioning, raw materials procurement, and initial production inventory management.

        Palindromes Inc., Unionville – Purchase and construct two new fertilizer processing systems and two new anaerobic digestion systems.

Montana
        Farmers Union Oil Co. of Circle, Circle – Funds will be used as working capital to fill the newly-constructed 8,500 st fertilizer plant. Funds will also be used for equipment and technology.

Ohio

        Earth Peak Organics LLC, Dublin – Procurement of necessary equipment for aerobic digestion technology to create natural fertilizer digestate from local food waste. Minimal facility modifications will be implemented.

Oregon

        True Organic Products Inc., Boardman – Grade area east of existing building for raw commodity storage bunkers, pellet processing building, and finished pellet storage bunker building. Provide and install said buildings and processing equipment and support equipment. Supply new upgraded facility electric service and support equipment.

Texas

        BioXRG LLC, Bryan – New construction of walls and roof for bioprocessing building, assembly of bioprocessing equipment, maintenance shop, laboratory, and employee areas.

        PCI Nitrogen, Pasadena – Funds will be used to build a liquid fertilizer production facility and storage. Included are construction of an 85×40 tank for 10,131 st of APP, 60×30 tank for 4,898 st of sulfuric acid; and upgrade of an existing tank for 5,397 st of super phosphoric acid.

Washington

        Perfect Blend LLC, Othello – 4,000 square foot addition to existing building. It also includes equipment and eight 25,000 gallon tank storage, as well as working capital.

Wisconsin

        Black’s Valley Ag Supply Inc., Durand – Construction of a new dry fertilizer storage and blending facility, including new blending, receiving, loading, and unloading equipment. Funds would also be used for green initiatives such as solar panels, as well as equipment and technology need in the facility. The current facility produces 20,963 st/y of dry fertilizer.

        Dairy Dreams LLC, Casco – Install state-of-the-art Nutrient Concentration System and pelletizing system, which will process manure inputs into organic liquid and pellet fertilizers.

        The Delong Co., Elkhorn – Removal of existing feed mill and three other buildings. Construct a new dry fertilizer warehouse, liquid fertilizer dike with tanks, and liquid fertilizer loadout building, which will be constructed on existing concrete pads.

CHS 1Q Income Up 73.1% on Strong Energy Results; Wholesale Crop Nutrient Volumes Off

CHS Inc. reported net income of $782.6 million on sales of $12.8 billion for the first-quarter ending Nov. 30, 2022, up 73.1% from the year-ago $452 million and $10.9 billion, respectively. The Energy segment saw a significant increase in pretax earnings compared to year-ago results. Ag and Nitrogen Production earnings were up, but relatively flat compared to year-ago figures.

“The US agricultural industry has benefited from ongoing strong global demand for grain and oilseed commodities,” said Jay Debertin, CHS President and CEO. “Our continued strong earnings are attributable to market dynamics and supported by our investments on behalf of our owners in infrastructure, supply chain capabilities, and innovative technology that drive efficiency and operational improvements. As we enter 2023, CHS remains well-positioned to maximize value for our member cooperatives, farmer-owners and customers.”

Nitrogen Production pretax earnings were up slightly, to $96.9 million from the year-ago $96.6 million. CHS said the increase reflects continued favorable performance of its strategic investment in CF Nitrogen due to strong global demand for urea and UAN.

Ag pretax earnings were $287.3 million on sales of $9.63 billion, up from the year-ago $286.4 million and $8.57 billion, respectively. CHS reported strong global demand and constrained supply for grain and oilseed. It said there were improved margins in oilseed processing due to robust demand, as well as mark-to-market gains.

The cooperative said there were lower margins on grain and oilseed commodities, driven by unfavorable mark-to-market impacts, as well as less favorable pricing for wholesale agronomy products, which experienced less favorable pricing due to global market conditions.

CHS saw decreased volumes across most of the Ag segment due to numerous factors, including drought conditions in portions of its trade territory. Decreased volumes in grain and oilseed, feed and farm supplies, wholesale agronomy, and renewable fuels product categories contributed to $304.7 million, $215.8 million, $147.7 million, and $110.0 million decreases in revenues, respectively.

Wholesale crop nutrient volumes were down 11.6%, to 1.612 million st from the year-ago 1.823 million st.

Energy pretax earnings were $396.6 million on sales of $3.11 billion, up from the year-ago $69.2 billion and $2.30 billion, respectively. CHS cited improved refined fuels market conditions, including higher refining margins and discounts on heavy Canadian crude oil, partially offset by higher renewable energy credit costs and increased refinery maintenance expenses.

It said higher refined fuels and propane volumes were driven by strong demand due to more favorable weather conditions during the fall harvest compared to the year-ago quarter. However, lower propane margins resulted from hedging-related impacts due to volatile pricing in the quarter.

Nutrien-Backed Alaska Blue Ammonia Project Continues Assessment Despite DOE Snub

The state-owned Alaska Gasline Development Corp.’s (AGDC) said it continues to assess a major blue hydrogen/ammonia project for the state despite a negative notification decision by the US Department of Energy (DOE) on AGDC’s proposed Alaska Hydrogen Hub.

AGDC said on Dec. 30 that the concept paper it and other Alaska organizations submitted in November received a “discourage” result for filing a full application. As a result, AGDC does not plan on submitting a formal hydrogen hub application when applications are due to DOE in April 2023.

AGDC’s concept paper proposed leveraging $850 million in federal incentive funding to enable an additional $3.75 billion in non-federal investment to produce up to 1,600 mt/d of blue hydrogen. The Alaska Hydrogen Hub was one of 79 submissions received by the DOE that requested nearly $60 billion in federal funds.

DOE has envisioned selecting six to ten hydrogen hubs and awarding $7 billion in federal funding to support the production and delivery of clean hydrogen energy to support US emissions reduction goals.

Organizations supporting the AGDC Hub plan included Agrium US, a subsidiary of Nutrien Ltd.; Salamatof Native Association; the University of Alaska Fairbanks’s Alaska Center for Energy and Power (ACEP); and the Alaska Carbon Capture, Utilization, and Storage (CCUS) Consortium, which includes ARC Energy Services LLC; Oil Search (Alaska) LLC, a subsidiary of Santos Ltd.; and Storegga. AGDC was to act as the prime recipient/consortium representative for an unincorporated consortium of organizations that will comprise the Hub.

In October, AGDC signed a Memorandum of Understanding (MOU) with two Japanese companies, Mitsubishi Corp. and TOYO Engineering Corp., and Cook Inlet natural gas producer Hilcorp Alaska to assess the potential of utilizing North Slope natural gas – which AGDC said is the largest untapped natural gas resource in North America – to produce blue ammonia in the Cook Inlet region of Southcentral Alaska (GM Oct. 7, 2022).

The gas would be transported via a long-proposed 807-mile pipeline to Nikiski on the Kenai Peninsula. The project has the potential to liquefy some 20 million mt/y of LNG for export, as well as supply the long-idled Nutrien Kenai plant for the manufacture of blue ammonia.

Nutrien’s plant would serve as the initial production site for the blue hydrogen and ammonia. AGDC said a phased restart of both idled ammonia units would yield 3,500 mt/d of ammonia, which equates to 600 mt/d of hydrogen. Annual production would be 1.26 million mt/y of ammonia consisting of 221,000 mt/y of hydrogen.

AGDC said a possible expansion could more than double the daily ammonia production at the Nutrien plant to 8,900 mt/d (1,600 mt/d hydrogen), with total annual ammonia production of 3.25 million mt (571,000 mt/y hydrogen). AGDC said this would represent 6% of DOE’s 2030 hydrogen production goal of 10 million mt/y.

Nutrien idled the Kenai plant due to limited local natural gas availability in Cook Inlet. AGDC put gas needed for the first phase of production at the Kenai plant as 150 million standard cubic feet per day (MMscfd), which could increase up to 375 MMscfd in the expansion.

AGDC said it has been working collaboratively with Nutrien, which it called a key teaming partner, and its Kenai plant, for the past two years on several technical and commercial development initiatives involving natural gas feedstock, plant restart alternatives, and joint carbon reduction concepts. These efforts include the private sector-led Cook Inlet Blue Ammonia Feasibility Study.

AGDC said Nutrien is currently completing the preliminary engineering study for the restart of the plant, which is necessary to determine the basis of design and program plan to address major cost, schedule, and supply chain challenges and risks. The plant has maintained its operating permits, including air permits, to reduce permitting risks with a plant restart.

AGDC said priority engineering and design activities at the Nutrien plant will focus on upgrades and refurbishment of the two existing steam methane reformers, as well as the support of utility functions.

AGDC said it has worked with ACEP and Alaska CCUS Consortium parties since 2021 on Alaska hydrogen development and joint carbon capture and sequestration opportunities. It said the carbon can be captured and sequestered in secure underground geologic formations, and that the Cook Inlet basin has been identified by scientists as having world-class carbon sequestration potential.

The parties said another Kenai advantage is that round-trip tanker transport from Alaska to key Asian markets is more than 12,000 miles shorter than from the US Gulf Coast, reducing costs and shipping emissions. They also said Alaska has a 45-year record of success exporting LNG to Asia.

Once the Nutrien blue ammonia is up and running, AGDC said Alaska has unlimited potential to eventually use renewable energy to produce green ammonia via electrolysis. A study is currently underway to quantify Cook Inlet’s offshore wind, tidal and geothermal potential, as well as Alaska’s onshore wind and solar expansion. AGDC said there is currently a multitude of large, private sector-led renewable energy projects in development in the state.

Genesis Picks Site for Urea Plant

Genesis Fertilizers LP, Saskatoon, announced on Jan. 11 that it has chosen Belle Plaine, Sask., as the site for its proposed 700,000 mt/y urea plant (GM June 11, Oct. 22, 2021). The project will also include ammonia production to supply the urea plant. Genesis said it is proceeding to secure land to accommodate the building of this facility. The company also contemplates a network of distribution facilities or SuperCenters across the Prairies.

“Farmers across Canada, together with our management team, have been looking for the right opportunity to move this project forward,” said Jason Mann, Genesis President. “The Saskatchewan Government’s commitment to creating a competitive business environment with a strong suite of incentives will support the agriculture sector and help this project address the challenge of high fertilizer prices.”

Genesis Fertilizers was founded on a business model whereby farmers will not only be customers of the proposed new fertilizer plant, but also be the majority owners. “Canadian farmers will be the real winners with Genesis Fertilizers positioned to move forward. Whether from B.C., the Prairies, or Eastern Canada, if this project is completed, being a farmer-investor will help farming operations manage their fertilizer costs, supply availability, and ultimately keep industry profits local,” said Barrie Mann, Genesis Vice President, Investor Relations.

Genesis said it has significant work ahead in the capital raise and engineering design process to move the project to the construction phase, however, it said choosing the site and gaining support of the province of Saskatchewan is a significant milestone. It is currently in the process of raising equity and debt capital to facilitate the engineering and construction of the urea plant, along with six distribution facilities.

Genesis already has one of its SuperCenter distribution facilities in operation in Belle Plaine (GM June 11, 2021). It plans for the urea plant to be at the same location.

Genesis estimates the $1.7 billion project will, if constructed, generate over 5,000 man-years of employment during the design and engineer phase, combined with the estimated 32-month construction period. The ongoing operations would support over 130 full-time jobs when the proposed plant begins producing urea fertilizer. Financial spin off effects during and after construction are expected to be significant for all of Western Canada, which includes fabrication, services, transportation, and ongoing tax revenues.

Genesis is a privately held limited partnership, and its securities do not trade on any exchange.

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