Filip Grzegorczyk, Vice President of the Management Board of Grupa Azoty SA, has assumed the role of Vice President at Brussels-based Fertilizers Europe, which represents the majority of Europe’s major fertilizer manufacturers. The current term of the Fertilizers Europe Board runs until 2024.
Mumbai-based UPL, a global provider of crop protection and other specialty agricultural chemicals and biosolutions, announced that David C. Elser has been appointed as Regional Head for North America. UPL said Elser has extensive industry experience through various leadership positions, with expertise in customer-focused initiatives, agronomic solutions development, diverse product portfolio management, and strategic supply chain operations.
Port of Açu, the largest deep-water industrial port complex in Latin America, has signed a partnership with Japanese-Brazilian company Toyo Setal to jointly develop a nitrogen fertilizer plant at the company’s port site in São João da Barra, in northern Rio de Janeiro, according to Valor International and Port of Açu’s LinkedIn page.
The companies will work together in structuring, developing, licensing, and finding strategic investors for a future plant with an estimated capacity of 1.38 million mt/y of urea and 781,500 mt/y of ammonia.
The plant will use natural gas as the feedstock for the first phase, using Petrobras’s Route 3 gas pipeline, with the possibility of producing blue and green fertilizers from hydrogen in the next phases, Port of Açu said. This year, Port of Açu began the environmental permit process for a low-carbon hydrogen cluster in Açu with an installed capacity of 4 gigawatts.
“The partnership with Toyo Setal allows us to take a step forward in our strategy to establish Açu as a fertilizer production hub in Brazil, contributing to the expansion of domestic production and balancing our dependence on imports,” said José Firmo, CEO of Port of Açu.
Toyo Setal was founded in 2012 as a partnership between Japanese company Toyo Engineering Corp. and the Brazilian firm Setal Óleo e Gás. According to Valor International, Toyo Setal uses its own technology to produce urea and has partnerships with other companies to produce ammonia, with 87 ammonia and 112 urea projects currently in its global portfolio.
Port of Açu began handling fertilizers in 2021, Valor International reported, when it carried out the first operation in the state of Rio de Janeiro. The port has handled about 100,000 mt of fertilizer since then, and added two more warehouses this year, quadrupling storage capacity to 110,000 mt and doubling the terminal’s bonded area to 360,000 square meters.
CHS Inc. on July 13 reported third-quarter net income of $547.5 million, down from last year’s record $576.6 million. Nine-month net income for the company climbed to $1.6 billion on revenues of $36.1 billion, however, up from last year’s $1.2 billion and $34.4 billion, respectively.
Favorable market conditions boosted the company’s Energy segment in the third quarter, while lower prices weighed on margins in CHS’s Ag business.
“Consumer demand remains strong for energy and oilseed products, and our joint venture investments continue to contribute to strong earnings and round out our well-diversified portfolio,” said Jay Debertin, CHS President and CEO. “As we enter the end of our fiscal year, opportunities remain for profitability and growth in the agriculture industry, and CHS is well-positioned to maximize value for our member cooperatives, farmer-owners and customers.”
The company’s Energy segment posted pretax earnings of $199 million for the third quarter, up $35.8 million from last year, fueled by strong refining margins and favorable pricing in CHS’s refined fuels business. The higher margins were partially offset by decreased fuels production volumes due to planned maintenance at CHS’s Laurel, Mont., refinery, however.
The company’s Ag segment posted third-quarter pretax earnings of $233.5 million, down $40.2 million from last year’s third quarter, due to market-driven price decreases and lower margins, particularly for wholesale and retail agronomy products. Strong meal and oil demand contributed to increased margins in CHS’s grain and oilseed and processing product categories, however.
CHS reported that its CF Nitrogen investment delivered pretax earnings of $56.3 million during the quarter, down $121.9 million from last year due to lower equity income attributed to decreased market prices for urea and UAN.
CHS’s Corporate and Other segment reported pretax earnings of $69.3 million for the quarter, up $45.8 million from last year due to improved equity income from the company’s Ventura Foods joint venture and increased interest income due to higher interest rates.
Nine-month earnings by segment included Energy at $860 million, up from $243 million last year; Ag at $439 million, down from last year’s $615 million; Nitrogen Production at $235 million, down from $429 million last year; and Corporate/Other at $154 million, up from $48.6 million last year.
Intrepid Potash Inc. announced on July 10 that it has completed the Well 45 and Well 46 drilling projects at its solar solution potash mine in Moab, Utah, in time for the 2023 evaporation season. The company said both projects were completed on schedule and build on the success of its Phase One HB Injection Pipeline Project, which was announced on June 21 (GM June 23, p. 1).
Intrepid said Well 45 and Well 46 will help it deliver on key goals of maximizing brine availability and underground brine residence time, which is expected to lead to improved brine grade and higher and more consistent production. The company continues to expect its 2023 capital program to be in the range of $60-75 million.
“Successfully executing both projects required a very high level of technical expertise and our new design for Well 45 led to significant cost savings compared to our previous horizontal caverns due to the single-well design,” said Bob Jornayvaz, Intrepid’s Executive Chairman and CEO.
Intrepid said Well 45 is a newly designed, single-well cavern system with three interlocking laterals that targets new ore in Potash Bed 9. This single-well cavern is designed to have a long operational life with the laterals completed over approximately 18,000 feet of horizontal drilling. The company said brine measurements have shown good availability of high-grade ore.
After cavern development, Intrepid said it will switch to injecting salt-saturated brine and begin selective solution mining, with the benefit of Well 45 beginning in the 2024 evaporation season. The total capital cost of Well 45 was approximately $11.5 million, which Intrepid said was approximately 40% lower than its previous two-well cavern systems.
Intrepid said Well 46 is a horizontal drilling project designed to target a high-grade brine pool in the original mine workings in Potash Bed 5, which was previously accessed by a nearly 50-year-old well that was plugged-and-abandoned. The capital cost was approximately $5 million.
Intrepid said it expects Well 46 to contribute to its 2023 potash production when harvest begins in the third quarter; create medium- to longer-term wellbore access to drill additional laterals to target unmined ore in Potash Bed 5 or access other stranded brine pools; and serve as a backup for other injection/extraction wells.
“While our Moab potash operation has been our most consistent production asset, these projects are expected to help ensure this continues to be a world-class operation for many years to come,” Jornayvaz said. “Our focus continues to be successful project execution across our operations, and I’m very encouraged by the results so far.”
Incitec Pivot Ltd. (IPL) confirmed that it has received a number of approaches for the potential acquisition of its fertilizer business. The news follows speculation that the group may be considering a potential sale amid doubts over whether its plan to spin-off Incitec Pivot Fertilisers (IPF) and the Dyno Nobel explosives business into standalone companies will succeed.
IPL in a July 12 Australian Securities Exchange (ASX) release said its Board is considering a potential sale alongside the ongoing proposal to structurally separate IPF and the Dyno Nobel explosives business, and that it will continue to assess all options “to ensure shareholder value is maximized.”
IPL’s shares jumped as much as 8.3%, the most since Nov. 15 last year, after the Melbourne-based group confirmed the unsolicited interest from potential buyers. IPL stressed that discussions are incomplete, however, and there is no certainty that any agreement will be reached or that any transaction will occur.
IPL declined to identify any interested parties, but The Australian Financial Review reported on July 11 that at least one Asia-based, state-owned enterprise has shown interest in buying IPF, with speculation focused on Pupuk Indonesia, a large fertilizer producer in the region, according to the report.
IPF is the largest distributor of fertilizers by volume in Australia, supplying 1.869 million mt to the domestic market in FY2022, down from 2.235 million mt in FY2021. It is the country’s sole manufacturer of phosphate fertilizers, producing 735,900 mt in FY2022 and 958,400 mt in FY2021.
IPL no longer produces its own urea following the closure of its Gibson Island plant in Brisbane at the end of 2022. It made the decision in late 2021 after being unable to secure “an economically viable” long-term gas supply to the facility beyond Dec. 31, 2022, when the existing contract ran out (GM Nov. 12, 2021).
However, IPL has lined up a 20-year offtake agreement for 2.3 million mt/y of granular urea from Perdaman Chemicals and Fertilisers Pty Ltd.’s Karratha plant, which is under construction on Western Australia’s Burrup Peninsula and expected to be commissioned in mid-2027 (GM April 21, p. 1).
IPL’s long-standing plan to separate its fertilizer business and Dyno Nobel has appeared increasingly uncertain after the departure last month of IPF CEO designate Christine Corbett (GM June 16, p. 26). IPL also announced in early June that its Managing Director and CEO Jeanne Johns was stepping down at the end of the month (GM June 9, p. 26).
IPL’s Fertilisers Asia Pacific saw a first-half EBIT decline of 58%, to A$107.7 million from A$256.9 million last year, mainly due to lower selling prices and softer demand, as well as higher costs (GM May 19, p. 24). Those cost pressure include buying natural gas on the spot market for its Phosphate Hill ammoniated phosphate fertilizer operation in Queensland after gas supplier Power and Water Corp. (PWC) declared a reserve shortfall.
As of June 9 (GM June 9, p. 25), IPL said it expects the total FY2023 EBIT impact from sourcing shortfall gas to be A$75-$90 million (approximately US$50-$60 million at current exchange rates).
The Dyno Nobel business has been faring better. Dyno Nobel Americas reported a 55% increase in first-half EBIT, to A$390.9 million, while Dyno Nobel Asia-Pacific saw a 45% rise to A$748.5 million.
The demerger plan has already been delayed once. In November IPL announced its decision to sell the Waggaman, La., ammonia plant ahead of the proposed demerger (GM Nov. 18, 2022), with CF Industries Holdings Inc. agreeing earlier this year to purchase the facility for $1.675 billion (GM March 24, p. 1).
IPL announced in May 2022 that it had revived plans to separate its IPF and Dyno Nobel businesses to create two separate companies, and that it was targeting to demerge its fertilizer and mining explosives divisions into two separate ASX listed companies by mid-2023 (GM May 27, 2022).
CTI analysts, as cited by a Dow Jones, reported on July 12 that IPL’s spinoff of its fertilizer business may offer “incremental valuation upside,” but noted that “there are risks given the weakness in urea and DAP pricing.” According to the report, the CTI analysts calculate IPL’s fertilizer business is worth A$1.8 billion (approximately US$1.2 billion at current exchange rates), or the equivalent of A$1.30 per share.
The J.R. Simplot Co. will spend close to $150 million on waste processing upgrades and pay a $1.5 million civil penalty to resolve alleged Resource Conservation and Recovery Act violations at its Don Plant fertilizer facility near Pocatello, Idaho, the US Justice Department and Environmental Protection Agency announced on July 11.
According to the two federal agencies, Simplot allegedly failed to properly identify and manage certain waste streams as hazardous wastes, and also violated the Clean Air Act in relation to fluoride emissions at the facility.
Under the settlement, Simplot has agreed to implement specific waste management measures it has valued at nearly $150 million, including efforts to recover and reuse the phosphate content within these wastes and avoid their disposal in a gypstack. Simplot also agreed to implement requirements to ensure gypstack stability, including a detailed plan for the future closure and long-term care of the gypstack.
Simplot also agreed to cease operation of the facility’s cooling towers no later than June 27, 2026, and replace them with one or more new cooling ponds, which the DOJ and EPA said will significantly reduce fluoride emissions to the air. Additionally, Simplot agreed to submit revised Toxic Release Inventory forms for 2004-2013 that include estimates of certain metal compounds manufactured, processed, or otherwise used at the facility.
In addition to paying the $1.5 million civil penalty, Simplot is providing $200,000 in funding for environmental mitigation work that will be administered by the Idaho Department of Environmental Quality in conjunction with the City of Pocatello and the Shoshone-Bannock Tribes. The mitigation work will address habitat degradation on the Portneuf River that has resulted in part from excess phosphorus releases, the DOJ and EPA said.
“The J.R. Simplot Company is pleased to have worked with the Environmental Protection Agency and the Department of Justice to reach this settlement,” said a statement provided to Idaho Reports from Simplot spokesperson Josh Jordan.
“This more than 500-page settlement, which took over 15 years to achieve, provides for additional recovery of phosphate in our production process and other environmental protection measures associated with the handling of our ore processing materials and wastes,” the statement said. “This settlement is part of our work to continue to provide important crop nutrients throughout North America to help feed a growing population.”
The Andersons Inc., Maumee, Ohio, announced on July 10 that it has completed the purchase of ACJ International LLC (ACJ) and its subsidiaries, an ingredient, logistics, and supply chain management company that focuses on the pet food industry. The deal was first announced on June 13 (GM June 16, p. 27). Terms were not disclosed.
“The pet food industry continues to increase its demand for high-quality and responsibly sourced ingredients,” said Weston Heide, Senior Vice President for The Andersons Trade and Processing. “This acquisition expands our portfolio of ingredients while also enhancing our supply chain services throughout the central region of the US to provide further support for our customers in the pet food markets.”
The purchase includes ACJ’s headquarters in Lake St. Louis, Mo., and its facility locations in Joplin, Mo., Webb City, Mo., and Monroe, Wisc. Verdant Partners LLC served as advisor to ACJ in the transaction.
“We are excited to be joining an organization with such a rich history and deep roots in agriculture,” said Michael Peterson, President of ACJ. “Being a part of The Andersons will provide our customers access to an expanded portfolio of ingredients and services while maintaining high standards of quality, integrity, and transparency.”
Junior sulfate of potash producer SOPerior Fertilizer Corp., Toronto, Ont., reported on July 11 that it received a notice of default on June 29 from Lind Asset Management VII LLC, a fund managed by The Lind Partners LLC.
Lind’s default notice is requesting that SOPerior pay the principal and interest due and outstanding under a Convertible Security Funding Agreement (CSFA) dated Dec. 16, 2016, as amended.
SOPerior said its proposed JV partner, Argos Investment Partners, had informed the company that it was committed to remedying the default notice by a July 10 deadline, but failed to do so. As a result, SOPerior said it is currently in discussions with Lind and is exploring alternatives. SOPerior in 2021 (GM Dec. 10, 2021) entered into a joint venture agreement for its Blawn Mountain alunite asset in Beaver County, Utah, where it plans to produce SOP by mining and processing alunite-bearing rock. At the time, SOPerior said the proposed jv’s first phase commercial production facility and future expansion phases were to be constructed on the site of an existing copper processing operation, with initial project capacity estimates of over 70,000 mt/y of SOP, 140,000 mt/y alumina, and 150,000 mt/y of sulfuric acid.
The Polish state has established a “temporary custodian” for a 19.82% stake held by a Russian businessman in Polish fertilizers and chemicals company Grupa Azoty SA, according to a July 11 Polish Press Agency (PAP) report, citing Poland’s Minister of Economic Development and Technology Waldemar Buda.
The stake is held indirectly by Viatcheslav Kantor, who is a large shareholder in Russian fertilizer producer Acron Group through related parties including Norica Holding Sàrl of Luxembourg, Opansa Enterprises Ltd. of Cyprus, and Rainbee Holdings Ltd. of Cyprus, according to a statement on Grupa Azoty’s website.
Buda said the Polish state is seeking a partner to take over the shareholding and pay compensation. Reports circulated in May that the ministry might take over the stake (GM May 12, p. 33) to deprive Acron of executing its voting rights at Azoty’s shareholder meetings following Russia’s invasion of Ukraine, according to the newspaper Puls Biznesu, as cited by Bloomberg.
In its statement, Azoty said Kantor is not a beneficial owner of the Azoty group within the meaning of the European Parliament and the European Council, and that he “neither owns nor has control over the group within the meaning of the EU sanctions legislation.”
In a July 13 statement on its website, Acron said it believes that the temporary compulsory administration imposed by the Polish ministry on its three subsidiaries is “a gross violation of both international and national law.” Acron said its companies intend to challenge these illegal actions in Polish courts, the European Court of Justice, and through international arbitration.
The Russian fertilizer group added that it has held the shares in Grupa Azoty since 2012, and to date “has not been actively involved in the company management, remaining a portfolio investor and operating strictly within the legal framework.” It said it views the actions of the Polish authorities as “unmotivated, unjust, and illegal expropriation.”
Acron added that Radosław Kwaśnicki, who was appointed as the temporary administrator, is a member of the Supervisory Board of Orlen Group’s subsidiary and held a similar position in PKN Orlen S.A. in 2014-2019.
“Therefore, the appointed administrator has a potential conflict of interest because Orlen is also a fertilizer producer in direct competition with Grupa Azoty and Acron Group on certain markets, and has recently announced its intention to acquire Grupa Azoty Puławy, a subsidiary of Grupa Azoty,” Acron said.
In a move to improve its financial position, Grupa Azoty in June inked a cooperation and non-disclosure agreement with Polish energy group Orlen SA on the potential sale of Azoty’s most profitable subsidiary, Zakłady Azotowe Puławy, to Orlen (GM June 9, p. 1).
Azoty in the past two months has warned that it may breach debt covenants at the end of the second quarter after reporting a first-quarter group net loss of Pln555 million (approximately $138 million at current exchange rates). The company on July 13 said it sees its situation as “stable with jobs not at risk,” adding that it expects “optimization of production processes and improvement of the business situation” in the third quarter.
