All Posts from January 15, 2007

Coffeyville nitrogen income off 34 percent YTD; 3Q turnaround, cracked converter cited

Featured, News, Nitrogen

Operating income was off 34 percent for Coffeyville Nitrogen Fertilizers Inc. for the first nine months ending Sept. 30, 2006, to $34.1 million from the year-ago $52 million. Net sales were up 2 percent, to $128.2 million from $125.9 million. Coffeyville did not break out figures for the third quarter; however, it is a fair bet that the year-to-date decline was due to a negative third quarter. For the first six months of the year ending June 30, operating income was up 6 percent and sales 16 percent (GM Oct. 2, p. 1).

Coffeyville attributed the nine-month decline to reduced sales volumes, increased direct operating expenses related to repairs and maintenance ($.6 million), a turnaround ($2.6 million), outside services ($.7 million), and utilities ($.9 million), partially offset by a reduction in catalyst expenses ($.6 million) and higher ammonia prices.

The company said on-stream factors (total number of hours operated divided by total hours in the reporting period) were down for the gasifier, ammonia, and UAN plants due to a July turnaround and a cracked converter in the ammonia plant. Ammonia production was off 6 percent and UAN 2 percent YTD. Ammonia prices were up 13 percent and UAN was off 2 percent.

Coffeyville-wide, results were up for the first nine months. YTD net income was $170.8 million on total sales of $2.3 billion, up from the year-ago net loss of $200.2 million and sales of $1.76 billion. YTD operating income was also up, at $267.0 million versus the year-ago $208.1 million. Coffeyville’s refinery business represents about 84 percent of company operating income.

Coffeyville announced in September 2006 a plan to sell $300 million worth of stock in an IPO called CVR Energy Inc. (GM Oct. 2, p. 1), under which the fertilizer and refinery businesses are subsidiaries. One company goal is to double UAN production to 1 million st/y. The company reports that it has expanded a spare gasifier at the ammonia plant to increase production by at least 6,500 st more per year.

Coffeyville (thousand st)

Production Year-05 9MO-05 9MO-06
Ammonia 413.5 311.3 283.9
UAN 663.3 495.7 465.0
Total 1,076.5 807.0 748.9
Sales (thousand st) Year-05 9MO-05 9MO-06
Ammonia 141.8 102.4 96.8
UAN 646.5 487.4 477.7
Total 788.3 589.8 574.5
Pricing plant gate $/st Year-05 9MO-05 9MO-06
Ammonia 324 305 346
UAN 173 172 169
On-stream factor percent Year-05 9MO-05 9MO-06
Gasification 98.1 98.3 91.7
Ammonia 96.7 96.7 87.8
UAN 94.3 94.8 87.9
Capacity utilization percent Year-05 9MO-05 9MO-06
Ammonia 102.9 103.7 94.5
UAN 121.2 121.0 113.6

Wilco purchases Oregon co-ops, plans upgrades

Featured, News, Pacific N.W.

Wilco Farmers Co-op, a grower-owned agricultural cooperative headquartered in Mt. Angel, Ore., has purchased two cooperatives at the north end of Oregon’s Willamette Valley, including the fertilizer, chemical, and seed supply business of Pacific Harvest Supply Co., based in Cornelius, Ore.

The deal, which took effect Jan. 2, also includes the Cornelius-based Dutch Country Mercantile, which offers livestock feed and supplies, pet products, and some lawn and garden supplies. Both Pacific Harvest and Dutch Country were owned by Jeff and Laura Duyck. The Duycks started Pacific Harvest in 1985 as an offshoot of their family farm, and purchased Dutch Country in 2004.

The agronomy and seed services of the newly acquired businesses will be operated by Wilco-Agriliance LLC, a joint venture company formed in 2006 between Wilco and Minnesota-based Agriliance. A Dec. 22 letter from the Duycks and Wilco CEO Doug Hoffman told customers and the 22 employees of Pacific Harvest and Dutch Country that it will be “business as usual” under the new owners.

According to local reports, the acquisition brings 1,000 Dutch Country customers and 1,100 Pacific Harvest customers to Wilco’s service area. Pacific Harvest has 15 employees and serves the north end of Oregon’s Willamette Valley, specializing in fertilizer, agricultural chemicals, and lawn and garden supplies. A Wilco spokesman told The Hillsboro Argus that the company has wanted to be in or near the Cornelius area for some time to fill out its coverage of the Willamette Valley.

Wilco also recently announced that it is building a new liquid fertilizer plant at its Mt. Angel Agronomy Center, which it referred to as “the first step in a complete upgrade in all our facilities.” As part of the new acquisition, Wilco said it plans to build a full-size retail store within 12-18 months at the Dutch Country location in Cornelius.

Wilco touts itself as the Pacific Northwest’s number one supply cooperative, serving more than 3,000 members in the Willamette Valley and Southwest Washington. The company has assets of more than $50 million and annual sales exceeding $140 million.

Wilco, which is short for Willamette Consolidated, was formed in 1967 with the merger of five Willamette Valley cooperatives. Subsequent mergers added Farmers Oil Co., Woodburn, Ore., in 1989, and West Valley Farmers, McMinnville, Ore., in 1996, which expanded the co-op’s service area west of the Willamette River to the four-county Mid-Willamette area.

Wilco expanded again in 2000 with the purchase of Eugene Farmers Cooperative, CHS Supply and Marketing in Tangent, Ore., and Harrisburg Ag Center, combining all agronomy activities of that merger in the Harrisburg, Ore., location. One year later, Wilco purchased Valley Lime of Gervais, Ore., and in 2004 purchased the Cenex Harvest States Supply retail farm store operations in Battle Ground, Wash. Wilco also acquired the Washington Agronomy Center at Chehalis, Wash., in January 2006, extending its service area 100 miles north of the Oregon/Washington border.

Wilco Agronomy currently has six locations, at Whiteson, Donald, Harrisburg, Mt. Angel, Stayton, and Chehalis, which provide a full line of agronomy products and services and employ 11 full-time agronomists. The company’s agronomy sites offer commercial quantities of custom-blended dry fertilizer, liquid fertilizer products, and a complete line of agricultural chemicals. Wilco also partners with Harvest Geographics, Canby, Ore., to offer GPS technology and precision agriculture services to its customers.

Including its retail farm stores, petroleum stations, and fuel delivery services, Wilco also operates Oregon facilities in Newberg, Oregon City, Silverton, and Canby.

Mosaic pushes back submission of 10-Q, gives some earnings details

News

The Mosaic Co. said Jan. 10 that is working hard to get its second fiscal quarter 10-Q filed with the Securities Exchange Commission by the end of January. This is later than the company indicated on Jan. 4, when it said implementing its new enterprise resources planning system would delay the filing (GM Jan. 8, p. 10). At that time, Mosaic said it thought it could get the filing complete by Jan. 16.

Mosaic did provide some earnings details last week, though not specific numbers. Like the 10-Q, its official earnings release has also been delayed. Second-quarter net sales are expected to be slightly higher than the year-ago quarter, while net earnings are expected to be equivalent to year-ago numbers.

Operating earnings for phosphate and potash will be materially lower than those reported in the year-ago period, but operating profit is expected to be reported in the offshore segment, where a loss was reported in the year-ago period.

Mosaic said it will report a large foreign currency transaction gain during the second quarter due to the weakening of the Canadian dollar.

In addition, the effective tax rate for the quarter will be materially lower than the year-ago quarter.

“Current business conditions are good, with solid demand and improved pricing for all three major nutrients, especially in North America,” said Larry Stranghoener, Mosaic’s executive vice president and chief financial officer. “We look forward to a strong second half performance.”

Corps reviewing comments on PCS mine permit

News Briefs

Aurora, N.C.-The U.S. Army Corps of Engineers is currently taking comments on a plan by PCS Phosphates to expand its current Aurora mine by 3,412 acres. Comments are due by Jan. 27. The Corps issued a draft environmental impact on the expansion last October. Pamlico County commissioners, citing PCS’s stance as a provider of good jobs to the local community, approved the PCS plan Jan. 2, but the ultimate decision rests with the Corps. PCS says the expansion is necessary as its current mine will be exhausted in 2011. Of the expansion, some 2,408 acres consist of wetlands or land adjacent to waterways, though PCS notes that only 49 acres are actually marsh or open water wetlands. PCS has widely publicized its environmental mitigation practices in the local media to qualm any fears about the expansion. The Environmental Protection Agency requires two acres of land be converted to wetlands for every acre taken. Environmentalists, led by the local Pamlico-Tar River Foundation, fear that the mitigation will take place in other areas of the state and not necessarily at the local level. It says the existing wetlands store floodwaters and that mitigation can be risky, with a high failure rate. It is also concerned that there will be increased levels of toxic metals – including cadmium, arsenic, and chromium – found in the soils used to fill the mine pit, and that these may leach into groundwater. Written comments may be sent to the Corps’ Wilmington District, Regulatory Division, Attention: File Number 2001-10096, P.O. Box 1890, Wilmington, N.C. 28402-1890.

Farmers fuss over potash mine drilling rules

News Briefs, Potash

Regina, Sask.-After ten years, farmers in the province have finally gotten word that they are prohibited from drilling oil and natural gas wells on their property near underground potash mines. The measure was enacted to prevent flooding in potash mines. Farmers are eyeing legal action as a result, according to a recent article in a local paper, The Star Phoenix. Farmers were reportedly tipped off to the situation by a gas company that had sought permission to drill and was denied. To date, according to a spokesman from Potash Corp. of Saskatchewan Inc., no such suit has been filed, and potash producers are in talks with provincial authorities.

Man killed by forklift at Mosaic’s New Wales plant

News Briefs

Mulberry, Fla.-A man working for a contractor on a turnaround at Mosaic Co.’s New Wales plant was killed Jan. 9 when he was struck in the head by a forklift driven by an employee of another contractor, according to Mosaic spokesman David Townsend. The sheriff’s department said the man may have stepped in front of the heavy-duty fork lift, which was moving and carrying a box. The man’s identity had not been released.

Spill to cost Agrium $1 million

News Briefs

Soda Springs, Idaho-Agrium Inc. officials expect that cleanup and remediation of the release of 5 million gallons of acidic water from a gypsum stack two days after Christmas at its Idaho operations will cost about $1 million. Some 85 percent of the water was retrieved. Cause of the dike failure, which triggered a quick response of equipment and workers, is still unknown, but General Manager Charles Ross says the investigation is underway and problems will be identified and corrected before spring.

Manure pile sparks 200-acre California fire

California, News Briefs

Chino, Calif.-Red Star Fertilizer Co. is facing a fine and may have to pay the costs of fighting a 200-acre fire a week ago that started from spontaneous combustion in a manure pile and caused the evacuation of campers in two nearby parks, according fire authorities. “We’ve had a lot of problems with Red Star before,” Reuben Guerrero, battalion chief with the Chino Valley Independent Fire District, told Green Markets. Guerrero said the fire initially spread to the adjacent Miramontese manure fertilizer facility and then was spread by in the dry grassy area by high winds gusting up to 70 mph and blowing consistently at 20 to 30 mph. He said the fire began Sunday morning Jan. 7, and was brought under control the following day by a total of 400 firefighters, backed by four air tankers and several helicopters. Red flags stayed up until that evening. Guerrero wouldn’t estimate how much the fine would be, but said he believes the state division of forestry may be going after reimbursement. He said both Red Star and Miramontese are in the same business, in an area covered by willow trees and mixed brush. They provide bagged manure for fertilizer and wood chips for compost. No one at Red Star could be reached for comment, according to an unidentified employee who said the company was closed.

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