All Posts from April 15, 2022

Gensource Buys Innovare Technologies for US$11.5 M

London, News, News Briefs, Potash, Saskatchewan

Junior producer Gensource Potash Corp., Saskatoon, reported on April 13 that it has reached a binding agreement to acquire 100 percent of the issued and outstanding shares of Innovare Technologies Ltd., London, a privately-held developer of patented selective solution mining and brine processing technology for the recovery of potash and other soluble minerals. The closing of the transaction, which is expected in second-quarter 2022, values Innovare at US$11.5 million.

“Gensource’s acquisition of Innovare’s shares and the integration of Innovare’s business with our own will provide Gensource with exclusive use and control of Innovare’s unique and highly sought-after selective solution mining and brine processing technology for potash development, without which the environmental benefits of modern potash production would be extremely challenging to replicate,” said Mike Ferguson, Gensource President & CEO. “The acquisition will place the company in a strong competitive position in an industry dominated by producing facilities based on conventional 1950s and older technology.”

The acquisition of Innovare’s shares will occur by way of a reorganization, whereby Innovare’s existing shareholders will transfer the shares they hold in Innovare to Gensource in exchange for new common shares of Gensource. Following completion of the reorganization, Innovare will exist as a wholly-owned subsidiary of Gensource, and Innovare’s business will be integrated with and controlled by Gensource.

Gensource has worked with Innovare over the last six years in the development of Gensource’s modular potash production module. The company’s potash project located near Tugaske, Sask., will be the first project to implement a Gensource module.

The former owners of Innovare include the corporate vehicles of the three principals, being Artisan Consulting Services Ltd, McEwan Consulting Chemical Engineering, Inc., and Ristra Consulting Inc. Gensource said the three have a combined 100+ years of industry-specific experience and have successfully developed potash projects in Saskatchewan, including being part of what is now known as K+S AG’s Bethune Mine, north of Moose Jaw, Sask.

Nutrien 1Q Results Expected to Soar

Canada, Earnings, Featured, News

Nutrien Ltd.’s first-quarter net income is expected to soar at least ten times to $1.48 billion compared to the year-ago $133 million, according to the Bloomberg Consensus, which averages the projections from major analytical firms. The actual range given by analysts was $1.26-$1.76 billion.

Higher prices are expected to boost net sales to $7.48 billion ($6.25-$8.81 billion) from the year-ago $4.6 billion.

Adjusted EBITDA is forecast at $2.675 billion, up from the year-ago $806 million. The analyst range was $2.30-$3.01 billion.

Nutrien’s first-quarter results are expected to be released after markets close on May 2.

Austin Powder Agrees to Improve Wastewater Treatment, Pay $2.3 M Civil Penalty

Eastern Cornbelt, News, News Briefs

Austin Powder Co., Cleveland, Ohio, owner and operator of the Red Diamond explosives manufacturing plant located near McArthur, Ohio, last month agreed to implement significant upgrades to that facility’s wastewater treatment operations to resolve Clean Water Act violations and to also pay a civil penalty of $2.3 million, according to the U.S. Department of Justice.

The complaint, filed contemporaneously with the settlement, alleges that since 2013 the facility has had hundreds of discharges of pollutants in violation of the effluent limitations in its permits and failed to fully comply with an earlier EPA Administrative Order on Consent that sought to resolve these concerns.

“Industrial dischargers must ensure their operations do not foul our nation’s waters,” said Assistant Attorney General Todd Kim for the Justice Department’s Environment and Natural Resources Division. “The improvements required by this settlement will greatly improve Austin Powder’s compliance with its permits and improve the health of the Ohio River and its tributaries.”

“This settlement will prevent tens of thousands of pounds of pollutants from entering Ohio streams and rivers each year,” said Acting Assistant Administrator Larry Starfield for EPA’s Office of Enforcement and Compliance Assurance. “Ohio communities will benefit from cleaner water and a healthier environment.”

Under the proposed settlement, Austin Powder will invest approximately $3 million to improve two of its wastewater treatment plants, including implementing comprehensive operation and maintenance plans. The company has already eliminated discharges from four other onsite plants, and under the consent decree will eliminate discharges from a fifth plant. These improvements will be completed on or before Dec. 31.

This agreement will improve water quality in the tributaries of Raccoon Creek and Elk Fork, both of which are tributaries to the Ohio River. Implementing the consent decree will reduce pollutants discharged from the plant into these two water bodies by approximately 84,000 pounds annually.

Koch Collaborates with Thrive

California, News, News Briefs, Southern Plains, Specialty

Koch Agronomic Services LLC (Koch), Wichita, on April 11 announced an agreement to collaborate with Silicon Valley-based SVG Ventures | Thrive, leveraging its Venture & Innovation Platform.

“Koch is excited to work with Thrive and access its expansive pipeline of innovative organizations and technologies,” said Steve Coulter, Senior Vice President of Koch Agronomic Services. “Thrive offers a capability and reach within the crop nutrient space that will help accelerate our strategy of identifying new technologies in order to create long-term value for our retail customers and growers.”

“Our engagement with Koch Agronomic Services focuses on identifying start-ups that are ready for scale and commercial impact,” said John Hartnett, Founder and CEO, SVG Ventures | Thrive. “By connecting Koch to start-ups, we can identify companies that align with Koch’s goals and increase investment flow.”

“Now more than ever, Koch is focused on growth in plant nutrition categories,” said Coulter. “For us, this means finding new collaborators who have developed technologies and are exploring the best structures to bring those technologies into our portfolio either through licensing, equity investment, full acquisition, or other arrangements. The great thing about Koch is we can be flexible.”

SVG Ventures | Thrive is a global agrifood investment and innovation platform comprised of agriculture, food and technology corporations, universities, and investors. With a community of over 5,000 startups from 100 countries, the platform invests, accelerates, and creates access for entrepreneurs to scale globally to solve the biggest challenges facing the food and agriculture industries. 

SVG’s global partners include Media Partner Forbes and government, agriculture, and technology corporations such as Alberta Government, Old’s College, Calgary Economic Development, Corteva, Driscoll’s, FCC, BASF, Kubota, Land O’Lakes, Trimble, Taylor Farms, Bayer, ICL, Nutrien, Intel, Valmont, UFA, Yamaha Motor Ventures, and Wilbur-Ellis.

CF Impacted by UP Rail Delays, Shipping Reductions

Eastern Cornbelt, Featured, News, UAN, Urea

CF Industries Holdings Inc., Deerfield, Ill., on April 14 informed customers it serves by Union Pacific (UP) rail lines that railroad-mandated shipping reductions would result in nitrogen fertilizer shipment delays during the spring application season, and that it would be unable to accept new rail sales involving UP for the foreseeable future. CF said it understands that it is one of only 30 companies to face these restrictions.

CF ships to customers via UP primarily from its Donaldsonville Complex in Louisiana and its Port Neal Complex in Iowa. The rail lines serve key agricultural areas such as Iowa, Illinois, Kansas, Nebraska, Texas, and California.

Products that will be affected include urea, UAN, and diesel exhaust fluid (DEF). CF is the largest producer of those three products in North America, and the Donaldsonville Complex is the largest single production facility for the products in North America.

“The timing of this action by Union Pacific could not come at a worse time for farmers,” said Tony Will, CF President and CEO. “Not only will fertilizer be delayed by these shipping restrictions, but additional fertilizer needed to complete spring applications may be unable to reach farmers at all. By placing this arbitrary restriction on just a handful of shippers, Union Pacific is jeopardizing farmers’ harvests and increasing the cost of food for consumers.”

CF said UP informed it on April 8 of this decision, without advance notice that it was mandating certain shippers to reduce the volume of private cars on its railroad effective immediately. CF said it was told to reduce its shipments by nearly 20 percent.

CF believes it will still be able to fulfill delivery of product already contracted for rail shipment to UP destinations, albeit with likely delays. However, because UP has told CF that noncompliance will result in the embargo of its facilities by the railroad, CF may not have available shipping capacity to take new rail orders involving UP rail lines to meet late season demand for fertilizer.

CF said it intends to engage directly with the federal government to ask that fertilizer shipments be prioritized so that spring planting is not adversely impacted.

“CF Industries’ North American manufacturing network continues to produce at a high rate to meet the needs of customers, farmers, and consumers,” said Will. “We urge the federal government to take action to remove these Union Pacific rail shipment restrictions to ensure this vital fertilizer will be able to reach U.S. farmers when and where they need it.”

Both of the impacted facilities have the ability to truck shipments and one of the facilities can do barge sales, so the company will have alternative options, though they might be less attractive, said Alexis Maxwell, Green Markets Director of Research.

“Assuming that 20 percent of CF’s capacity at the impacted facilities moves by rail and CF reduces rail shipments by 20 percent in the second quarter, this would impact less than 1 percent of the company’s overall net production capacity,” added Maxwell. “CF’s stock price was up marginally on the news.”

UP said in a letter to customers that it would begin metering traffic after April 18 if customers don’t voluntarily reduce their inventory before then, according to Bloomberg. UP also said it is removing 2-3 percent of its own railcars and has added 50 locomotives since January, with plans to bring on 100 more to help move cars along.

“The operating inventory levels continue to rise on a daily basis,” Kenny Rocker, UP Sales and Marketing Chief, said in the letter published on the UP website April 11. “We have already identified and notified those customers who can help us manage the current congestion by reducing their railcar inventories.”

The industry has struggled with soaring freight since the pandemic drove higher demand for goods, choking the nation’s supply chain. The situation prompted the U.S. Surface Transportation Board to call public hearings later this month to hear from all the major railroads on steps to improve network fluidity, citing a broad worker shortage and railroads’ “bare bones” cost cutting.

“The railroads simply do not have a sufficient number of employees,” Board Chairman Martin Oberman said in a statement last week.

UP said in its letter that it has transferred 80 crew members to help in congested areas and has 450 employees in training that will be ready for locomotives in the summer.

The moves come after UP took steps last July to ease a backup in Chicago, where trailers weren’t being unloaded fast enough amid a crush of traffic. The company halted all containers at the time from Los Angeles to Chicago for about a week.

In a new statement, UP said the latest attempt to meter railcars will help it work through the backlog, echoing the “approach we successfully applied last year with West Coast intermodal traffic.”

Lifosa Halts Operations as E.U. Sanctions Freeze Bank Accounts

Featured, Lithuania, News

Lithuania’s Kėdainiai-based phosphate fertilizer producer and EuroChem Group AG subsidiary AB Lifosa halted operations on April 10 after banks froze the company’s accounts around a month ago, according to a report by Lrt.It, the website of the Lithuanian national broadcaster, LRT.

According to the report, Lifosa’s bank accounts were frozen due to the European Union (E.U.) sanctions imposed on EuroChem Group’s former controlling shareholder and CEO Russian billionaire Andrey Melnichenko on March 9 (GM March 11, p. 1). Melnichenko subsequently resigned from the EuroChem board and withdrew as a main beneficiary of the group following his inclusion on the E.U.’s expanded list of sanctioned Russian individuals.

Melnichenko had previously controlled 90 percent of EuroChem Group via Cyprus-based AIM Capital SE. A EuroChem statement on March 10 announcing the Melnichenko step-down did not specify how the company’s ownership would be re-structured.

Lifosa exported 398,881 mt of DAP in 2021, which was a 27 percent reduction on 2020 export volumes of 543,398 mt, according to Trade Data Monitor. The company has a DAP production capacity of 1 million mt/y.

The producer has a four-month operation plan and hopes to resume production at a reduced capacity in May, according to the report, citing Lifosa CEO Rimantas Proscevičius.

According to the CEO, the company could produce two types of products completely disconnected from its links with Russia and Belarus, with raw materials sourced from elsewhere and payments made through a Lithuanian bank.

In the meantime, some employees will continue to work and carry out essential maintenance work. Lifosa employs more than 1,000 people. However, the head of the company’s trade union, Kestas Šlama, was earlier cited by a Baltic News Service (BNS) report that some 300 to 400 workers may have to be laid off if production was suspended.

Lifosa has been allowed to access some of its frozen funds in order to conduct some essential financial transactions after Lithuania’s Ministry of Foreign Affairs granted an exemption, BNS reported. These transactions include payments of salaries and wages to employees and payments for services necessary for the company’s activities.

K+S Raises FY22 EBITDA Guidance

Earnings, Featured, Germany, News

K+S Group, Kassel, has raised the outlook for expected EBITDA for the 2022 financial year to €2.3-€2.6 billion (between approximately ($2.5-$2.8 billion at current exchange rates), up from the previous outlook for FY22 of between €1.6-€1.9 billion. It is K+S’ second upgrade to its FY22 guidance.

The company attributed the increased guidance mainly to a further rise in average prices in the Agriculture customer segment, which, it said, will “significantly outweigh” expected cost increases, particularly in energy, logistics, and materials.

This EBITDA forecast tangibly exceeds current market expectations, the company said, noting the Vara 2022 EBITDA consensus as of April 6, 2020, was €2.16 billion.

K+S said the expected EBITDA increase assumes unrestricted production during the rest of 2022, and possible interruptions in production caused by potential disruptions to energy supply – i.e., a gas shortage situation – to the company’s German sites are not taken into account.

Germany relies on Russia for a sizeable volume of its natural gas supplies. In 2020, the country relied on Russian gas for about 46 percent of its natural gas requirements, according to the International Energy Agency.

FY21 EBITDA came in at €969 million, a 262 increase on the previous year (GM March 11, p. 25). The FY21 result included a one-off gain of €219 million from the completion in December of the REKS waste management joint venture transaction (GM Dec. 31, 2021).

K+S also has raised its adjusted free cash flow (FCF) expectations for full-year 2022 to €1.0-€1.2 billion, assuming capital expenditures of “a good €400 million.” This compares to the company’s previous FCF outlook of around €600-€800 million, and to the Vara consensus as of April 6, 2022, of €949 million.

K+S noted that a one-off effect of around €230 million is to be deducted from this operating cash flow forecast following the repayment of factoring in first-quarter 2022, as well as the purchase of CO2 certificates.

Following the disclosure on April 13, K+S’ shares rose to their highest since Sept. 2015, surging 8.8 percent to €35.26 per share on the profit outlook. On April 14, K+S shares touched a high of €35.49.

The company will release its first-quarter 2022 financial results, including its full outlook for FY22, on May 11.

E.U. Imposes Cap on Imports of Russian Potash and Complex Fertilizers

Featured, News, Potash, Russia

The European Union (E.U.) has imposed a cap on imports of Russian potassium chloride (CN 3104 20) and of Russian NPKs (CN 3105 20) and PKs (3105 60) and other fertilizers containing potassium chloride into the Bloc as part of its latest package of sanctions against Russia agreed by Member States on April 8 (GM April 8, p. 1).

According to its Official Journal, the E.U. has set a quota of 837,570 mt of potassium chloride (CN 3104 20) starting July 10, 2022, through July 9, 2023, and 1,577,807 mt combined of the specified NPKs, PKs, and other fertilizers containing potassium chloride for the same period.

According to some industry sources, the European Commission (E.C.) was not able to push through a ban on Russian imports of potassium chloride. Instead, imports were capped at historic levels. Last year, the E.U. imported about 783,240 mt of all grades of Russian potassium chloride, according to Trade Data Monitor. The imports from Russia accounted for some 14.5 percent of the Bloc’s potash imports in 2021.

The restrictions do not apply to shipments until July 10 under contracts signed prior to April 9, 2022, the day the new sanctions came into force.

The cap on Russian imports of potassium chloride was a way to avoid the ban on potash imports from Belarus being circumvented via Russia. The E.C. on April 8, announcing the agreement of Member States to adopt the new sanctions package, said it was also including “an anti-circumvention” measure against potash imports from Belarus.

The E.U. first imposed a ban on certain grades of Belarusian potash in June 2021 (GM June 25, 2021), and subsequently expanded the import ban in February of this year to cover all grades of Belarusian potash, and crucially, imports of product with a potassium content evaluated as K2O by weight, exceeding 40 percent but not exceeding 60 percent on the dry anhydrous product (GM March 4, p. 30). The move, part of wider sanctions package against Belarus, was in response to the country’s role in supporting Russia’s invasion of Ukraine.

The. E.U. has typically imported about 14-18 percent of its annual potash requirements from Belarus, according to Trade Data Monitor.

Combined Nomenclature
(CN) Code 		Product
3104 20 Potassium chloride
3105 20 Mineral or chemical fertilizers containing the three fertilizing elements nitrogen, phosphorus, and potassium
3105 60 Mineral or chemical fertilizers containing the two fertilizing elements phosphorus and potassium
ex 3105 90 20 Other fertilizers containing potassium chloride
ex 3105 90 80 Other fertilizers containing potassium chloride

The E.U. in this latest sanctions package against Russia has not imposed restrictions against imports into the Bloc from Russia of other types of fertilizers.

As previously reported, the new sanctions do include an entry ban on Russian flagged vessels and Russian-operated vessels from accessing to E.U. ports. However, the E.U. has made exemptions to this ruling to cover what it describes as “essentials” cargo, such as agricultural and food products, humanitarian aid, as well as energy, among others.

The Official Journal listed Russian flagged and Russian-operated vessels with cargoes of anhydrous ammonia (CN2814 10 00) as excepted from the ban. The E.U. imported 3.9 million mt of ammonia in 2021, of which Russian tons were 997,521 mt, or 26 percent of the total, according to Trade Data Monitor.

As reports of more atrocities at Russian hands emerge from Ukraine, the E.U. is looking at a fresh set of sanctions against Russia. The E.U. is moving toward adopting a phased-in ban on Russian oil intended to give Germany and other countries time to prepare alternate suppliers, the New York Times reported, citing officials and diplomats. A Russia oil embargo would not be put up for negotiation until after French elections.

Phosphate Sales from Disputed Region Up 26 Percent in 2021; More Planned

Morocco, News, News Briefs, Phosphate, Phosphate Rock

Belgium-based Western Sahara Research Watch (WSRW), which advocates for the rights of the Saharawi people of the disputed Western Sahara territory controlled by Morocco, released a report on April 6 looking at phosphate rock trade from the territory during 2021.

It is WSRW’s ninth annual overview of what it describes as “illegally exploited” phosphate rock. The disputed region is home to OCP SA’s Phosboucrâa phosphate mining operation.

According to the report, 26 vessels departed from the territory with a total of 1.417 million mt of phosphate rock in 2021, up from 22 ships and 1.123 million mt in 2020, a 26 percent increase in volume year-over-year.

The biggest offtaker remains India, taking 10 shipments with a total of 572,336 mt last year, according to WSRW. This volume was down 20 percent over 2020’s offtake of 719,136 mt. Paradeep Phosphates Ltd., a wholly-owned subsidiary of Zuari Maroc Phosphate, in turn a 50:50 joint venture of India’s Zuari Agro-Chemicals Ltd. and Maroc Phosphore Ltd., is India’s sole buyer of phosphate rock from the disputed territory.

WSRW highlighted the resumption of phosphate rock imports last year from the disputed territory by U.S. company Innophos Holdings into Mexico. The company became the leading importer from the territory during the second half of 2021 following the arrival of the year’s first shipment to the port of Coatzatcoalcos, Mexico, on Aug. 2, 2021, the organization said.

According to the report, Innophos took in 43 percent of all phosphate rock shipped from the disputed Western Sahara region last year. The seven shipments that it received during the last five months of 2021 totaled 391,000 mt.

New Zealand fertilizer cooperatives Ballance Agri-Nutrients and Ravensdown took a combined 347,000 mt of phosphate rock from the disputed region in 2021, up almost 50 percent on 2020’s volumes of 232,000 mt. Of the 2021 New Zealand imports, Ballance received five shipments totaling 292,000 mt and Ravensdown one shipment totaling 55,000 mt, according to WSRW.

According to the report, Ballance’s offtake was responsible for the year-over-year increase, and WSRW noted the New Zealand farmer’s cooperative’s total annual purchase in 2021 was the largest since the activist organization started daily monitoring of the trade in 2011-2012.

The report noted that EuroChem Group made a shipment in October from the disputed region in 2021, the first import by the group from the disputed territory in five years. According to WSRW, the 34,000 mt shipment was destined for Estonia, where EuroChem in 2020 opened a new terminal at Sillamäe. The group’s Lithuanian subsidiary Lifosa AB, an earlier importer of phosphate rock from the region, stopped the trade in 2016.

WSRW in its report observed that not a single shipment of phosphate rock from the territory had been routed via South Africa’s Cape of Good Hope or through the Panama Canal since the bulk carriers Cherry Blossom and Ultra Innovation, respectively, were detained by the South African and Panamanian authorities in 2017 under civil maritime orders following a legal complaint from the Western Sahara Polisario Independence Movement.

Both ships were carrying Phosboucrâa rock. The Cherry Blossom was detained for more than a year (GM May 11, 2018; May 5, 2017), while the Ultra Innovation was released after less than three weeks (GM May 26, 2017; May 19, 2017).

The activist organization also highlighted the major investments being undertaken by OCP and the Moroccan government in the Phosboucrâa phosphate production facilities and in a new 1 million mt/y fertilizer production complex at Al-Marsa near the Atlantic port of Laâyoune (also known as El Aaiún), through which OCP currently exports Phosboucrâa phosphate rock.

OCP is investing an envisaged $2.2 billion in the construction of the 1 million mt/y fertilizer production facilities, which will also include a sulfuric acid unit and phosphoric acid unit, as well as a granulation unit. The project was launched in 2016, following the green light from the Moroccan government (GM Feb. 12, 2016). At the time, OCP said the focus of the fertilizer exports from the new plant would be across Africa.

The Moroccan group has made few public comments internationally on the project’s progress since its launch.

According to WSRW, OCP is targeting to start operations at the new plant by 2023. However, this could not be confirmed with OCP by Green Markets press time.

New extraction methods, a new washing unit, and additional storage facilities are also being developed at the existing Phosboucrâa mining operation. OCP in 2020 reported it was planning to roll out a reverse flotation process to exploit deeper layers of the open-pit mine, where reserves are said to be lower-quality rock.

The Morocco government is also investing in a new deepwater mega-port in the disputed region, the so-called Dakhla-Atlantic port, located some 550 km south of Laâyoune (GM Oct. 8, 2021).

Orica, H2U Partner for Green Ammonia Initiative

Australia, Green Ammonia, Green Hydrogen, News, News Briefs

Melbourne-based explosives manufacturer Orica Ltd. and Australian green hydrogen infrastructure developer The Hydrogen Utility (H2U) have partnered up to initiate the first phase of a proposed multi-billion chemical complex producing green hydrogen and green ammonia at Gladstone, Queensland.

The so-named “H2-Hub” Gladstone project has a planned capacity of up to 3 gigawatts of electrolysis and up to 5,000 mt per day of green ammonia from new-build solar and wind resources in the Queensland region.

Under a Memorandum of Understanding on a master plan study signed on April 12, the two companies will explore opportunities for an exclusive domestic green ammonia offtake and supply agreement, the Queensland government said in a media statement.

The potential agreement would see green ammonia supplied directly to Orica’s Yarwun ammonium nitrate manufacturing plant from H2U’s proposed Yarwun green ammonia production plant.

The partnership will also see Orica and H2U explore opportunities for a potential green ammonia export terminal at the Port of Gladstone.

“Being able to leverage off existing Orica ammonia storage capacity and the associated connecting infrastructure in the Gladstone State Development Area is an added benefit of this fantastic project,” said Minister for Regional Development and Manufacturing, Minister for Water, and Member for Gladstone Glenn Butcher.

The master plan study will run for approximately six months, with Front-End Engineering and Development (FEED) approval activities scheduled to commence towards the end of 2022.

The financial investment decision for the activation phase of the development is scheduled by June 30, 2023, with the H2-Hub Gladstone slated for operational activity to begin in 2025, according to the Queensland government statement. An expansion phase for the project is targeted to take place between 2027-2030.

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