All Posts from August 15, 2016

Compass Minerals to buy rest of Produquímica

Compass Minerals has reported plans to acquire all of Produquímica Indústria e Comércio SA, São Paulo, a Brazilian manufacturer and distributor of specialty plant nutrients.

“The purchase of the remainder of Produquímica marks an important milestone for Compass Minerals in the execution of our growth strategy. This accretive acquisition gives us access to higher growth markets and geographic diversification of our earnings, while lessening our dependence on winter weather,” said Fran Malecha, Compass Minerals president and CEO. “Produquímica’s strong history of growth and product development in Brazil provides Compass Minerals an excellent platform for expansion in one of the world’s most important agriculture markets. We look forward to the opportunities that will come from Produquímica joining Compass Minerals.”

Compass Minerals purchased 35 percent of Produquímica in December 2015. The expected price for the remaining 65 percent of equity is approximately $310-$330 million, is based on Produquímica’s expected 2016 performance, and will be subject to customary, post-closing adjustments. In addition, Compass Minerals will assume approximately $150 million in U.S. dollar equivalent long-term debt, most of which will be retired during the fourth quarter. The acquisition includes approximately $150 million of net working capital.

Compass Minerals expects the transaction to add $0.12-$0.15 to full-year 2016 diluted earnings per share.

Produquímica, generated approximately R$1.2 billion in net revenue and R$198 million in EBITDA as of the 12 months ending June 30, 2016. It operates two primary businesses – agricultural productivity and chemical solutions. The agricultural productivity division manufactures and distributes specialty plant nutrition solution-based products. These include micronutrients, controlled release fertilizers, and other specialty supplements that are used in direct soil and foliar applications, as well as through irrigation systems and for seed treatment. Produquímica also manufactures and markets specialty chemicals, primarily for the water treatment industry and for use in other industrial processes in Brazil. It has 1,400 employees.

Compass Minerals expects to close the transaction in early October 2016 subject to regulatory approval and to fund the acquisition with new debt. This transaction was enabled by an amendment to the prior agreement between Compass Minerals and key shareholders of Produquímica.

Chemtrade to add potassium capacity

Chemtrade Logistics Income Fund reports that it has begun construction on an approximately C$30 million project to increase the capacity of its high purity potassium chloride manufacturing facility at Midlothian, Texas, by more than 50 percent over the next 18-24 months. In addition to the expansion, which will include a new crystallizer and downstream train, Chemtrade will construct a new upgraded packaging hall and warehouse that meet and exceed cGMP and FDA requirements for both Active Pharmaceutical Ingredients (API’s) and ingredients used in the food, beverage and nutraceutical industries.

The first phase, which will be completed during the fourth quarter of this year, will add 25 percent to the facility’s API grade capacity. The balance of both the API and other grades should be on-stream mid-2018.

“We see this as a major commitment to our Select Specialties business to ensure a reliable supply to our valued partners in the pharmaceutical, nutraceutical, food and other key industries,” said Leon Aarts, group vice president.

“High purity potassium chloride is a key inorganic salt for both the pharmaceutical and food markets. Recently issued  FDA voluntary guidelines recommend the U.S. food industry work towards a 50 percent reduction in sodium chloride (salt) content in their products over the next 10 years and potassium chloride is one of the ways in which the food industry can help meet those guidelines. This investment will give Chemtrade capacity and redundancy to serve our API and food markets for years to come,” added Jeff Berresford, director of Chemtrade’s Select Specialties business.

AN Russian dumping order to end

The U.S. Department of Commerce’s International Trade Administration published a notice in the Federal Register Aug. 12 that it will revoke an antidumping order on ammonium nitrate from Russia, effective Aug. 20, 2016. The reason given was that no domestic party indicated that it planned to participate in the five-year sunset review of the dumping order.

The U.S. International Trade Commission (USITC) on July 1 (GM July 8, p. 1) initiated a five-year sunset review to determine whether revoking the antidumping duty order on ammonium nitrate imports from Russia would be likely to lead to the continuation or recurrence of material injury to the domestic AN industry “within a reasonably foreseeable time.”

ICL reported to have halted Ethiopian investment

Israel Chemicals Ltd. has halted its potash project in Ethiopia, according to a report Aug. 15 in the Marker economic daily. The report said that ICL had taken its decision due to delays by the Ethiopian government on giving concrete assurances regarding the operation of the planned mine. ICL would not comment on the report.

The Marker estimated ICL has invested $180 million so far in the project. This includes the $135 million paid for Allana Potash which was granted the concession to mine potash in Ethiopia. The report said that the Ethiopian government had not given ICL response regarding tax issues, the price of electricity from the state-owned utility and water supplies.

In late December, ICL said it was still evaluating the technical and economic feasibility of the Ethiopian potash project and would take a decision in mid-2016. The paper reported that ICL had fired 120 people working on the project and that CEO Stefan Borgas instructed that all investments in the Ethiopian project be halted until the Ethiopian government approves the regulatory framework for the project.

An Israeli analyst recently told Green Markets that the Ethiopian project was based on a potash price of $430/mt, which is almost double current levels.

DAP import price softens in India

Amber won the NFL follow-up DAP tender for 50,000 mt to be delivered to India’s West Coast. The winning offer was $339.75/mt CFR with material from China. The cargo will be delivered to either Kandla or Mundra. The award was the final part of an effort by NFL to buy 150,000 mt by October.

The delivered price represents evidence of a steady decline in the Indian import price. However, the netback comes out in the high-end of the current China market. Once credit, freight and other costs are backed off, sources estimated the netback to China at $323-$324/mt FOB.

ICL eyes more U.K. job cuts

Israel Chemicals Ltd. U.K. announced today that it is beginning consultation over proposals to cut a further 140 jobs at its Boulby potash mine in northeast England before the end of this year as part of the next phase of restructuring. The latest job cuts follow last November’s announcement that 240 jobs would go and contractor numbers would be cut by around 140.

The job losses are a result of a move to reduce the level of potash mining at Boulby over the next couple of years as the company focuses on polyhalite production – marketed as polysulfate – and gradually ceases production of potash at the mine.

Announcing the next phase of restructuring of operations at Boulby, ICL today said it is to seek approval from the North York Moors Park Authority to extend planning permission for a further 40 years.

“At the same time as accelerating polysulfate production, the mining of the limited remaining economically viable reserves of potash will continue at a lower rate until completed,” the company said. “The need to realign potash production reflects the continuing decline in potash prices.”

As a consequence, ICL UK said it has begun consultation with the recognized trade union on around 140 job losses by the end of the year.

ICL said it is working hard to expand the polysulfate market including a program of developing a range of innovative polysulfate products. In addition, the company said it had identified an opportunity to produce a compacted potash and polysulfate product marketed as ‘PotashpluS’.

APC inks Chinese K contract

Arab Potash Co. (APC) confirmed it has reached an agreement with China’s Sinochem Macao for the supply of potash. The supplier did not disclose the volumes agreed but said the terms and conditions of the deal were in line with quantities outlined in the long-term agreement between the two parties signed in 2013, and in line with other potash suppliers for “the relevant period.”

Last year, APC and Sinochem Macao agreed to the supply of 600,000 mt of potash for firm quantities plus optional tons for delivery during 2015.

APC said the two sides agreed to continue their cooperation and their long-term partnership in the supply, promotion and distribution of potash in China and this latest agreement paves the way to maintaining a regular volume of potash shipments from Jordan to China.

Correction: Tampa ammonia at $270 mt CFR

Tampa anhydrous ammonia for August is $270/mt CFR. The Green Markets dated Aug. 12, 2016, incorrectly listed it as NA in the Price Scan.