All Posts from July 16, 2012

Sylvite – Management Brief

Management Briefs

Peter Marovich and the staff at Sylvite’s Lakeland/Bartow Florida warehouse locations announced that Gary Garcia will be joining Sylvite on July 1, 2012, as specialties sales manager in the U.S. He will report direct to Marovich.

Garcia has sold products into the turf, horticulture, landscape, consumer retail, specialty agriculture, and arboricultural markets throughout his career, building annual sales volumes in excess of $2.5 million, with a strong emphasis on enhanced efficiency fertilizer. He was president of The Homestead Nitrogen Corp. and general manager of The Homestead Company, which introduced the slow-release nitrogen products Nutralene, Nitroform, and Meth-X 40. He also served as northeastern U.S. regional sales manager for that company for 14 years.

Garcia also worked with Lebanon Turf Products to introduce another Homestead product, MESA, which Lebanon purchased in 2004 after Garcia developed a market for the product in Canada and the U.S. South. Garcia’s further work experience included serving as an independent representative for several companies, including Sylvite, through which he sold Sazolene MU and UF products. He was also involved in the development of Sigma Diagnostics, a division of Sigma Chemical in St. Louis.
“Gary’s extensive knowledge of the turf market and his familiarity to Sylvite will be a great asset to Sylvite and our loyal customer base,” Sylvite said.

Glencore wins key Canadian approval for Viterra acquisition

Breaking Industry News

Glencore International PLC announced that Canada’s Minister of Industry on July 15 approved the company’s acquisition of Viterra Inc. under the Investment Canada Act. Glencore and Viterra signed a definitive agreement in March whereby Glencore will acquire all of the issued and outstanding shares of Viterra for C$16.25 per share. The transaction values Viterra’s equity at approximately C$6.1 billion on a fully diluted basis.

In granting his approval, Industry Minister Christian Paradis said in a statement that Glencore’s acquisition of Viterra is “likely to be of net benefit to Canada.”

“We are very pleased to receive Investment Canada approval, which recognizes the long term benefits for farmers and Canada from our acquisition of Viterra,” said Chris Mahoney, Glencore’s director of agricultural products. “Glencore is committed to investing in Viterra’s operations, its philanthropic initiatives, and in playing a key part in ensuring the continued growth of western Canada’s agricultural industry.”

Glencore reported that it has made a series of commitments to Canada for a five-year period, including increasing Viterra’s projected capital expenditures in Canada by more than C$100 million; investing C$8 million above Viterra’s projected expenditures in R&D; contributing toward grain industry initiatives in the province of Manitoba; working with the Government of Saskatchewan toward establishing a Global Institute for Food Security in the province, and contributing to this initiative should the government initiate the project; increasing contributions toward programs supporting the Western Canadian farm community by 25 percent; and making charitable contributions in support of youth and educational scholarships for First Nations and Metis.

Glencore has also committed to maintaining the Regina, Sask., head office and making it the head office for its North American agricultural operations.

Viterra also issued a statement confirming the Minister of Industry’s approval, noting that this is the latest in a series of approvals and clearances necessary for the transaction to close. Viterra shareholders passed a resolution to approve the transaction at a special meeting on May 29, and Glencore reported in June that it had received unconditional approval from the Australian Competition and Consumer Commission. The Ontario Superior Court of Justice on May 31 also issued a final order approving the transaction under the Canadian Business Corporations Act, and the Canadian Competition Bureau earlier in May said it will not challenge the transaction. In addition, the U.S. statutory waiting period for antitrust review expired on May 3, and the European Commission issued a notice saying that it will not oppose the acquisition.

Viterra noted in its July 15 statement that the closing of the deal is still subject to approvals or clearances under the Australian Foreign Acquisitions and Takeovers Act of 1975, and the Chinese Anti-Monopoly Law.

Glencore reported on July 16 that it has received notification from the Ministry of Commerce of the People’s Republic of China (MOFCOM) that it has moved to the next phase of its review of the transaction. Glencore said it continues to engage with MOFCOM to ensure approval as soon as possible, but the company does not expect MOFCOM approval before the end of July.

Glencore said it will update the market “in due course when it expects closing of the Viterra transaction to occur.”

IPL urea tender closes

Breaking Industry News

A total of 3.6 million mt of urea was offered in the IPL tender that closed July 14. The average price of the offers was $423.76/mt CFR, more than $100 off the price paid by STC in May.

Industry watchers expected to see a lot of large offers from a wide variety of traders and producers. The only other large buyer in the market was TCP from Pakistan and it is down to just asking for 50,000 mt in a new tender.

Indian buying has been behind schedule largely because the rains from the seasonal monsoon are late. The Indian government estimates that the main growing areas of the country have received only 65-70 percent of the rain needed instead of the usual 95 percent at this time. Delays in the rain mean delays in planting and fertilizer applications.

Traders have noted that Indian reserves of urea are very low. Local distributers have been filling farmers’ orders with stock on hand. Sources say few tons are in the pipeline to replenish the sales.

The last import deal was in May when STC paid $535-$540/mt CFR for about 500,000 mt. Prior to that deal, IPL awarded Emmsons a contract for 500,000 mt at $385.83/mt CFR for Iranian tons. Unfortunately for the Indian farmers and Emmsons, the trading house could not secure the material at a price that would work. It declared force majeure on the deal.

Sources report that Emmsons recently chartered two vessels to take material from Iran to India. Industry watchers speculate that Emmsons was successful in its efforts to revitalize its award from March at current rates.

The next step in the procedure is for IPL to counter bid with prices based on ports of discharge.

New Mexico potash, oil & gas companies reach accord

News, Potash Muriate, Western

Drilling for oil and gas can take place on federal lands in the Permian Basin so long as it does not damage mineable potash deposits, according to newly proposed guidelines issued by the Bureau of Land Management (BLM).

In a July 12 conference call with reporters, Interior Secretary Ken Salazar announced the proposal, contained in a draft Secretarial Order that updates 1986 guidance. Salazar was joined on the call by New Mexico senators Jeff Bingaman and Tom Udall, and acting BLM Director Mike Poole.

“It’s important that we end years of costly litigation and disagreement and together start a new chapter of collaboration when it comes to oil and gas and potash development in New Mexico,” said Salazar, while offering praise to representatives of the oil and gas and potash industries who helped draft the proposal, published Friday, July 13 in the Federal Register.

“What we’re proposing today is a common-sense framework that emphasizes the co-development of potash and oil and gas in the region, and strengthens the economy by continuing to support our nation’s energy and agriculture needs,” Salazar said.

The order establishes quarter-mile buffer zones for oil wells and a half mile for gas wells.

“These buffer zones will stay in effect until such time as revised distances are adopted by the BLM Director or other BLM official, as delegated,” the draft order states.

The technical committee of industry reps includes officials from Intrepid Potash and Mosaic Potash, the two companies currently operating in the basin. Other leaseholders include Yates Petroleum Corp. and Occidental Petroleum Corp., but their leases have been assigned to, and are being developed by, Mosaic.

According to the Federal Register notice, “It is envisioned that the majority of the Designated Potash Area will eventually be divided into Development Areas designed to minimize the impacts to potash mining while allowing for the development of oil and gas resources. It is intended that Development Areas will be developed with extended reach horizontal wells using the most current technology, consistent with applicable laws and regulations.”

Three different areas would be set up under the new guidelines:

  • Development Areas, which are blocks of federal oil and gas leases to be identified by BLM and which could be developed as a unit from one or more “drilling islands.”
  • Barren Areas, defined as “lands within the Designated Potash Area where sufficient data is available to establish that the area lacks mineable potash resources.”
  • Unknown Areas, or “areas within the Designated Potash Area where there is an absence of data to classify the potash mineralization of the lands. While Barren Areas may be preferred locations for Drilling Islands, Unknown Areas may warrant protection from oil and gas drilling until such time as data is available to properly classify the potash mineralization.”

BLM foresees that “the majority of the Designated Potash Area will eventually be divided into Development Areas designed to minimize the impacts to potash mining while allowing for the development of oil and gas resources. It is intended that Development Areas will be developed with extended reach horizontal wells using the most current technology, consistent with applicable laws and regulations.”

The order continues, “No wells shall be drilled for oil or gas at a location which, in the opinion of the Authorized Officer, would result in undue waste of potash deposits or constitute a hazard to or unduly interfere with mining operations being conducted for the extraction of potash deposits.”

According to the FR notice, which allows for a 30-day comment period, “Among other benefits, the revised

USDA lowers projected corn yield by 20 bushels/acre, cites extreme conditions

Eastern Cornbelt, Midwest Cornbelt - Retail, News, Western Cornbelt

USDA lowered the projected U.S. corn yield to 146 bushels/acres in its July 11 World Agricultural Supply and Demand Estimates (WASDE) report, down 20 bushels from last month, reflecting the rapid decline in crop conditions since early June and the latest weather data.

The season average 2012/13 farm price for corn is projected at $5.40-$6.40 per bushel, up sharply from $4.20-$5.00 per bushel in June.

“Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing region,” the report said. Harvested area is also reduced slightly based on USDA’s June 29 Acreage report (GM July 2, p. 11).

USDA said reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage, with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. U.S. feed grain supplies for 2012/13 are projected sharply lower, with corn production prospects reduced 1.8 billion bushels from last month. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol.

USDA said corn exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments.
Ending corn stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection.

The U.S. soybean crop was also feeling the pinch from drought, USDA said. Soybean production is projected at 3.050 billion bushels, down 155 million, as increased harvested area is more than offset by reduced yields. The soybean yield is projected at 40.5 bushels/acre, down 3.4 bushels from last month. “The drop reflects sharply declining crop conditions resulting from limited rainfall since early April, coupled with excessive heat across much of the producing area in late June and early July,” USDA said.

The U.S. season average soybean price is projected at $13.00-$15.00 per bushel, up $1.00 on both ends of the range.

Soybean supplies are 160 million bushels below last month’s forecast due to lower beginning stocks and reduced production. Soybean exports for 2012/13 are reduced 115 million bushels to 1.37 billion, reflecting lower U.S. supplies, although increased exports from South America and Canada partly offset reduced U.S. exports. Soybean ending stocks are projected at 130 million bushels, down 10 million.

USDA’s projected U.S. wheat supplies for 2012/13 were raised 5 million bushels, with higher estimated beginning stocks more than offsetting lower forecast production. Wheat production for 2012/13 was reduced 10 million bushels, with lower production of hard red winter wheat projected in Texas, Colorado, Oklahoma, and Montana. USDA said a 14-million-bushel reduction in winter wheat production is only partly offset by a higher spring wheat forecast.

The projected range for the 2012/13 season average farm price for all wheat was raised 60 cents on both ends to $6.20-$7.40 per bushel, supported by the sharply higher corn and soybean prices. This compares with the record $7.24 per bushel reported for 2011/12, USDA said.

Total U.S. wheat use for 2012/13 is projected 35 million bushels higher, while ending stocks are projected 30 million bushels lower.

U.S. rice production for 2012/13 was raised 4 percent to 191.0 million cwt, USDA said, due mostly to an increase in harvested area as indicated by USDA’s June 29 Acreage report. Harvested rice area for 2012/13 was raised 107,000 acres to 2.64 million, but USDA said this acreage figure is still the lowest since 1987/88.

The 2012/13 season

Gavilon to remain intact, eyes world headquarters, beefs up propane business

News

Gavilon Group LLC, which is in the process of being bought by Japanese company Marubeni Corp. (GM June 4, p. 1), told Green Markets last week that it expects to remain intact after the acquisition, and that the company is moving forward with plans to build its own world headquarters in downtown Omaha, Neb. The company also announced plans July 9 to expand its propane business.

Gavilon said the Marubeni deal, still before regulatory authorities, is expected to close in the late third quarter.

The company is looking to construct a new building to house its current 350 employees in Omaha, as it is outgrowing its current 48,000 square foot site in the downtown ConAgra complex. Gavilon is a spinoff of ConAgra Foods Inc.

Company-wide, Gavilon employs 2,000.

Key for any new headquarters would be a wide-open commodities trading floor and mezzanine that could be some 70,000 square feet. Due to this requirement, the company said it is more apt to build than buy. The company is currently looking at a low-rise design. However, the design, site selection, and building timeline have not been established.

Gavilon confirmed that it has been looking at a 1.45 acre green space, full-block site. Called World-Herald Square Plaza, it is the former home of The World-Herald Co.
Gavilon’s fertilizer trading business is based in Savannah, Ga.

In other news last week, Gavilon announced it has expanded its natural gas liquids (NGL) business and will market propane along all of the major U.S. propane pipelines, including TEPPCO and Dixie, with additional supply from refineries, terminals, and fractionators. Joining Gavilon to provide the company expertise in the top propane markets in the U.S. are John Bienkowski, Bill Connallon, Nick Di Risio, Pat Frey, John Lorgan, Jim Neumann, and Matt Ward.

"We are looking forward to expanding our NGL business with the addition of a seasoned marketing and operations team," said Jay Furman, head of Natural Gas Liquids Marketing at Gavilon. "These individuals are renowned for their customer service, reliability, and logistics expertise, as well as their relationships with a large array of customers, suppliers, and transportation providers.

"Our marketing team now has the ability to provide services to satisfy customer demand for propane and other natural gas liquids east of the Rocky Mountains," Furman added.

Bidding for Eilat port postponed

Israel, News, News Briefs

Tel Aviv — Israel’s Finance Ministry has postponed for a month the bidding process for operating the Eilat port. The move was designed to give potential bidders more time after Israel Chemicals Ltd. (ICL) was the sole bidder in the process, which closed on July 5. The Finance Ministry came under intense criticism when it became apparent that ICL was the sole bidder. Labor party leader Shelly Yachimovitch charged that the Ofer family (which holds a majority stake in ICL) was in conflict of interest because of interests in Zim Shipping and a private dock owned by ICL at the Eilat port. The ICL bid is also viewed as problematic and will need regulatory approval if accepted. Israel’s Anti Trust Commission is likely to intervene, and either set conditions for ICL ownership of the southern port or disqualify the company altogether. The company was the only one to post the necessary guarantees. Three other bidders – Goldbond Group, Gadot Tankers and Terminals, and Papo Maritime – all informed the Government Corporations Authority that they were dropping out of the process. ICL has rejected criticism of its bid, saying it is the largest employer in southern Israel and intended to invest $125 million in upgrading the port at Eilat. The company termed the attempts to eliminate it from bidding “empty populism.” Eilat is Israel’s third largest port, and has been handling an increasing share of the burgeoning trade with the Far East. ICL ships some 2.5 million tons of potash and other chemicals via the Eilat port, and the importance of the port has continued to grow in recent years as sales to the Far East increase in importance. ICL accounts for nearly 20 percent of the port’s revenues. Shipments via Eilat are expected to continue to increase in the coming years. In addition, the government is planning a rail line to Eilat that would include a feeder line from Sdom at the Dead Sea specifically for shipping potash.

Gas deal struck in Trinidad

Breaking Industry News, News, News Briefs

Point Lisas — The government-owned National Gas Co., after a year of negotiations, has signed a 20-year sales contract to supply 100 million cubic feet per day of gas that will allow Methanol Holdings Trinidad Ltd. (MHTL) to proceed with its proposed AUM II nitrogen complex at Point Lisas, according to reports in the Trinidad press. Helm markets the fertilizer from MHTL’s AUM I (GM Aug. 24, 2009). However, ownership of MHTL remains an issue. The deal came in the midst of arbitration in London over company ownership. Previously, Clico, a Trinidad insurance company, held 56.53 percent of MHTL, with the remainder owned by Consolidated Energy Ltd., a group consisting of German firms Helm AG, Ferrostaal AG, and Proman. However, the government took over 49 percent of Clico when it spent $5 billion to bail out the company in 2009-2010. Now the government and the German firms are in arbitration, as the minority stakeholders say they were supposed to be allowed to buy the majority stake should Clico lose ownership. A decision is reportedly due later this summer.

One guilty in bomb attempt; another indicted

News, News Briefs, Southeast

Amarillo and Sherman, Texas — A Saudi Arabian who lives in Lubbock, Texas, could be sentenced as early as Sept. 11 after being convicted by a federal jury of attempted use of a weapon of mass destruction in connection with his purchase of chemicals and equipment necessary to make an improvised explosive device (IED), and his research of potential U.S. targets, including persons and infrastructure. Federal agents who searched the Texas apartment of Khalid Aldawsari testified during Aldawsari’s trial that they found sulfuric acid and nitric acid, among other things. Aldawsari faces up to life in prison and a maximum fine of $250,000. According to court documents and evidence presented during trial, Aldawsari had been researching online how to construct an IED using several chemicals as ingredients. He had also acquired or taken a substantial step toward acquiring most of the ingredients and equipment necessary to construct an IED and had conducted online research of several potential U.S. targets, the affidavit alleges. In addition, he had allegedly described his desire for violent jihad and martyrdom in blog postings and a personal journal. The verdict was reached earlier this month in the Northern District of Texas. In the meantime, in Amarillo, Anson Chi of Plano, Texas, was indicted for attempting to blow up a natural gas pipeline. His explosive device blew up prematurely, critically injuring him. The indictment did not identify what chemicals were in the device. He was charged with possession of an unregistered firearm or explosive device. If convicted, Chi faces up to 10 years in federal prison.

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