All Posts from March 17, 2023

Corteva, Bunge, Chevron Collaborate on Canola

News, News Briefs, South Central

Corteva Inc., Bunge Ltd., and Chevron USA, a subsidiary of Chevron Corp., announced on March 14 a commercial collaboration to introduce up to 10 million acres of proprietary winter canola hybrids to the US South for use in renewable fuels production. US overall harvested canola acreage in 2022 was only 2.2 million acres, according to a Bloomberg New Energy Finance (BNEF) report.

Demand and American acreage for the crop were expected to expand after the Biden administration approved it last year for use in making renewable diesel and other biofuels, qualifying fuels blended with the oilseed to meet national standards.

The 10 million acres equates to 1.2 billion gallons of renewable diesel capacity, according to BNEF, which estimates that US renewable fuel capacity is expected to triple from 2022 to 2028 to 7.9 billion gallons. This would require 26 million mt of feedstock to meet planned and existing biofuel production from vegetable and waste oils. BNEF expects 17 million mt will be available based on current trends.

The new canola acreage could be a boon to suppliers of ammonium sulfate, as the crop is a heavy sulfur user. Canola in Western Canada needs nitrogen, phosphate, and sulfur, with a small percentage of fields benefiting from potash, according to the Canola Council of Canada. However, much could depend on the soil types found in the US South versus Western Canada.

The initial plan calls for farmers in Louisiana, Mississippi, and Tennessee to sow the oilseed as a second seasonal crop after soybeans and cotton. A pilot program is expected to be conducted in the 2022-23 growing season to fine-tune best management practices.

Bunge Chevron Ag Renewables, the joint venture between Bunge and Chevron, plans to contract with farmers to purchase the crop and use the oil to produce renewable fuel. In addition to providing farmers a new income opportunity, the companies said adding winter canola to a rotation provides a cover crop that can enhance soil health by holding more nutrients, water, and carbon in the soil.

The proprietary winter canola hybrids from Corteva can be used in the double crop system. “We’re pleased to work with Bunge and Chevron to bring a new option in the southern US that will deliver solutions for farmers to increase productivity and sustainability on their acres, as well as contribute to the need for renewable and less carbon-intensive fuel options,” said Chuck Magro, CEO, Corteva Agriscience.

The companies plan to continue to explore opportunities to sustainably improve farming options and produce lower carbon renewable fuels.

BHP Awards New Contracts for Jansen

Australia, News, News Briefs, Potash, Saskatchewan

BHP Group Ltd. reported on March 10 that it has awarded three new contracts valued at C$260 million (approximately US$188 million) to firms owned by some members of the First Nations ethnic community in Canada for its Jansen potash project under development in Saskatchewan, MT Newswires reported.

Site services and raw ore/handling foundation contracts have been awarded to 2Nations Bird, who will work closely with KDM Constructors of the Kawakatoose, Day Star, and Muskowekwan Nations and with George Gordon Developments of the George Gordon First Nation, the company said.

The contracts run for a term of three and a half years and will support more than 400 local jobs, BHP said.

Itafos Weighs Strategic Alternatives

Featured, Mono-Ammonium Phosphate, News, Phosphate, Phosphoric Acid, Specialty, U.S.

US phosphate and specialty fertilizer producer Itafos Inc. on March 13 announced that its Board of Directors has commenced a process to explore and evaluate various strategic alternatives that may be available to Itafos in an effort to enhance shareholder value.

The Board has formed a Committee of Independent Directors to oversee the process. The Committee, working together with its advisors and the management team, will consider a wide range of potentially value-enhancing alternatives, including, among other things, the sale of the company, a merger with another strategic partner, and a recapitalization or continued execution of the company’s long-term business plan.

CL Fertilizers Holding LLC (CLF), the company’s largest shareholder, supports the review process. CLF is an entity owned by funds managed by Castlelake LP.

“Itafos continues to successfully execute on its long-term plan,” said Itafos Chairman Anthony Cina. “Over the last year, Itafos has taken decisive actions to strengthen the company, including by working to extend the life of the Conda mine, extending the maturity and reducing the cost of the company’s debt, improving its capital structure through significant deleveraging, and strengthening the company’s management and Board. We expect significant shareholder benefits from these initiatives and believe now is an opportune time to consider the full range of potential strategic alternatives to enhance value for all Itafos shareholders.”

The news comes after two years of record earnings for Itafos, which has benefited from a global surge in fertilizer prices. While the company has not yet released full-year and fourth-quarter 2022 results, guidance that was reaffirmed in November 2022 (GM Nov. 18, 2022) was for full-year adjusted EBITDA of $210-$230 million and fourth-quarter at $35-$55 million. Full-year 2021 adjusted EBITDA was $143.4 million, up from 2020’s $15 million.

In a deal closing in January 2018, Itafos agreed to pay $100 million for its major asset, the Conda Phosphate Operations in Idaho, from Agrium Inc., a wholly-owned subsidiary of Nutrien Ltd. The sale was required by the US Federal Trade Commission as a condition for its approval of the merger of Agrium and Potash Corp. of Saskatchewan (GM Jan. 19, 2018). As part of the deal, Agrium and Itafos entered into long-term supply and offtake agreements, with Agrium supplying Conda with 100% of its ammonia requirements and agreeing to purchase 100% of the MAP produced, with pricing formulas based on major phosphate benchmarks.

Itafos also has a long-standing partnership with MacroSource (formerly Gavilon) to supply the distributor with phos acid from Conda (GM Dec. 6, 2019).

Itafos puts Conda’s phosphate production capacity at 550,000 mt/y, which includes MAP, MAP with micronutrients, superphosphoric acid, merchant-grade phosphoric acid, and ammonium polysulfate. Approximate MAP capacity has been put at 340,000 /mt/y, with 170,000 mt/y for the other phosphate products. The company also has hydrofluorosilicic acid capacity of approximately 27,000 mt/y (GM July 1, 2022).

In addition to Conda, Itafos owns the Arraias Phosphate Operations in Tocantins, Brazil, which has the capacity to produce 500,000 mt/y of SSP and SSP with micronutrients. It has gross sulfuric acid capacity of 220,000 mt/y. While the company is not currently producing SSP at the site, sulfuric acid production came back online in 2022 (GM Feb. 11, 2022).

Itafos’s development portfolio includes additional projects in Brazil, including the Santana Project, a phosphate mine and fertilizer project located in Pará State, and the Araxá Project, a rare earth elements and niobium mine and extraction project located in Minas Gerais State. It also owns the Farim Project, a phosphate mine project in Guinea-Bissau (GM Jan. 5, 2018).

Itafos cautioned that there can be no assurance that the strategic alternatives review process will result in the company pursuing any transaction or that any alternative transaction will be available to the company.

Neither the Board nor the Committee has set a timetable for completion of the process, and the company does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary.

Ostara, Pursell Agri-Tech Top List in First Round of USDA Grant Awards

Featured, News, Specialty, U.S.

Specialty fertilizer manufacturers Ostara Ltd., St. Louis, and Pursell Agri-Tech LLC, Sylacauga, Ala., topped the list of the eight companies that received a total of $29 million in the USDA’s first round of its Fertilizer Production Expansion Program (FPEP). Some 21 companies were under consideration (GM Jan. 13, p. 1). The first round focused on projects that can come online in the near term.

In total, USDA has allotted $500 million for the FPEP. On March 10, it said that so far it has received $3 billion in applications from more than 350 independent businesses from 47 states and two territories. FPEP supports fertilizer production that is independent, made-in-America, innovative, sustainable, and farmer-focused.

Ostara was awarded $7.57 million to fund its St. Louis fertilizer manufacturing site, which is scheduled to be completed in the summer of 2023, in time for growers to apply Crystal Green® this fall. At capacity, the facility plans to produce 200,000 st/y. The product is currently available through retailers across North America.

“Our team is honored to receive the USDA grant and will use the funds to increase US-based production of the most efficient phosphate fertilizer on the market, Crystal Green,” said Ostara CEO Kerry Cebul. “Ostara’s efficient and sustainable phosphate fertilizer, Crystal Green (5-28-0 with 10%Mg), aligns perfectly with the goals of the USDA grant program.”

“Crystal Green checks every box of the USDA program’s criteria and is the only granular phosphate fertilizer available on the market to deliver superior agronomic performance while protecting the environment,” added Ron Restum, Ostara Chief Commercial Officer. “The unique organic acid solubility of Crystal Green keeps nutrients where they are needed and available for maximized crop performance without nutrient loss due to soil tie-up, runoff, and leaching. Expanding production will be very welcomed by the ag community.”

Pursell Agri-Tech will receive $5 million. The company will use the funds for working capital that will increase its inventory by 40,000 st/y. It said each ton of its controlled release fertilizer (CRF) effectively doubles the nutrient benefit of a ton of fertilizer, making the 40,000 st increase the equivalent of 80,000 st of uncoated fertilizer per year. The company said the funds could be put to use beginning this spring, with farmers realizing the benefit of increased fertilizer availability almost immediately.

The other six in order of the grant award amount, included:

Palindromes Inc., Columbia, Mo., will use $4.9 million to expand its anaerobic digestion and renewable energy production system. The project entails the conversion of wet organic wastes of animal manure, meat processing waste, and food wastes into dried organic fertilizer and soil amendments. Electricity co-product is generated from the biogases.

Earth Peak Organics, Columbus, Ohio, will utilize $3.34 million to expand its current applications of aerobic food waste digestion technology to convert food waste into a natural fertilizer product.

Table to Farm Compost LLC, Durango, Colo., will take its $2.61 million to increase the production of locally produced compost to support agricultural production between December 2022-December 2027. The company has received permitting approval to build a Class II commercial compost facility and will use the funds to purchase land, equipment for carbon and nitrogen feedstocks, working capital for expansion, and construction and installation of power.

Perfect Blend LLC, Bellevue, Wash., will use $2.59 million to expand and increase its ability to manufacture and process raw manure and fish waste into fertilizer using its patented technology. The project will replace a stainless-steel dryer drum and construct a liquid fertilizer blending station and storage area at the facility.

Black Earth Compost LLC, Gloucester, Mass., will receive $1.76 million to help it construct an indoor compost facility that converts stranded nutrients back into a stable supply of usable nutrients in the form of compost. The company would convert its facility to produce a compost tailored for a new market of larger agricultural producers outside of metropolitan population centers. The new value-added process includes compost drying and screening equipment to get larger amounts of Food Safety Modernization Act (FSMA) compliant, nutrient-rich compost on each truck, which can economically travel deeper into agricultural areas.

Elm Dirt LLC, Grandview, Mo., garnered $1.3 million to expand production of organic microbe fertilizer from 8,000 gallons per week to 120,000 gallons per week. Products are based on worm castings and are a proprietary blend of microbes that include nitrogen fixing microbes, phosphorus solubilizing microbes, and plant growth promoting rhizobacteria.

Manitoba’s First Potash Mine Receives Final Approval; Production Could Start Within Four Weeks

Canada, Featured, News, Potash

Potash and Agri Development Corporation of Manitoba Ltd. (PADCOM) has received final approval to commence commercial production at Manitoba’s first potash mine (GM June 17, 2022). The approval came earlier this month from the Director of the Mining, Oil, and Gas Branch of the Manitoba Department of Economic Development, Investment, and Trade.

Construction of the project is estimated at 99% complete and potash production could come within four weeks, according to Harvey Haugen, President of Beechy Potash Products Corp., Beechy, Sask., which is a partner in the project. Haugen owns the technology patent PADCOM is using for the solution mining.

PADCOM said the technology has a reduced environmental footprint, eliminates the necessity of salt storage on the surface, and reduces energy and water consumption. The project will also use hydroelectric power. “A typical underground mine for potash produces about a thousand pounds of carbon for every mt of potash,” said PADCOM President Daymon Guillas. “When we’re up and running fully, with Manitoba’s electricity, we’ll be at 21-36 ounces, so we’ll be classified as a near zero-emission fertilizer, the first ever in the world.”

The mine will initially produce 50,000-100,000 mt/y, which PADCOM expects will increase to up to 250,000 mt/y or more over an expected life of up to 100 years.

The mine is located in the Hamlet of Harrowby, approximately 16 kilometers west of the Municipality of Russell-Binscarth, Manitoba. It is just across the border from other successful potash mines in Saskatchewan.

PADCOM has developed a partnership with Gambler First Nation, which intends to invest for a 20% equity stake in the project.

Last summer, PADCOM said its plan was to sell the product to a single customer loaded on trucks (GM June 17, 2022). The buyer would be responsible for logistics. As of last June, an offtake deal had not been finalized. PADCOM told Green Markets it had nothing to announce at this time.

In related news, a Manitoba government delegation promoted the province as a top destination for mining investment at the recent Prospectors and Developers Association of Canada (PDAC) Conference in Toronto, which focuses on mineral exploration and development.

In addition to touting the PADCOM project, the Manitoba Economic Development, Investment and Trade Ministry said approximately 60 companies have exploratory permits in Manitoba, with over 70% of which are looking for critical minerals.

BHP Still Open to Nutrien Deal

Australia, Canada, Featured, News

BHP is still open to partnering with Nutrien Ltd. and is not ruling out another takeover attempt, according to a Globe & Mail interview with Ragner Udd, BHP President, Minerals America. Pressed further as to what kind of deal might occur, he said the company is looking at a “myriad of options.”

While the Canadian government rejected BHP’s $40 billion attempt to buy Nutrien legacy company Potash Corp. of Saskatchewan in 2010 (GM Nov. 22, 2010), speculation that some sort of deal might occur between the companies has persisted since that time.

Just last year, speculation arose again after BHP expanded its deal-making team and went into merger and acquisition mode (GM Jan. 2, 2022). In 2021, as BHP got closer to a final decision on whether to proceed on the Jansen mine, which it opted to do in August (GM Aug. 20, 2021), much of the speculation was that BHP would partner with Nutrien on Jansen (GM May 28, June 25, 2021). Takeover talk was also present in 2016 (GM July 1, 2016) and 2014 (GM April 21, 2014).

Analysts have noted that much has changed since 2010. BHP has improved relations with Canada and has made major investments in the country, including $5.7 billion in the Jansen mine. Former Canadian Industry Minister Tony Clement, who rejected the 2010 merger, has said it would be more likely today, as the focus is not on large deals and their impact, but on national security issues, noting that Australia is an ally and not an aggressive competitor (GM Jan. 2, 2022).

Had the 2010 deal gone through, there was much speculation that BHP would sell nitrogen, phosphate, and retail. The same would be even more true today, said analysts, who point to potash being the low carbon of the three major fertilizers and that BHP is targeting net-zero emissions by 2050.

“The smart move is to buy it and break it up,” Charles Neivert, an analyst with Piper Sandler Cos., told the National Post in January 2022. He added that BHP would only be interested in Nutrien’s six potash mines, not in selling seeds, livestock feed, or other fertilizers.

Others this past week suggested that BHP might actually be ready to throw in the towel on Jansen and sell it to Nutrien. BHP expects to close a $9.6 billion deal in May to buy Australian copper and nickel producer Oz Minerals and is fending off a $44 billion class action lawsuit in the UK regarding its 2015 dam collapse in Brazil. In turn, Nutrien could sell off non-potash assets to cover the cost of Jansen.

Canadian Pacific Wins US Approval for $27 B Rail Deal

News, News Briefs, Transportation, U.S.

Canadian Pacific Railway Ltd. received a green light to complete its $27 billion acquisition of Kansas City Southern, overcoming opposition from shippers and creating the only rail operator serving the US, Canada, and Mexico.

The deal is consistent with the public interest, the US Surface Transportation Board, which has sole authority to approve rail deals, said on March 15. The combined operations will have “little to no track redundancies or overlapping routes,” it said.

The approval comes with some conditions, including an obligation to keep gateways open to other railroads, providing a dispute resolution mechanism to address commuter disruptions in Chicago, and a seven-year oversight commitment to address any issues that arise from the acquisition.

Canadian Pacific’s US shares climbed 6.9% – the biggest jump in almost three years – to $78.08 as of 9:44 a.m. in New York.

The decision comes despite heightened scrutiny of the US rail industry in the wake of a series of derailments, including a toxic chemical spill in Ohio, and tense relations between company management and labor groups. Canadian Pacific’s financial transaction to acquire Kansas City Southern’s shares was wrapped up in December 2021, but the railways were required to continue operating separately until the STB gave final approval of the deal.

The combination enlarges Canadian Pacific’s network by 50%, to about 20,000 miles of track from Vancouver to Veracruz, Mexico. Keith Creel, CEO of Canadian Pacific, said that the additional track opens the railroad to new customers and offers the prospect of luring more truck traffic to trains. Even after the tie-up, Canadian Pacific will still be the smallest of the major railroads that operate in the US and Canada.

The takeover will likely mark the end of the consolidation among large railroads in North America for the foreseeable future. It was grandfathered under an older, more relaxed set of rules that only applied to Kansas City Southern, the smallest of the so-called Class I railroads. Other mergers would have to meet a much tougher standard that was adopted in 2001 to cool a flurry of deals after the rail industry was deregulated in 1980.

The deal will drive increased competition with Union Pacific and BNSF, as well as with Canadian National to a lesser extent, according to Bloomberg Intelligence, which said the conditions set by the STB seem reasonable and shouldn’t be overly burdensome for CP.

Shippers were among the loudest critics of the acquisition of KCS, which they fear will lead to higher prices and reduced service as a result of more concentration of ownership. The US Justice Department also opposed the merger, but it does not have regulatory power to approve or deny railroad deals.

The industry, which once had more than 30 large railroads, now only has six. With this latest deal, the network is balanced with two railroads in the eastern US, two in the western US, and two Canadian rail operators with main lines that extend to down to the US Gulf Coast.

Canadian Pacific also gains access to Mexico operations that KCS purchased after the Mexican government privatized its freight rail system in the late 1990s.

The STB cited the two railroads’ operations limited overlap as a key reason for its decision. It had quashed an attempt by Canadian National Railway Co. to snatch away Kansas City Southern with a higher bid in August 2021. The regulator determined that extensive overlap in that prospective deal would have harmed competition.

The Andersons to Expand Ohio Wholesale Terminal

Eastern Cornbelt, Featured, News

The Andersons Inc., Maumee, Ohio, announced on March 16 that it plans to expand its wholesale fertilizer distribution terminal at Lordstown, Ohio, increasing dry bulk storage by nearly 65% with the addition of a new 10,000-ton storage building. The project also features enhancements to the receiving system and loadout automation process.

“The Lordstown facility is celebrating its 25th anniversary this year. This investment further supports The Andersons commitment to growing with our customers in the northeast Ohio market,” said Andy Spahr, Vice President Wholesale for The Andersons. “We look forward to the positive impact this project will have, supplying key nutrients for agricultural production when and where it matters most, positioning the Lordstown facility to serve the market for the next 25 years.”

The upgrade will increase bulk dry storage capacity at the terminal from 15,500 to 25,000 tons, and the new receiving system will expand unloading capacity from 300 to 500 tons per hour, according to Operations Manager Josh Kurth. The expansion project is expected to be completed by fall of 2023. Automation to the loadout process has already been completed, the company said, streamlining traffic flows and reducing loading times by 25%.

The Lordstown terminal is one of five wholesale ag facilities that The Andersons operates in Ohio, with the others located at Maumee, Toledo, Upper Sandusky, and Carey. The Andersons opened the Lordstown site in 1998 (GM March 9, 1998) to supply dry bulk fertilizer to dealers and distributors in northeastern Ohio, Pennsylvania, and New York.

The facility was initially a bulk blending site with 6,100 tons of storage capacity, but a $1 million expansion in 2003 (GM Dec. 9, 2002) more than doubled the dry capacity and added liquid transfer capabilities to allow for truckload shipments of nitrogen solutions and other non-pressure liquids. Another upgrade in 2020 added a 1.5 million-gallon UAN storage tank at Lordstown (GM Feb. 28, 2020), expanding UAN capacity at the site to 3 million gallons.

Bunge Surges on Plans to Replace Signature Bank in S&P 500

News, News Briefs

Bunge Ltd.’s shares climbed 14% in the biggest one-day gain since May 2017 after the S&P Dow Jones Indices announced that the company will replace Signature Bank in the S&P 500, according to Bloomberg. The move was effective prior to the opening of trading on Wednesday, March 15.

The Federal Deposit Insurance Corporation (FDIC) announced that it has taken Signature Bank into FDIC Receivership, and therefore Signature Bank is no longer eligible for inclusion.

Fortescue, Kenya Sign Pact on Green Energy and Ammonia Projects

Africa, Australia, Green Ammonia, News, News Briefs

Fortescue Future Industries Executive Chairman Andrew Forrest and Kenya President William Ruto signed an investment support and implementation agreement for the development of a 300MW capacity generation green ammonia and fertilizer facility in the Naivasha vicinity of Olkaria geothermal field, the company said in a statement.

Agreement was also made that the project will supply green electricity to Kenya’s grid. It also outlines a commercial framework for the implementation of the project, including government support for the critical resources, infrastructure, and off-take.

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