All Posts from June 18, 2012

Tessenderlo Kerley Inc. – Management Briefs

Management Briefs

Tessenderlo Kerley Inc.’s NovaSource crop protection business unit announced the establishment of two new sales regions and a new manufacturing position. The expansion is a result of the company’s recent acquisitions of the Sevin® brand agricultural insecticide (carbaryl) and Purshade® solar protectant. Keith Foster joins NovaSource as regional account manager for the Eastern U.S., and his responsibilities include managing the business in an eighteen state area. Foster was previously with Rotam North America as their territory manager in the Southeast. He also held earlier sales management positions with Helena Chemical and Terra International. Foster is in Sebring, Fla., and can be reached at kefoster@tkinet.com. Bernard Olsen represents NovaSource as the regional account manager for Southern California, Arizona, and New Mexico. Olsen was previously with Arysta LifeScience as their fumigant specialist in the western region. He held prior sales positions with Arysta, MGK, and Eden Bioscience. Olsen is in Paso Robles, Calif., and can be reached at bolsen@tkinet.com. Jim McNamara joins NovaSource as toll manufacturing manager. He was previously with Nufarm Americas as their supply chain and toll manufacturing manager, and also held prior manufacturing management positions with McIntyre Group, Owens Corning, and Mobil Oil.

Stonegate releases drill results for P project

Eastern Canada, News, News Briefs, Phosphate Rock

Toronto — Stonegate Agricom Ltd.’s latest assay results at its Paris Hills Phosphate Project in Southeast Idaho show consistent quality grades throughout the project’s upper phosphate zone. The latest 11 drill hole intercepts in the zone announced June 8 align with the results of 15 drill hole intercepts disclosed in April. The most recent assay results show grades ranging from 21-31.29 percent P2O5 and phosphate bed thicknesses of 2.5-5.4 meters, which are consistent with ranges previously published. In December 2010, the Toronto-based company confirmed intersecting high-grade phosphate on the upper and lower zones of its Paris Hills project. Stonegate President and CEO Mark Ashcroft said the Paris Hills project could rank as one of the highest-grade phosphate deposits in the Americas. The drilling to determine resources is now complete. Stonegate expects to release a compliant estimate of the zone’s mineral resources in the second half of 2012. The company also intends to announce assay results for the project’s lower phosphate in the next few weeks. A pre-feasibility study for the lower zone was released in March. Mineral reserve estimates are expected to be updated in a feasibility study by the end of 2012. Ashcroft said Stonegate is confident the two deposits have sufficient size and grade to become strategic, cost-effective sources of phosphate supply for major fertilizer producers. Stonegate completed the purchase of the phosphate/vanadium property at Paris Hills from Rocky Mountain Resources Corp. in November 2009 for $1 million in cash and six million common shares of Stonegate valued at 50 cents per common share. Earlier in 2009, Rocky Mountain announced its phosphate holdings in Paris Hills could sustain mining operations for up to 75 years. It said the estimated 4.6 million tons of ore at 29 percent P205 could potentially be mined and directly shipped as feed to a phosphoric acid plant.

LOI signed for potash assets in Brazil

Brazil, News, News Briefs, Potash Muriate

Vancouver — Pacific Potash Corporation on June 13 announced that it has signed an arms-length letter of intent to purchase all its issued and outstanding securities in Moonraker Acquisition Corp and its shareholders. Under the terms of the transaction, Pacific Potash will acquire all of the issued and outstanding shares of Moonraker from the shareholders in exchange for the issuance of 4,975,000 common shares of Pacific Potash. Moonraker will become a wholly owned subsidiary of Pacific Potash. Moonraker or Pacific Potash holds an option to acquire an 80 percent interest in Western Potash Corporation’s Brazilian potash assets, which comprise several claim parcels that extend from the Amazon River to the center of the Amazonas Basin, for a cash payment of $100,000, followed by an additional $150,000 and the issuance of 500,000 common shares of Pacific Potash within five days after approval of the agreement. On or before the first anniversary of the agreement, Moonraker or Pacific Potash must pay an additional $250,000 and issue a further 500,000 common shares of Pacific Potash. On or before the third anniversary, Moonraker or Pacific Potash must issue a further 500,000 common shares of Pacific Potash. The option also calls for $2 million in exploration expenditures over three years in order to earn the 80 percent interest, with a minimum exploration expenditure of $300,000 per annum. Once all of these commitments have been completed a joint venture will be formed, with Pacific Potash paying 80 percent of costs and Western paying 20 percent going forward. Potassio do Brasil, Petrobras, and Vale, among others, are also exploring for potash deposits in that region. On May 31, Potassio do Brasil announced that it had completed a US$58.66 million capital raising to further the exploration for potash at their Amazon Basin project.

OCP forms joint venture with Toros Agri

Asia, Eastern Europe, News, News Briefs

Casablanca — Moroccan phosphate producer and exporter OCP on June 13 announced that it is forming a joint venture with Turkish fertilizer producer Toros Agri to export phosphate fertilizer to Eastern Europe, the Balkans, and Central Asia. State-owned OCP will hold a 70 percent stake in Black Sea Fertilizer Trading Co., with Toros Agri owning 30 percent. “This venture will enable us to serve our clients in this region in a shorter time, from a shorter distance,” said Mhamed Ibnabdeljalil, OCP executive vice president of sales, marketing, and raw materials procurement. “Together with Toros Agri, we aim to leverage our positioning in Turkey and extend our growth to new surrounding markets, while contributing to agricultural development and food security in this region.” Ibnabdeljalil said the jv’s mission will extend beyond trading activities, “as it will serve as a consulting vehicle to the cooperatives and farmer ecosystem in the region by providing them best-in-class agronomical services.” Some of the phosphate exported by the new company will be produced by Toros Agri’s Samsun plant on the Black Sea coast. Acquired by Toros Agri in 2005, the facility has two phosphoric acid plants, one compound production unit, and one DAP plant. “Our cooperation with OCP, which commands an important share of the world’s phosphate exports and is the biggest enterprise of Morocco, goes back a long way,” said Esin Mete, chairwoman of Toros Agri and CEO of its affiliate, Tekfen Agri-Industry Group. “Our goal is to carry our activities on a broader international scale. We especially target growth in the global fertilizer market through regional strategic partnerships. As an initial step, this joint venture with OCP is an important milestone.”

Not all cheer in Illinois for possible OCI plant

Midwest, News, News Briefs

Pekin, Ill. — Not everyone is eager about the possibility of Egypt-based Orascom Construction Industries (OCI) building a $1.6 billion fertilizer project in Illinois’ Peoria County. It’s far from a done deal since Iowa and possibly others have set out to capture the proposed plant, which would produce ammonia, urea, and other nitrogen fertilizers to sell to Midwestern farmers. Illinois has pitched an 1,800 acre location in Peoria as a good location, and to sweeten the deal, Illinois State Sen. Dave Koehler introduced legislation (GM June 4, p. 10) providing incentives to OCI. Last week Koehler’s bill was approved unanimously by the senate’s executive committee. Although the new project promises to bring 165 to 200 permanent jobs and 1,200 construction jobs to the area, the Illinois Heart of Sierra Club in Illinois has voiced some environmental concerns. “Orascom is looking at a specific site; however, no one really knows where it will end up,” Joyce Blumenshine, club chairwoman, told Green Markets. “We’re not really opposed to the new site, and we’re all for new jobs and opportunities. However, we want the issue to be included in early discussions about the plant. We hope that environmental impacts won’t be overlooked. We are hoping to raise public awareness.” Blumenshine said a key issue for the area is poor air quality. “The Peoria area has managed to avoid being in non-attainment for key pollutants,” she said. “However, at times we have come very close to ozone and other limits. Hopefully a plant like the Orascom project will not cause this county to jeopardize our air quality.” Air quality has been an issue for the Peoria area, which received a grade of “F” from the American Lung Association in 2009. It improved to a “D” in 2010, and was awarded an “A” in the latest report.

Low fert prices and volumes impact OCIÆs 1Q

News, News Briefs, North Africa

Cairo — Orascom Construction Industries (OCI) released disappointing first-quarter results last week. Citing lower selling prices for ammonia and melamine and a drop in fertilizer sales volumes, OCI posted first-quarter EBITDA of US$255.8 million, down 23.6 percent from EBITDA of $334.8 for the first quarter of 2011. Net income for the quarter fell 54.4 percent to $94 million, compared with $206.3 million in last year’s first quarter, while consolidated revenues moved up 1.4 percent, to $1.28 billion from last year’s $1.26 billion. OCI said the income drop was due to lower operating margins and the elimination of investment income from the Gavilon Group LLC, since Gavilon was reclassified as an investment held for sale. OCI said the May 29 announcement of the sale of Gavilon to Japanese trading house Mrubeni Corporation (GM June 4, p. 1) valued the equity of the business at $3.6 billion. Subject to the completion of the transaction, OCI expects to receive cash proceeds in excess of $600 million for its 16.8 percent stake in Gavilon, which it acquired in 2008 for $340 million. OCI Chairman and CEO Nassef Sawiris said part of the proceeds will be paid as dividends to shareholders, and part will finance the company’s Fertilizer Group expansion in North America and potentially other opportunities. OCI said lower than targeted fertilizer sales volumes of ammonia, urea, and UAN during the first quarter, despite full operating rates, resulted in a favorable inventory position for OCI’s Fertilizer Group. Sawiris said this “should bode well for the Group, since fertilizer prices have recovered in the second quarter.” With increased production rates at its new fertilizer plants, Sawiris said OCI expects “a noticeable improvement in our financial results for the remainder of the year.” Since the first quarter, Sawiris said ammonia prices “have surged over 50 percent and urea prices have rebounded over 20 percent, and we expect prices for both commodities to remain firm for the second half of the year.” OCI said the Fertilizer Group has made significant progress on the commissioning of its capacity extensions in the U.S. and Algeria, and continues on track with its debottlenecking initiatives in Egypt and the Netherlands. In the U.S., OCI Beaumont sold 38,000 mt of ammonia during the first quarter, and is on track to produce at a rate of 250,000 mt/y. OCI Beaumont’s 750,000 mt/y methanol line is slated to start production in June. OCI noted that shareholders on May 17 approved the planned demerger of the company’s construction business from its fertilizer business. After remaining regulatory approvals are cleared, OCI said it expects the demerger to be completed during the third quarter.

K+S places Ç500 million corporate bond

News, News Briefs, Western

Kassel, Germany — German fertilizer company K+S AG on June 12 launched a corporate bond with a volume of €500 million and a maturity of ten years. With an interest coupon of 3 percent and an issue price of 99.422 percent, the yield is 3.068 percent. K+S said the proceeds will be used to refinance the outstanding corporate bond maturing in 2014, which, along with available liquidity and future cash flows, will serve to finance the Legacy Project in Canada and general corporate purposes. “The rapid and successful placing of the ten-year bond shows the capital market’s confidence in the sustainable earnings capacity of the K+S Group,” said Norbert Steiner, chairman of the K+S board of executive directors. “The issuance of the bond with a maturity up to 2022 optimizes our maturity profile, makes use of the capital market environment which is currently favorable for issuing investment-grade corporate bonds, and guarantees long-term financing security on extremely attractive terms.” Banco Santander, Barclays Bank, HSBC Bank, and Landesbank Baden-Württemberg served as joint managers and bookrunners for the transaction.

PotashCorp still considers upping ICL stake

Israel, News, News Briefs, Potash Muriate, Saskatchewan

Saskatoon — Potash Corp of Saskatchewan is still considering increasing its stake in Israel Chemicals Ltd. (ICL). In a meeting with analysts, PotashCorp CEO William Doyle said his company has not given up attempts to buy a larger stake in ICL, but he stressed that this was contingent on getting the necessary backing from government regulatory agencies. PotashCorp currently holds a 13.9 percent stake in ICL, and last December requested permission from the state-owned Corporations Authority to increase the stake to 25 percent. On June 10 PotashCorp informed the authority that it was ceasing efforts to increase its stake, but only days later Doyle indicated otherwise. PotashCorp would require approval from the authority as well as Israel’s Anti Trust Authority for any such transaction. The Israel Corp. controls 52.3 percent of ICL, and the remainder is publicly traded. ICL is a cash cow for the holding company, which also controls a majority stake in Oil Refineries Ltd. and Zim Navigation Lines, both of which have witnessed a sharp drop in profitability in recent years. Last December several local agricultural organizations came out against allowing PotashCorp to increase its stake in ICL. The Plant, Citrus, Vegetable and Fruit Councils jointly issued a statement opposing the move, saying they feared it would enable ICL to further take advantage of its monopolistic position in Israel, and that this could have a detrimental impact on local foods prices as well as export prices for agricultural produce.

Scotts lowers guidance after disappointing spring

Midwest, News, News Briefs

Marysville, Ohio — The Scotts Miracle-Gro Company on June 12 said it expects to fall short of its previous guidance of 6 to 8 percent sales growth and adjusted earnings of $2.65 to $2.85 per share for fiscal 2012 due to lower-than-expected sales and an unfavorable product mix. The company said consumer purchases of its products at its largest retail partners in the U.S. are up 3 percent on a year-to-date basis, compared with 8 percent entering May. Scotts said the challenges this year are primarily an outcome of slowing consumer demand following a strong and early start to the lawn care season in the second quarter. The gardening season, which traditionally peaks in mid- to late-May, has not met expectations, the company said. Consumer purchases of Miracle-Gro branded soils and plant food are essentially in line with 2011, and appear to have been negatively impacted by an industry-wide slowdown in the sale of flower and vegetable plants, Scotts said. In addition, the company said poor weather and challenging economic conditions will also cause its European business to fall short of expectations. Gross margin rates are also likely to fall short, due primarily to unfavorable product mix, unplanned distribution costs associated with the strong performance of the controls and mulch businesses, and reduced leverage of fixed costs. “While we remain confident in the long-term growth opportunities in our business, it is clear that near-term category growth has become harder to achieve,” said Jim Hagedorn, chairman and CEO. “Over the balance of the fiscal year we will pressure test our assumptions and make any necessary adjustments as we plan for the 2013 lawn and garden season.” Hagedorn noted some positives for the company as well, including unit growth in consumer purchases of Scotts’ lawn fertilizer products for the first time in several years; growth in its controls business; and 25 percent growth in the company’s mulch business through the first seven months of the year. An updated outlook will be provided when Scotts issues its third-quarter financial results in early August.

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