All Posts from November 19, 2012

Agrium expects to close on Viterra in 1Q

Calgary — Agrium Inc. President and CEO Michael Wilson said Nov. 14 that the company expects to close on its acquisition of the bulk of Viterra’s retail outlets by the end of the first quarter of 2013. He said Glencore has indicated that it will likely close with Viterra in the second week of December. “If they do we’ll be getting into Christmas when we file for competition review, but hopefully, we’ll be closing the deal near the end of the first quarter.” As a result, he said Agrium would be getting all the earnings from April 1 on that business. He said it would be a great addition for Agrium. And Agrium Retail is not prepared to rest on its laurels. “We’re likely sitting in retail below 20 percent share of market,” said Wilson, “whereas why can’t we get that up to 30 percent over the immediate near future.” He said Agrium Retail has lots of room to grow in North America. Wilson was speaking at the Dahlman Rose & Co. Global Metals, Mining and Materials Conference.

Israel considers limitations on Negev phosphate mining

Tel Aviv — Israel’s Energy and Water Ministry is looking into the possibility of limiting phosphate mining in the Negev. The panel appointed by the ministry – comprised of three members from the ministry and headed by Yosi Vertzburger, director of the natural resources unit – will also examine the royalties paid by Israel Chemicals Ltd. (ICL) on the phosphate that it mines in southern Israel. ICL currently mines millions of tons of phosphates annually and pays $0.73 per ton in royalties to the state on each ton of phosphate mined. The ministry, which has overall responsibility for Israel’s natural resources, fears that uncontrolled mining would lead to the depletion of local reserves. The panel was instructed by Ministry Director General Shaul Tsemach to examine the various issues regarding local mining in light of the expected global shortage of phosphates. About 95 percent of mined Israeli phosphates are exported, either directly or indirectly. The panel will examine the issue from a long-term vantage point and to guarantee that the country has sufficient reserves for future needs. The ministry is also revisiting the agreement on royalty payments for phosphate rock to determine whether it needs to be changed, and is considering hiring a foreign advisor to assess the situation in Israel and make recommendations.

ICL Industrial reports expansion

Ardsley, N.Y. — ICL Industrial Products (ICL-IP), a unit of Israel Chemicals Ltd. (ICL), said Nov. 13 that it is expanding production of Fyrol® HF-5 polymeric flame retardant at its Gallipolis Ferry, W.Va., plant to meet growing market demand. Fyrol® HF-5, a flame retardant designed for flexible polyurethane foam applications, was designed originally to meet the exacting sustainability and chemical use standards of international furniture makers. Effective Jan. 1, 2013, ICL-IP will discontinue the sale of TDCP for flexible polyurethane foam upholstered home furnishings applications, including chairs, sofas, and nursery products. “By expanding the production of Fyrol® HF-5, ICL-IP is positioned to serve the changing needs of the upholstered furniture industry,” said Greg Symes, ICL-IP global business manager for polyurethane products. “This is an example of how ICL-IP’s world-class research capabilities, our culture of engaging directly with customers, and the flexibility of our manufacturing facilities combine to provide new and innovative products to the global marketplace.” He also noted that by expanding production of Fyrol® HF-5, the company bolsters its manufacturing position in West Virginia. ICL-IP also announced that it is well into the development process of a flame retardant to replace TDCP in automotive and other transportation industry applications in 2013. The company will cease all production of TDCP by the end of 2015. This schedule will allow customers in transport-related segments adequate time to qualify the TDCP replacement through the Production Part Approval Process system. ICL-IP is a global leader in the production of flame retardants and a variety of bromine compounds for the electronics, construction, and automobile industries and clear brine fluids to the oil and gas drilling industry.

One year in prison for organic fertilizer fraud

San Francisco — The head of a Salinas Valley fertilizer company has been sentenced to one year in prison and ordered to pay a $125,000 fine for defrauding customers by representing his product as organic fertilizer when it contained prohibited chemicals. Peter Townsley, a resident of British Columbia who was charged in 2010 with eight counts of mail fraud, two counts of making false statements, and one count of conspiring to commit mail fraud, also was ordered to serve six months of community confinement, during which time he must perform 1,000 hours of community service related to organic farming. According to the plea agreement, as president of California Liquid Fertilizer (CLF) from April 2000 to December 2006, Townsley sold Biolizer XN with a label that claimed it was approved for use in organic farming when it actually contained prohibited chemicals. During that period, CLF realized more than $6.5 million in gross sales from the sale of Biolizer XN. The plea agreement also states that in 1998 Townsley applied for approval by Organic Materials Review Institute, an agency that approves organic fertilizers, saying that the fertilizer was made of fish, fish by-products, feathermeal, and water. He admitted that by April 2000, he had changed the ingredients in Biolizer XN to a product containing ammonium chloride, a material prohibited from use in organic agriculture.

Martin 3Q Sulfur Services income up 42 percent

Kilgore, Texas — Martin Midstream Partners LP saw a 42 percent increase in operating income from its Sulfur Services segment for the third quarter ending Sept. 30, 2012, to $6.1 million on revenues of $60.6 million, versus the year-ago $4.3 million and $70.2 million, respectively. The unit, which includes both fertilizer and sulfur, saw an uptick in fertilizer volumes to 61,200 lt from the year-ago 54,200 lt, while sulfur volumes were off at 225,600 lt from 310,200 lt. Company-wide, Martin saw a whopping increase in third-quarter net income to $72.4 million on revenue of $317.9 million, versus the year-ago $5.4 million and $287.6 million, respectively. However, this was mainly due to the sale of Prism, which included East Texas and Northwest Louisiana gas gathering and processing assets and netted some $63.6 million. Minus that, income from continuing operations was $8.8 million versus the year-ago $3.1 million. Nine-month Sulfur Services income was $30.9 million on revenues of $202.2 million, versus the year-ago $22.4 million and $206.9 million, respectively. Fertilizer volumes were 238,700 lt, up from 201,200 lt, while sulfur were down at 861,800 lt from 998,700 lt. Martin-wide nine-month net income was $90.1 million on revenues of $920.2 million, versus the year-ago $21.5 million and $800.6 million, respectively. Income from continuing operations was $22.8 million versus $13.8 million.

K+S 3Q Potash/Mag earnings off, sales up

Kasel — Costs crimped K+S Group’s Potash/Magnesium segment during the third quarter ending Sept. 30, 2012, with operating earnings for the segment down 7.3 percent to €158.8 million, versus the year-ago €171.3 million. Sales were up 10.1 percent, to €560.5 million from the year-ago €508.9 million. Salt earnings were off 61.7 percent due to weak restocking, a major factor dragging company-wide earnings down 13.8 percent to €156.7 million on revenues of €916.6 million, versus the year-ago €181.8 million on revenues of €853.5 million. Nine-month Potash/Mag earnings were up 8.9 percent, to €608 million on revenues of €1.81 billion from the year-ago E558.1 million on revenues of E1.59 billion. Company-wide earnings were off 10.5 percent, to €625.3 million on revenues of €2.99 billion, versus the year-ago €698.4 million and €2.97 billion, respectively.

Growmark reports record annual sales

Bloomington, Ill. — Growmark Inc. said last week that higher commodity prices and volume growth in most business units produced record sales for the fiscal year that ended Aug. 31, 2012. Net sales were the highest in history at $10 billion, up from the prior year’s $8.6 billion. Net income attributable to Growmark was $243 million, the second highest level in history. Year-ago was $196 million. Total patronage in the amount of $158.1 million was returned to Growmark member-owners, also a company record. Year-ago was $84.5 million. Growmark is a regional cooperative providing agriculture-related products and services, as well as grain marketing in 31 states and Ontario, Canada. This year it was ranked fifth on the NCB Co-op 100 listing of the nation’s 100 highest revenue-earning cooperatives across all economic sectors, moving up from seventh place on the 2011 list. Growmark was also ranked fourth on the USDA list of the 100 largest agricultural cooperatives in the U.S., a ranking that was also achieved in 2011.

Wilbur-Ellis buys Mott Grain in North Dakota

Walnut Creek, Calif. — Wilbur-Ellis Co. announced that it has acquired the assets of Mott Grain in Mott, N.D., broadening its footprint in southwestern North Dakota and complementing the company’s aerial application business in the Dakotas and the surrounding region. “Wilbur-Ellis sets a high standard for acquiring profitable businesses with people who have a work ethic similar to ours, which is exactly what we saw in Mott Grain,” said Troy Johnson, Midwest regional manager at Wilbur-Ellis. “They have been a Wilbur-Ellis customer for many years, so we know they are an excellent and capable organization. The acquisition complements our growth plan as we are committed to expanding our grower base and aerial application business in North Dakota.” Mott Grain purchases seed, fertilizers, plant protection, and other branded products from Wilbur-Ellis, and also utilizes the company’s aerial application services. Mott Grain received the North Dakota Department of Agriculture’s 2007 and 2008 Dealer of the Year awards, and was also a 2008 recipient of the National Environmental Respect Award. “We’re excited to bring together the synergies of our companies at a time when North Dakota growers, large and small, need a high level of technological service and expertise to help meet the needs of their businesses,” said Todd Kautzman of Mott Grain. “And I believe that Wilbur-Ellis can bring that to the table.” Wilbur-Ellis’ Agribusiness Division generates $2 billion in sales revenue and has more than 160 locations in 25 states throughout the U.S.

Competitors weigh in on Uralkali-China bonds

Moscow — The Mosaic Co. and Potash Corp. of Saskatchewan Inc. executives last week weighed in on a recent bond investment in which a Chinese company could gain a sizeable stake in Russian potash giant Uralkali. “The convertible bond in China as far as I know is a financial exercise,” said PotashCorp President and CEO Bill Doyle. “I don’t think Mr. Putin is going to allow the Chinese to manage the Russian potash industry.” Speaking about the Chinese Investment Corp. (CIC), Mosaic President and CEO James Prokopanko said they are not an organization designed to subsidize potash into China or improve agricultural cost competitiveness. “They’re an organization designed to earn returns on the capital they invest … I think they are going to be driven by the same economic factors that we are, a return on capital.” Still, others speculate that the deal could give the Chinese leverage or insight in negotiating potash contracts going forward. Uralkali said Nov. 9 that it has notified certain key shareholders about the completion of the issuance of bonds exchangeable into ordinary shares of Uralkali in a privately negotiated transaction to VTB Capital plc and Chengdong Investment Corp., a unit of the China’s sovereign wealth fund CIC. The bonds are due 2014, and assuming full conversion they will be exchangeable into ordinary shares of Uralkali, representing 14.5 percent of the issued share capital of Uralkali as of Nov. 9. Uralkali is not a party to any agreement regarding this transaction.

No ICL-PotashCorp deal before Israeli elections

Israel’s Deputy Attorney General Avi Licht has made it clear that no deal between Israel Chemicals Ltd. (ICL) and Potash Corp. of Saskatchewan Inc. (PotashCorp) can be concluded before the January 22 Israeli elections. He made this clear in a legal opinion that was sent to all relevant government ministries. The legal opinion was requested by the prime minister’s office, the Finance Ministry, and the Industry, Trade and Labor Ministry.

Licht said that the proposed merger was a complex deal that would require numerous approvals in Israel and abroad, and that only preliminary contacts have been held so far. He said that the various government ministries have not prepared the necessary legal work in regard to the proposal. In the meantime, Licht said that representatives from the various government ministries could meet with the interested parties, but that the process should not in any way be sped up. Senior officials from the Finance Ministry and PotashCorp are due to meet later this month to discuss the proposal. Ministry sources stressed that the discussions would focus on hearing from PotashCorp regarding the proposed framework of the merged company. The sources said only after the meeting would ministry economists and experts begin to assess the proposal and recommend whether to accept it.

The deputy attorney general said in his legal opinion that even if the negotiations are concluded in the coming weeks, the current government should not approve the deal prior to the elections.

Meanwhile, Bank of Israel Governor Stanley Fischer has said he is not opposed to the proposed deal. In an interview with Bloomberg., the governor said that if ICL continues production in Israel, then there is no reason not to sell the company. He noted that the profits would be transferred abroad instead of remaining in Israel, but that the real concern was a cut in jobs, which Fischer said was not likely to occur. The Bank of Israel governor has a huge impact on the Israeli economy and government policy. From a regulatory point of view, however, Fischer’s support has no influence since the Bank of Israel would not have to approve the deal. The big hurdle is likely to be the Finance Ministry, where Accountant General Michal Abadi-Boiangiu has expressed her opposition to the deal.

Meanwhile, the Dead Sea Works union has asked the powerful Histadrut Labor Federation to approve the declaration of a work dispute at the company. The reason given is the contacts over the possible sale of ICL to PotashCorp. The union said it feared that the change of ownership could lead to a cancellation of the owner’s commitments to the workers. The Histadrut is due to take up the request next week. If approved, the union would be allowed to impose sanctions in two weeks’ time.