All Posts from December 19, 2016

K+S invests in Saudi Arabian manufacturer

K+S Group has acquired a 30 percent stake in fertilizer manufacturer Al-Biariq for Fertilizer Plant Co. Ltd (Al-Biariq) in Saudi Arabia for a high single-digit million figure (U.S. dollars). A contract to this effect was signed today by both companies in Dubai. Through this purchase, K+S is seeking to participate in the growth in the Middle East, Africa and South Asia, particularly in the fertigation segment.

“In line with our management agenda, we are further strengthening the specialty business in the Potash and Magnesium Products business unit through this investment and can offer an even broader product portfolio in the future,” said Norbert Steiner, chairman of the board of executive directors of K+S Aktiengesellschaft and board member responsible for this business unit.

Al-Biariq is a manufacturer of fully soluble potassium sulfate, which is used for the liquid fertilization of fruit and vegetables, amongst other applications. Al Biariq’s production facilities on the Red Sea have an annual capacity of 20,000 mt (SOP water-soluble), which is set to double to 40,000 mt in the near future.

As part of the agreement, K+S will in future take over the distribution and marketing of the fertilizers produced by Al-Biariq. In addition, K+S has acquired an option to purchase a further 30 percent in Al-Biariq within two years of completing the transaction (closing), which is scheduled for the second quarter of 2017.

K+S produces potassium sulfate fertilizers (including KALISOP®) from natural deposits at the Werra site in Hesse. The company said the synthetically manufactured potassium sulfate (SOP water-soluble) by Al-Biariq in Saudi Arabia provides a welcome addition to the K+S product range with a fully soluble potassium sulfate, which is primarily used in fertigation.

With the announcement of the acquisition of fertilizer activities in China (Magpower) in July, the investment in Al-Biariq in Saudi Arabia marks another step towards expanding and strengthening the K+S specialty fertilizer business this year.

Mosaic announces deal with Vale

Mosaic Co. agreed to buy Vale SA’s fertilizer unit for $2.5 billion in cash and stock to become the largest fertilizer producer in Brazil.

Half the price will be paid in cash and the other half in new shares, giving Vale an 11 percent stake in Mosaic and two seats on its board. The transaction is expected to close late next year, pending regulatory approvals, Plymouth, Minnesota-based Mosaic said Monday in a statement.

While Mosaic already operates a port terminal in Brazil, its mines are in the U.S. and Canada. Vale’s fertilizer business includes a phosphate mine in Peru and a potash mine in Brazil. The acquisition will give it assets including five Brazilian phosphate-rock mines and four chemical and fertilizer production plants, plus a 40 percent stake in a Peruvian phosphate mine.

“This acquisition provides Mosaic a tremendous opportunity to capitalize on the fast-growing Brazilian agricultural market and from improving business conditions,” Chief Executive Officer Joc O’Rourke said in the statement. “We see this as an ideal strategic fit for Mosaic.”

Vale can also earn as much as $260 million in cash in the two years after the completion of the Mosaic deal if certain financial metrics are met, according to the companies. Vale share were little changed at 24.35 reais at 10:22 a.m. in Sao Paulo, according to Bloomberg.

Mosaic expects the acquisition will boost earnings by 5 to 10 cents a share in 2018 and generate about $80 million of after-tax cost savings, according to presentation slides posed on its website. It will finance the deal by issuing $1.25 billion of debt next year.

The Vale assets have the capacity to produce 4.8 million mt/y of finished phosphate crop nutrients and 500,000 mt of potash. Mosaic will get Vale’s 40 percent interest in the Miski Mayo phosphate mine in Peru and its Kronau potash project in Saskatchewan, Canada, and the option to include a potash project in Argentina.

The acquisition excludes Vale’s Cubatao-based nitrogen and non-integrated phosphate business.