All Posts from February 19, 2021

Incitec Pivot Assesses Impact of Turnarounds, Unplanned Outages

Ammonia, Ammonium Nitrate, Australia, News, News Briefs

Incitec Pivot Ltd. (IPL), Southbank, Victoria, said on Feb. 15 it would take a total incremental adverse impact of approximately US$26 million (A$35 million) on its FY2021 earnings before interest and tax as a result of the updated status of its major plant maintenance projects and business performance, compared to previous expectations.

The Australian group reported that for the Waggaman, La., ammonia plant alone the earnings impact of the turnaround extension and an additional plant outage that occurred prior to the turnaround are expected to be an incremental US$15 million, up from previous expectations (for a total earnings impact of US$40 million). The assessment is based on a plant nameplate capacity of 800,000 mt/y of ammonia, as well as year-to-date realized ammonia and gas prices. The capital cost of the turnaround has increased by US$10 million, the company said.

IPL said the discovery phase of the Waggaman plant turnaround has been completed, during which emerging works were identified. The emerging work has increased the length of the turnaround by approximately two weeks, with the company now expecting the plant to be back online by mid-March 2021.

The Waggaman plant produced 729,000 mt of ammonia in FY2020, 15 percent more than the year-earlier 634,400 mt (GM Nov. 13, 2020), with the group reporting that the plant operated at 91 percent of nameplate capacity in FY2020, compared with 79 percent in the prior year.

Regarding its other major plant maintenance turnarounds, IPL confirmed that the six-week turnaround of the St. Helens plant was successfully completed in November 2020, and as previously announced, the planned maintenance shutdowns of the Mt. Isa and Phosphate Hill, Queensland, plants were successfully completed in October 2020.

IPL said planning and preparation for the earlier announced major turnaround to start in May of the Moranbah, Queensland, ammonium nitrate plant remains on track. The group expects lower second-half FY2021 production at the plant due to the turnaround.

Providing an update on its business performance, IPL said the total earnings impact of recent outages at Dyno Nobel Americas Explosives’ ammonium nitrate (AN) plants in Louisiana, Mo., and Cheyenne, Wyo., is estimated to be approximately US$11 million, which will be included in IPL’s first-half FY2021 results. The Australian group said the two plants experienced the unplanned downtime as a result of rotating equipment failure and repair works at the Louisiana, Mo., plant, which are currently underway.

Excluding the impact of these outages, Dyno Nobel Americas Explosives business earnings for first-half FY2021 are expected to be in line with the prior corresponding period.

Meanwhile, for Dyno Nobel Asia Pacific Explosives, IPL said the business performance of the division is tracking to expectation, with lower metallurgical coal exports not materially impacting earnings to date. It confirmed that Indonesian demand recovery is slow as expected, with COVID-19 related mine closures ongoing. The division’s business earnings for first-half FY2021 are expected to be in line with the prior corresponding period.

At Fertilisers Asia Pacific, the company said favorable weather conditions and recently firming fertilizer prices are expected to drive higher earnings in FY2021, and that the typical second-half earnings skew is expected to be accentuated in FY2021 as the business realizes the benefits from higher fertilizer prices.

IPL reported the company’s ongoing response plan is on track to deliver expected cost savings of at least A$30 million in FY2021, as previously announced. The response plan was initiated in FY2020 to respond to the impacts of COVID-19 and low commodity prices, and designed to deliver A$60 million cost savings over the years. The plan delivered A$20 million of cost savings in FY2020. The group will release its first-half FY2021 results on May 17.

Germany’s BaFin Orders Accounting Probe at K+S

Germany, News, News Briefs

K+S Group, Kassel, said its financial statements as of Dec. 31, 2019, together with the related interim group management report and the abbreviated financial statements as of June 30, 2020, are to be examined at the occasion-related request of the German Federal Financial Supervisory Authority (BaFin)

BaFin informed the German Audit Office for Accounting (DPR) about the reason for the examination, saying that assets reported in K+S’ consolidated financial statements as of December 31, 2019, and the abbreviated financial statements as of June 30, 2020 – in particular non-current assets – may be overstated.

The probe relates to a K+S statement on Nov. 4, 2020, that it had adjusted its long-term assumptions for the potash business (GM Nov. 6 & Nov. 13, 2020).

Essentially, this related to assumptions regarding that long-term potash price development are now lower. Furthermore, an upward adjustment of the weighted average cost of capital (WACC) became mandatory, K+S reminded in its Feb. 17 statement.

“Overall, this resulted in a non-cash, one-off impairment loss of around €2 billion on assets in the Europe+ operating unit,” the company reminded. The Europe+ operating unit comprises Potash and Magnesium Products (including Bethune) and Salt Europe.

The impairment loss was recognized in the financial statements for the third quarter of 2020 and had a correspondingly negative impact on adjusted consolidated earnings after tax and ROCE, but did not result in a cash outflow, said K+S.

At the occasion-related request of BaFin, the DPR has announced that it will examine the accuracy of the impairment losses recognized.

For this purpose, DPR has requested the company’s cooperation and the submission of documents, and K+S said it is “comprehensively” complying with this request and has already provided the documents requested by DPR.

K+S’s Board of Executive Directors is convinced that the impairment loss has been recognized appropriately and in compliance with all relevant accounting standards, the company said, adding that its Supervisory Board also does not anticipate any indications to the contrary at present.

The company’s stock dropped as much as 14 percent in early trading in Frankfurt on Feb 18, the lowest since March 2020, and as of 17.35 CET was 14 percent down on the day.

Bloomberg cited Baader analyst Markus Meyer as saying he could only speculate on the potential “worst-case” consequences – if there are any. The analyst said these could include delayed fiscal-year reporting, additional impairments, or equity measures to strengthen balance sheets. While a further impairment “would strain K+S’ relatively weak balance sheet further, it could result in equity measures to strengthen it in the medium term,” said Meyer.

Commerzbank downgraded the stock to hold from buy in a note to investors, Bloomberg reported. Commerzbank analysts, including Michael Schaefer, said they await further clarification from K+S’ 2020 annual report, due on March 11. Separately, Independent Research also cut K+S to sell from a hold rating.

BHP: Jansen on Track for Mid-Year FID; Seen Okaying Project, Analyst Says

Australia, News, News Briefs, Potash, Saskatchewan

BHP Ltd., Melbourne, this week said its Jansen Stage 1 potash project in Saskatchewan remains on track to be presented to the BHP Board for a final Investment decision in the middle of the 2021 calendar year.

“Potash is an opportunity in a commodity we like,” CEO Mike Henry reiterated to analysts at a group earnings call on Feb.16, reminding everyone that the nutrient is “well-placed” to benefit from the world’s population growth and changing diets.

BHP’s view of the trend demand growth for potash remains unchanged. In its latest Commodities Outlook, reported as part of its fiscal first-half financial results statement this week, the group anticipates trend demand growth in potash of 1.5 to 2.0 million mt/y (between two and three percent per annum) through the 2020s. This rate of growth, it believes, would “progressively absorb the excess capacity currently present in the industry, with opportunity for new supply expected by the late 2020s or early 2030s.”

The mining group estimates producer sales of potash hit a record 79 million mt annualized in the June quarter of 2020, noting this halted “the downtrend in price of the prior twelve months that was exacerbated by the pandemic,” with robust demand carried over into subsequent quarters.

BHP’s aspiration to diversify into what it what it calls “future-facing” commodities might suggest it will green light the Jansen potash project when it is presented to the board in mid-2021, according to a Dow Jones Newswire report this week, citing UBS. Potash prices remain at soft levels “that could challenge the economics of the project,” UBS believes, but predicts BHP might pursue Jansen “as an avenue for growth.”

BHP’s current investment program to complete the shafts at Jansen was reported as 89 percent complete in January (GM Jan. 22, p. 31). Under current plans, Jansen Stage 1 will provide between 4.3-4.5 million mt/y of potassium chloride production capacity on completion. As previously indicated, the group puts the required capex for Stage 1 at between US$5.3-$5.7 billion, anticipates a five-year construction timeframe, and sees around two years from first production to full capacity ramp-up.

Yara Partners for Large-Scale Green Ammonia Project in Norway

Ammonia, News, News Briefs, Scandinavia

Yara International ASA, Oslo, has signed a Letter of Intent with state-owned hydropower company Statkraft AS and Norwegian renewable energy investment firm Aker Horizons, aimed at establishing Europe’s first large-scale green ammonia project in Norway.

Yara in December revealed its plans for 500,000 mt/y of green ammonia production in Norway through fully electrifying its Porsgrunn ammonia plant, and said it was seeking partners as well as government support for the project (GM Dec. 11, 2020).

The Norwegian group said the Porsgrunn plant is well set up for large-scale production and export, allowing Norway to quickly play a role in the hydrogen economy. Yara has an ongoing 5 MW green ammonia pilot plant at the Porsgrunn site operating in cooperation Norwegian hydrogen company NEL.

“Constructing a new ammonia plant and associated infrastructure is typically a capital-intensive process, but by utilizing Yara’s existing ammonia plant and associated infrastructure in Porsgrunn, valued at $450 million, the total capital requirement for the project is significantly reduced compared with alternative greenfield locations,” said Yara.

The project will likely require more than €1 billion ($1.2 billion), according to Bloomberg calculations based on current cost estimates for the technology and amount of hydrogen required. Electrolyzers are expected to get cheaper in the coming years as demand rises for clean hydrogen, which could help lower costs.

Yara said provided that power is available at the site and the required public co-funding is in place, the project could be realized within five-to-seven years.

The three partners plan to seek support from the Norwegian government and the European Union to kick start a marketplace that will drive demand, said Yara International President and CEO Svein Tore Holsether.

In addition to the Porsgrunn project, the three companies plan to explore the potential for green ammonia production in Northern Norway as a future opportunity.

Yara announced earlier this month that it is establishing a global Clean Ammonia division to capture growth opportunities “within carbon-free food solutions, shipping fuel, and other clean ammonia applications” (GM Feb. 12, p. 1).

BHP Reports Profit Increase

Australia, News, News Briefs

BHP Ltd., Melbourne, on Feb. 16 reported a 16 percent rise in its fiscal first-half profit, with underlying attributable profit of US$6 billion in the six months to Dec. 31, 2020, up from $5.2 billion in the prior corresponding period. The result compared with a median analyst estimate of US$6.4 billion, according to Bloomberg

The mining group cited higher prices, particularly for iron ore and for copper, and strong operational performance for the profits’ boost. It said it would pay a record interim dividend of US$1.01, up from last year’s US$0.65.

Tessenderlo Reported to Be Mulling Belarus Ammonium Thiosulfate Investment

Amthio, Belarus, Europe, News, News Briefs, Specialty

Belgium’s Tessenderlo Group is reportedly looking at setting up a facility in Belarus to produce ammonium thiosulfate, according to a report by Russia’s Fertilizer Daily. The report did not cite any sources, and Tessenderlo had not responded to Green Markets’ inquiries by press time.

According to the report, the production facility would be located in the Belarus free economic zone Grodnoinvest, and Grodno Azot would supply the plant with ammonia. A production capacity of 100,000 mt/y of ammonium thiosulfate is reported to be being proposed.

A final investment decision is reportedly proposed for this spring.

Reports by Belarusian media outlets, citing representatives of the Belarusian nitrogen company, were circulating in early 2019 of ongoing negotiations between Grodno Azot and Tessenderlo Kerley International (TKI) to discuss business cooperation and opportunities for cooperation with other Belarusian petrochemical companies. However, little has been reported since.

Emmerson Looks at Phased Development, Expansion Projects, Including SOP

Morocco, News, News Briefs, Potash, Specialty, Sulfate of Potash

Potash junior Emmerson plc, Isle of Man, this week said it is assessing a conceptual, staged, development for its 100 percent-owned Khemisset Potash Project in northern Morocco, aimed at reducing upfront capital costs and incorporating expansion options into the development plan of the project.

Emmerson recently received the mining license (ML) for the Khemisset project from the Moroccan Ministry of Energy, Mines, and the Environment, providing the company with the exclusive right to develop and mine the potash deposit, within the perimeter of the ML, in the Khemisset basin (GM Feb. 12, p. 37).

The key elements now being assessed are: to increase potash production by up to 50 percent; to incorporate potassium sulfate (SOP) as part of the larger project development; to increase salt sales to up to 4 million mt/y; and to increase the mine life, the company said.

“Khemisset is a project of enormous potential, and we see several opportunities to improve upon the mine plan presented in the 2020 feasibility study,” said Emmerson CEO Graham Clarke.

The existing project plant proposes potash production of up to 800,000 mt/y, with a current 19-year mine plan. However, the plan is based on only 43 percent of the total mineral resource estimate of 537 million mt with an average grade of 9.24 percent K2O (GM June 5, 2020).

The company previously has presented a scoping study for an SOP project, which indicated a project that could deliver an additional US$70m of EBITDA for the company for minimal capital expenditure, said Emmerson. The scoping study to assess the viability of converting 25 percent of its potash to produce 240,000 mt/y of SOP was completed in November 2019 (GM Dec. 6, 2019).

“The SOP market, especially our target U.S. sales market, continues to show strength in pricing, which drives a strategy to accelerate the development of that project, which provides increased cash flow generation, but also diversity of end-product,” said Clarke.

“We have also previously discussed the potential to increase our salt sales and our ongoing investigations into the global de-icing salt market and, in particular, the U.S. market gives us a high level of confidence in our ability to upscale our salt production significantly,” said the CEO.

During the project feasibility study, completed last June, the company confirmed its ability to manufacture significant quantities of de-icing salt and designed the project to produce 1 million mt/y for sale into the U.S. market (GM June 5, 2020).

“Following the completion of the feasibility study, Emmerson has continued to assess the market opportunity for de-icing salt and has concluded that there is likely to be a much larger market opportunity for this product,” said Clarke.

The potash junior said it will examine the technical and economic viability of initially constructing a project that mines at approximately half the rate assumed in the feasibility study. Following this phase 1 development, the project will then run through several expansion phases, the company said.

The earlier-than-expected receipt of the ML for Khemisset puts the company in the position to commence construction during 2021, and ahead of the anticipated initiation of construction by the end of 2021, “finance permitting,” Emmerson said.

Uralkali Buys 12.7 Percent of Own Shares

Fertilizer Stocks, News, News Briefs, Russia

Uralkali, Moscow, has purchased 12.7 percent of its own shares from shareholder Rinsoco Trading, reducing the latter’s stake in the potash company from 18.5 percent to 5.8 percent, according to a Feb. 10 Interfax report citing Uralkali.

The purchase was made by Uralkali Invest LLC, according to the report.

Uralkali’s principal shareholder since late last year is Dmitry Mazepin’s Uralchem, with 81.5 percent of the equity. Uralchem upped its stake in the potash company from 46.4 percent with the purchase of a 35.1 percent stake from Rinsoco in early December, in a deal that was financed by Russia’s Sberbank (GM Dec. 4, 2020).

Rinsoco Trading is owned by Belarusian businessman Dmitry Lobyak, who is a close business associate of Mazepin.

Uralchem in November confirmed that it planned a management reshuffle for Uralkali and Uralchem, saying the management would be merged in 2021 and transferred to the head of a joint management company (GM Nov. 20, 2020). Uralkali in fact named a new CEO in late November (GM Nov. 27, 2020). However, Mazepin has refuted speculation by some Russian media that the two companies planned to merge in 2021.

The report of this latest share transaction had not been confirmed by Uralkali.

Industry Mourns Loss of TFI’s Ford West

Featured, News, Obituary

Former TFI President Ford West, 73, passed away on Feb. 14, surrounded by his family, after a 15-year battle with prostate cancer.

“For more than thirty years, Ford West was the face of The Fertilizer Institute (TFI),” the organization said in a statement. “His tireless advocacy for TFI, its members, and the Nutrients For Life Foundation (NFLF) was unmatched, and serves as an inspiration today to all who served with him.

“Under Ford’s leadership, TFI grew its retail membership and expanded its portfolio to include 4R Nutrient Stewardship, the Nutrients for Life Foundation, and ResponsibleAg. Ford’s dedication to the fertilizer industry was eclipsed only by his profound love for his family. We extend our deepest sympathy to his wife Cathy and his three children.”

An announcement regarding TFI’s plan to memorialize Ford’s life and service to the industry will be forthcoming. In the meantime, TFI said it wants to hear your Ford West stories. You can send them to FBWestremembrance@tfi.org. TFI said it will compile your submissions and send them to the West family.

Ford joined The Fertilizer Institute (TFI) in 1979. He was named President in 2005. He was passionate about the industry, and his legacy of 34 years with TFI lives on through the Ford B. West Center for Responsible Agriculture, a training center in Owensboro, Ky., named in recognition of his efforts with ResponsibleAg. In 2013, he was recognized by the Agricultural Retailers Association with the Jack Eberspacher Lifetime Achievement Award, and in 2018 Ford was inducted into the Fertilizer Hall of Fame.

Ford began his professional career with the National Canners Association, located in Washington, D.C.

Born in Murphy, N.C. in 1947, Ford attended Mars Hill College, where he was a member of the Mars Hill football team, tri-captain of the 1969 team, active in student government, and listed in the Who’s Who Among Students in American Universities and Colleges. He joined the U.S. Air Force and received an honorable discharge in May 1974 with the rank of Staff Sergeant. He then attended North Carolina State University, where he met the love of his life, Mary Lucas (Cathy), and earned a M.S. in Food Science.

Ford is survived by his wife, two daughters, son, four grandchildren, three sisters, and a brother. A service celebrating his life will be held at a future date.

The family wishes any memorial contributions to be made to The Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins or Calvary United Methodist Church in Annapolis, Md.

Lower Selling Prices Hit APC’s FY2020 Net Profit, Sales Volumes Up 6 Percent

Jordan, News, News Briefs, Potash

Arab Potash Co. (APC) reported a 16 percent fall in full-year 2020 net profit after tax to JD126.7 million (approximately $178.7 million at current exchange rates) on consolidated revenue of JD456.2 million, down from the year-ago JD151.7 million and JD504.6 million, respectively, according to a company filing to the Amman stock exchange on Feb.15. The results are preliminary.

APC cited lower global selling prices and increased social responsibility payments as driving the net profit decline. The 10 percent year-on-year fall in revenues was also due to the lower selling prices.

Potash output increased 5 percent last year, while sales volumes were up 6 percent on the year. The company produced 2.62 million mt of potash in 2020, up from 2.486 million mt in the previous year, while sales volumes reached 2.553 million versus 2.408 million mt in 2019.

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