All Posts from April 2, 2012

BLM gives okay to Intrepid solution mine

News Briefs

Carlsbad, N.M.—The Bureau of Land Management (BLM), after taking more than two years assessing the environmental impacts, has given the go-ahead to Intrepid Potash Inc.’s plan to extract by solution mining the potash remaining in an inactive underground mine in the Carlsbad area. No one was available at Intrepid’s Denver headquarters to comment, but before the BLM decided the project required an environmental impact study (EIS), company officials indicated that the HB Solar Solution Mine, located 20 miles northeast of Carlsbad in Eddy County, could yield 150-200,000 tons of additional low-cost potash production in approximately two years. According to BLM, approval of the project was based on all of the alternatives analyzed in the project’s environmental impact statement and public comments received. The main environmental concern involved the source of and impact of water supplies required for the project’s solar ponds, which at peak usage is estimated to be approximately 2,000 gallons per minute over seven years. “Obviously the project required a lot of water, and we had to determine how much and what would be the impacts,” reported BLM Project Manager David Alderman, pointing out that some small amounts could be recovered and reused in the processing plant, but the majority would be lost from the evaporation ponds. BLM agreed in the EIS that the remaining potash in the underground pillars and walls of the inactive workings is no longer accessible through conventional methods. The Intrepid plan calls for injecting saline water into the mine workings and extracting the saturated mineral solution. This mineral-rich solution will then be pumped to the surface and transported through a series of surface pipelines to evaporation ponds. Once the solution evaporates in the ponds, the potassium-bearing salts will be harvested from the ponds and transported to a newly constructed mill for ore refinement. “The BLM has carefully reviewed the proposed project and determined that this project meets BLM’s requirement for balanced management of public lands” said Jim Stovall, BLM’s Carlsbad Field Manager. “The project allows for the development of potash minerals while protecting other resource values including air quality, water quality, wildlife, cave resources, and cultural resources.” Intrepid earlier indicated that it planned to hit the ground running with respect to developing the solutions mine once BLM approval was received.

CF suspends UAN loading at Woodward

Breaking Industry News

CF Industries Holdings Inc. notified customers March 31 that it had suspended loading of UAN-32 and UAN-28 at its Woodward, Okla., facility until further notice. No other details were provided. This is the second time in less than a month that UAN loading at Woodward has been suspended. Back on March 9, CF alerted customers that UAN loading at that location was suspended, but the company followed that announcement with another on March 12 that UAN loading had resumed on an allocated basis.

UAN capacity at Woodward is 825,000 st/y. The Woodward facility also produces 440,000 st/y of ammonia, but only 100,000 st of that is available for sale as a finished product, with the rest upgraded to UAN.

Pusri settles half of urea tender

Breaking Industry News

Indonesia’s Pusri awarded 30,000 mt of granular urea to Dreymoor at $470.10/mt FOB in a tender that closed Friday, March 30. An additional 30,000 mt was offered but no bidders appeared.

Pusri set the minimum price at $470/mt FOB, and only Dreymoor met that level. All other bids were in the mind-$450s/mt FOB.

In the run up to the tender, industry sources expected to see prices in the low-$450s/mt FOB. The higher floor price set by Pusri indicates the producer is more bullish than many of the traders.

BASF-EuroChem deal sealed

Breaking Industry News

EuroChem completed its purchase of the European BASF fertilizer operations March 31. The Euro 830 million (US$1.1 billion) deal was concluded after antitrust authorities in Europe approved the deal.

The transfer includes plants for CAN/AN, NPK, nitrophosphoric acid and three nitric acid plants. The plants will be part of a new company, EuroChem Antwerp.

The deal solidifies EuroChem’s presence in Western Europe in an ever-expanding area of the fertilizer industry. It is already holds title to the fifth largest reserves of potash and is a major phosphate and nitrogen fertilizer producer.

Yara makes SOP investment

Breaking Industry News

Yara International ASA has agreed to make a strategic investment of approximately C$40 million in IC Potash Corp (ICP) and has entered into an off-take arrangement for 30 percent of all products produced by ICP’s Ochoa project in New Mexico for a period of 15 years. ICP and Yara have also agreed to discuss the possibility of establishing a jointly held entity for the purpose of marketing products produced by the Ochoa project.

"This investment fits well with our strategy. Through the ownership in ICP, Yara gets an upstream exposure on potash which reduces and mitigates the financial impact of being structurally short on the nutrient. Furthermore, the partnership with ICP aligns our respective strategies to develop and distribute premium fertilizer products, where Yara already has a leading position globally with its nitrates and nitrate-based NPK portfolio," says Jørgen Ole Haslestad, President and Chief Executive Officer in Yara.

Mr. Sidney Himmel, President and CEO of ICP, comments, "Yara and ICP share a strategic focus on premium products and adding value in the fertilizer supply chain. As one of the world’s largest distributors of plant nutrients, Yara is the ideal partner for ICP’s project development and product marketing strategies. This partnership is transformational for ICP and provides the Company with a significant injection of capital and a buyer for 30 percent of the annual production by the Ochoa project. We look forward to working with Yara in further developing the distribution channels for our premium potash products."

Pursuant to the strategic investment, Yara, through a wholly-owned subsidiary, will purchase from ICP in a private placement transaction 30,129,870 common shares at a price of $1.32 per share. The issue price represents a 41 percent premium over the 20 day volume weighted average price of ICP’s common shares traded on the Toronto Stock Exchange as of the close of business on 30 March 2012. On completion of the transaction, Yara’s shares will represent 19.9 percent of the issued and outstanding common shares of ICP on a non-diluted basis.

ICP’s objective is to start commercial production in fourth quarter 2015, with an estimated annual production of 700,000 metric tons of SOP and SOPM (Potash Magnesium Sulphate). SOP is a non-chloride based potash fertilizer used in the cash crop and horticultural industries, and for agriculture in saline and dry soils. It is considered a premium product, carrying a substantial premium over the price of Muriate of Potash (MOP).

Upon completion of the transaction, ICP will have approximately US$60 million in cash which will be used to complete a definitive bankable feasibility study, all required permitting, deposits for equipment purchases, and pre-construction engineering. ICP intends to launch the feasibility study on the Ochoa project in the coming weeks.

Yara will have the right to appoint one representative to ICP’s board of directors and the pre-emptive right to participate pro rata in all future equity or equity-linked issuances by ICP. Subject to certain exceptions, Yara will be restricted from transferring securities of ICP until the earlier of 24 months following the closing date and the date on which ICP has secured all financing to complete the construction of the Ochoa project and such construction has commenced. During such period, and subject to certain exceptions, Yara has agreed not to make any take-over bid for ICP’s securities and not to take certain other actions which may affect the control of ICP.

Yara has no current intention to acquire additional securities of ICP, except in connection with the exercise of its pre-emptive right, or to dispose of any of its ICP securities. Subject to its agreements with ICP, and depending on its assessment of ICP’s business, prospects and financial condition and general economic and market condi

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks


Producer Symbol Price Week Ago Year Ago
Agrium AGU 86.05 86.79 87.89
CF Industries CF 179.50 182.44 129.76
Intrepid Potash IPI 24.19 24.33 33.88
Mosaic MOS 55.27 56.27 78.85
PotashCorp POT 45.01 45.44 57.15
Terra Nitrogen TNH 247.95 228.14 113.19
CVR Partners UAN 26.06 26.65 N/A
Distribution/Retail
Andersons Inc. ANDE 48.29 48.17 46.56
Deere & Co. DE 80.49 80.43 91.92
Scotts SMG 54.33 52.70 56.72

TFI applauds bill to halt EPAÆs guidance

News Briefs

Washington—The Fertilizer Institute (TFI) on March 28 praised U.S. Sens. John Barrasso (R-Wyo.), Jim Inhofe (R-Okla.), Dean Heller (R-Nev.), Jeff Sessions, (R-Ala.) and 26 other Senators for introducing the “Preserve the Waters of the U.S. Act” (S. 2245), which TFI said seeks to prevent the U.S. EPA and the U.S. Army Corps of Engineers from issuing their “Final Guidance on Identifying Waters Protected by the Clean Water Act.” The final guidance document, issued in draft form by EPA and the Corps in May 2011, would significantly change and expand the scope of federal jurisdiction under the Clean Water Act, according to TFI. If finalized, TFI said it has “the potential to make it more difficult for Americans to build in their backyards, grow crops, manage livestock, expand small businesses, and carry out other activities on private lands.” S. 2245 was introduced just days after the Supreme Court’s decision in Sackett v. EPA, a ruling that supports the rights of property owners to challenge EPA compliance orders that are found to be arbitrary and capricious. In 2007, according to TFI, the Sackett family was told by EPA that the property they had recently purchased in Idaho on which to build their home was a wetland covered under the Clean Water Act. Although the Sacketts attempted to prove that their property was not a wetland, EPA proceeded to issue a compliance order that if not obeyed would result in fines of up to $75,000 a day. The case eventually ended up before the Supreme Court, which ruled in favor of the Sacketts last week. “The Fertilizer Institute believes the Supreme Court’s decision in Sackett v. EPA is a victory for land owners throughout the country,” said TFI President Ford B. West. “We are pleased that the legislation introduced by Senators John Barrasso, Dean Heller, Jim Inhofe and Jeff Sessions seeks to prevent additional situations where EPA may be overstepping and infringing on the rights of property owners, including farmers and other land use stakeholders.” In related efforts on this issue, TFI joined sixty other organizations in sending a letter to the Office of Management and Budget (OMB) earlier this week to express serious concerns with EPA and the Corps’ draft guidance. The letter also urged OMB to conduct a thorough review of the final guidance document, noting that the coalition believes EPA significantly underestimated the costs associated with implementation.

STB considers industry input on rail transport

News Briefs

Washington—The Fertilizer Institute (TFI) and other organizations representing rail shippers filed the third and final round of comments with the Surface Transportation Board (STB) last week, asking the board to determine the reasonableness of tariff provisions that require shippers of toxic by inhalation (TIH) materials, including anhydrous ammonia, to indemnify the Union Pacific (UP) Railroad for all liabilities except to the extent caused by UP’s own negligence. The filing results from a Dec.12, 2011, decision by the STB to initiate a public proceeding regarding tariff provisions that apply to a much broader range of products than just TIH materials. According to TFI, the tariff would make TFI members and other shippers responsible for environmental liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), for which UP otherwise would be responsible. Other groups submitting comments include the American Chemistry Council, the Chlorine Institute, and the National Industrial Transportation League. Should the STB rule that UP’s indemnity tariff is reasonable, the industry groups claim that TIH and non-TIH shippers could face similar tariffs from other railroads, effectively making the shippers insurers of the railroads against all liabilities caused by third parties, including environmental clean-up charges and Acts of God, even when there is no release of a TIH material. According to a statement by TFI, a reasonableness determination by the STB would also narrow the common carrier obligation of the railroads. “TFI and other petitioners have reminded the STB that the common carrier obligation of the railroads comes with corresponding benefits, such as protection from the application of normal bankruptcy and antitrust laws,” TFI said.

SULFUR

Market Watch, Sulfur, Tampa, Vancouver, West Coast

Tampa: Preliminary negotiations for second-quarter molten sulfur prices for delivery to Tampa began last week, but will probably not be settled until near the end of the month, which is about normal.

A source said sulfur producers were seeking an increase of about $10/lt, but that will probably meet some stiff resistance from the phosphate industry, which has adequate supplies and more stockpiled.

Mosaic was concluding its self-imposed curtailment of phosphate production at the end of the month, so it should begin using somewhat more sulfur than it did during the first quarter of the year. The company has been purchasing molten sulfur at below-market prices and has been putting it on the ground at its facility in Texas.

Refinery capacity operating rates for last week increased from 82.2 percent to 84.5 percent, an increase of 2.3 percent, according to the U.S. DOE.

Vancouver: Speculators in China have pushed the price of sulfur there to $210-$220/mt, and that could increase a bit more. In Vancouver, spot prices were in the $180-$200/mt FOB range, and contract talks were in process.

West Coast: Spot prices for prill on the West Coast were said to be in the $180-$200/mt FOB range last week.

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