All Posts from May 20, 2022

AMEC Calls WA Royalty Rebate Modest, Praises Other Budget Items, Reduced Reporting

Australia, News, News Briefs, Potash

Australia’s Association of Mining and Exploration Companies (AMEC) on May 12 called the Western Australian (WA) government’s A$10 million Potash Industry Rebate Scheme, which is a 50% royalty rebate over two years, only a modest step forward to support the establishment of a new potash industry in the state. The rebate was a part of WA’s 2022-23 State Budget.

AMEC, however, praised several other areas of the budget, including a further $20.2 million for the Department of Mining, Industry Regulation, and Safety’s Resources Advice and Regulation Services capacity, including $14.6 million for the Aboriginal Empowerment Initiative; $2.9 million for post grant mining titles compliance; $1 million for a new Registrar’s office in Geraldton; and $1.8 million to support a Mining Warden. AMEC said all of these will facilitate greater mining and mineral exploration.

AMEC also praised the commitment of $12 million for a state-wide passive seismic survey, the WA Array, which will increase the knowledge of WA geology at depth and generate precompetitive data. It said an additional $8 million for Minerals Research Institute of Western Australia (MRIWA) will support greater scientific research to extend the state’s leadership in the sector.

AMEC also said the $350 million expansion of Geraldton Port and $78 million for growth at Lumsden Point will facilitate projects in each port’s hinterland that will benefit from the increased capacity.

The budget also had a $100 million commitment to an Investment Attraction Fund to facilitate investment in a range of industries.

On May 16, AMEC welcomed the WA government’s Reduced Reporting Burden Pilot project.

The pilot program will stop or halve environmental reporting requirements for lower-risk industry licenses. A risk-based assessment was conducted to identify licenses eligible for reduced reporting requirements. These include: licenses with no monitoring requirements will no longer require annual environmental reports; and licenses with limited monitoring requirements will move to environmental reports every two years.

Other licenses, such as those that require comprehensive monitoring and have several environmental issues, multiple monitoring points, complex monitoring suites, and/or high frequency monitoring, will continue to require annual environmental reporting.

AMEC said the changes affect more than 60% of eligible licenses granted under Part V Division 3 of the Environmental Protection Act 1986.

“These sensible changes will reduce the government’s administrative burden while ensuring strong environmental protections remain in place,” said AMEC CEO Warren Pearce. “AMEC has been a strong advocate for significant regulatory reform and for better efficiency around environmental reporting. With less red tape for lower risk license holders, this program is a positive outcome for the mining and exploration industry.”

Inter Pipeline Joins Itochu, Petronas on Blue Ammonia/Methanol Project

Blue Ammonia, Canada, Featured, Methanol, News

Energy infrastructure company Inter Pipeline, Calgary, said on May 11 that it is partnering with Itochu Corp. and Petronas Energy Canada Ltd. (GM Aug. 6, 2021) to evaluate the development of world-scale integrated blue ammonia and blue methanol production facilities.

“This project would be among the first of its kind in North America,” said Inter Pipeline President and CEO Brian Baker. “Once operational, these facilities would be at the forefront of diversifying Canada’s abundant supply of raw resources by converting them to value-added, energy transition products to supply growing global markets with low- or no-carbon fuel and energy products.”

The partners are expected to reach a final investment decision in early 2024. If sanctioned, construction would commence in late 2024, with a 2027 in-service date.

The proposed project would consist of two facilities based in Alberta, with early expectations – pending the results of the technical evaluation – of producing world-scale volumes of blue ammonia with blue methanol volumes. CO2 emitted during processing of both products would be sequestered underground permanently, and the resulting blue products would then be loaded onto rail cars for transport to an export facility before being shipped to global markets.

Last year, Itochu and Petronas said they were partnering with an unnamed Calgary-based midstream company to explore the feasibility of a US$1.3 billion, 1 million mt/y blue ammonia plant in Alberta. The plant was to export hydrogen from Alberta’s Industrial Heartland to Asian markets. The year-ago report did not include methanol.

Having recently completed the Heartland Petrochemical Complex, North America’s first integrated propane dehydrogenation and polypropylene plant, Inter Pipeline said it has proven it can successfully develop a petrochemical mega project.

In March, Inter Pipeline and Rockpoint Gas Storage, Calgary, announced that they have submitted a joint application as part of Alberta’s Energy’s Request for Full Project Proposals (RFPP) to develop a new carbon sequestration hub in Alberta’s Industrial Heartland. If approved and developed, the project would provide carbon storage capacity of more than 6 million mt/y, on an open access basis, to emitters in Alberta’s Industrial Heartland.

Nutrien Plans World’s Largest Clean Ammonia Production Facility; Mitsubishi Partial Offtaker

Ammonia, Blue Ammonia, Featured, Japan, Louisiana, News, Saskatchewan

Nutrien Ltd., Saskatoon, said on May 18 that it is evaluating Geismar, La., as the site to build the world’s largest clean ammonia facility. It would produce 1.2 million mt/y.

The project will proceed to the front-end engineering design (FEED) phase, with a final investment decision expected to follow in 2023. If approved, construction of the approximately US$2 billion facility would begin in 2024, with full production expected by 2027.

Nutrien said the plant would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure at its existing Geismar facility to serve growing demand in agriculture, industrial, and emerging energy markets.

The blue ammonia plant is expected to capture at least 90% of CO2emissions, permanently sequestering more than 1.8 million mt/y of CO2 in dedicated geological storage. Nutrien said the plant will use auto thermal reforming technology to achieve the lowest carbon footprint of any plant at this scale, and has the potential to transition to net-zero emissions with future modifications.

Nutrien noted that it has actively been pursuing the development of low-carbon ammonia for more than a decade, and has approximately 1 million mt/y of production capability through its Redwater and Joffre, Alta., operations, as well as Geismar, all of which employ carbon capture and sequestration technology (GM July 30, 2021).

“Our commitment to the development and use of both low-carbon and clean ammonia is prominent in our strategy to provide solutions that will help meet the world’s decarbonization goals, while sustainably addressing global food insecurity,” said Ken Seitz, Nutrien’s Interim President and CEO. “Leadership in clean ammonia production will play a key role in achieving our 2030 Scope 1 and 2 emissions reduction goals, as part of our Feeding the Future Plan.”

Nutrien has signed a term sheet with Denbury Inc., a partner for nearly a decade, that would allow for expansion of the existing volume of carbon sequestration capability in the immediate vicinity of its Geismar facility, if selected as the final site of construction.

“Nutrien is optimally positioned to supply global emerging clean ammonia markets and grow a pathway for a decarbonized supply chain,” said Raef Sully, Nutrien’s Executive Vice President and CEO of Nitrogen and Phosphate. “We are pleased to partner with Denbury on this initiative given our established track record of cooperation. It is another example of how we are building on our expertise in low-carbon ammonia to decarbonize the agriculture industry while helping to sustainably feed and fuel the future.”

Nutrien has also signed a Letter of Intent to collaborate with Mitsubishi Corp., Tokyo, for offtake of up to 40% of expected production from the plant to deliver to the Asian fuel market, including Japan, once construction is complete.

Nutrien said it is committed to leading the development of low carbon and clean ammonia to rapidly accelerate the decarbonization of hard-to-abate sectors such as agriculture, industrial use of ammonia, power generation, and maritime fuel. As one of the world’s largest ammonia traders by marine transportation, Nutrien announced in 2021 a collaboration agreement with Exmar, Antwerp, Belgium, to jointly develop and build one of the first low-carbon, ammonia-fueled maritime vessels to help decarbonize shipping.

Nutrien is also involved with the U.S. Department of Energy and other partners to explore flexible clean ammonia production using air, water, and variable renewable electricity.

Heringer 1Q Income, Revenue Up on Lower Volumes

Brazil, Earnings, News, Specialty

Fertilizantes Heringer, Viana, Brazil, reported higher earnings and revenue for first-quarter 2022, though fertilizer volumes were off 20%. The company said it maintained gross and operational profitability despite the global rise in input costs and lower market demand.

First-quarter net earnings were R$128.4 million on net revenue of R$1.23 billion, up from the year-ago loss of R$7.45 million on R$741.3 million, respectively. EBITDA was R$85.1 million, down from R$103.8 million

Volumes were 301,239 mt, down from the year-ago 376,550 mt. Specialty fertilizer volumes made up 51% of sales, up from the year-ago 48%. Specialty volumes were 153,000 mt, down from 181,000 mt, while conventional tons dropped to 148,000 mt from 196,000 mt.

Heringer said 30% of its sales went to the other crop category, 27% to coffee, 25% to corn, 14% to sugar cane, and 4% to soybeans.

Strike Picks Koch for Urea Offtake

Australia, Featured, News, Southern Plains, Urea

Australian junior urea producer Strike Energy Ltd., West Perth, said on May 19 that it has completed its competitive urea offtake process (GM Sept. 24, 2021) and selected Koch Fertilizer LLC, a subsidiary of Koch Industries Inc., Wichita, as the preferred bidder for the offtake of 100% of the 1.4 million mt/y of granulated urea production from Strike’s proposed Project Haber development adjacent to Geraldton Port, Western Australia.

“This award creates the foundations for an exciting and transformational period for the company, at the conclusion of which Strike will have completed its journey to becoming a fully vertically integrated manufacturer of high energy intensive and low-carbon emission products,” said Strike Managing Director & CEO Stuart Nicholls. “Securing Koch Fertilizer as Strike’s sole offtaker would give Project Haber a high degree of creditworthiness and financial security. Having a single long-term offtaker for 100% of the urea production will provide the foundation for the financial architecture required to successfully finance this nationally significant development.

“Australia’s farmers are set to benefit from the re-domestication of Australian urea manufacturing, which will secure a local supply of globally cost competitive, low-carbon emission nitrogen-based fertilizer,” he added. “With global urea prices at all-time highs, the timing for this development in Australia is now.”

Strike and Koch have entered into a nonbinding term sheet and will now enter into the drafting and negotiation of a full form definitive offtake agreement reflective of key terms agreed in the term sheet, which include a 10-15 year supply period, pricing linked to international benchmarks, and a condition precedent relating to Project Haber’s final investment decision.

Strike told Green Markets that there is no firm schedule on when construction will begin on the new plant, however, more news is expected soon. The company still needs to complete the front-end engineering design (FEED) and offtake agreement and financing, as well as confirm the final resource for South Erregulla natural gas.

Project Haber will be a fully integrated low-carbon urea development based at the edge of the West Australian Wheatbelt in the Mid-West region. Strike said through the integration of its adjacent low impurity natural gas, application of global best in class ammonia technology, domestication of fertilizer supply, and incorporation of green hydrogen, it is aiming to develop a low-carbon urea product to support the abatement of Australia’s agricultural emissions.

SQM 1Q Income Soars; Prices Up in All Segments

Chile, Earnings, Lithium, News, Specialty

SQM Inc., Santiago, reported first-quarter net income of $796.1 million ($2.79 per share), up from the year-ago $68 million ($0.26 per share). Gross profit reached $1.16 billion, up from $136.6 million.

Adjusted EBITDA rose to $1.19 billion from $165.1 million, while revenues totaled $2.02 billion, up from $528.5 million.

“Our first-quarter results reflect several positive circumstances: first, the impact of higher prices in all our business lines, where significant increases in lithium prices stand out, and second, the successful long-term, operational, and commercial strategy,” said SQM CEO Ricardo Ramos.

SQM noted that its first-quarter results included Corfo and tax provisions of $800 million. Ramos said that some 60% of operating margin from lithium is dedicated to payments to Corfo and taxes, and said the company’s lithium business is a very good example of a successful public-private partnership.

“Today we can proudly report that we are a leader in the lithium industry,” said Ramos. “We have almost tripled our production levels in three years, while we have significantly decreased the extraction of brines.”

SQM saw a surge in first-quarter lithium results, with volumes up 59%, to 38,100 mt from the year-ago 23,900 mt, and revenues up 970%, to $1.45 billion from $135.2 million. The company said prices reached a record $38,000/mt, and the company had the highest sales volumes it has ever reported.

SQM believes the lithium market will grow at least 30% this year, with one important indicator being a 125% increase in electric vehicle sales in China during the first quarter. SQM said its plans to increase capacity remain on target. It believes its 2022 sales volumes will surpass 140,000 mt.

SQM said its Specialty Plant Nutrition (SPN) business remains an important segment within SQM’s diverse portfolio, with average prices 39% higher in first-quarter 2022 than fourth-quarter 2021. However, the company fears demand growth in the agricultural potassium nitrate market could be impacted by these higher prices and continuous supply restrictions, and ultimately SQM sales volumes in 2022 could be lower than reported in 2021.

First-quarter SPN volumes were off 25% from year-ago levels, to 210,400 mt from 280,500 mt. Potassium nitrate-based volumes were off 24%, to 124,300 mt from 163,100 mt, and specialty blends 25%, to 50,000 mt from 66,600 mt.

SPN revenues, however, were up 42%, to $275.3 million from $194.1 million.

SQM reported that sales prices in its Potassium Chloride and Potassium Sulfate (MOP/SOP) segment were up 170% during the quarter compared to the year-ago period. As a result, revenues were up 89.2%, to $114.1 million from $60.3 million. Volumes were off 29.9%, to 141,700 mt from 202,200 mt. Despite the lower first-quarter volumes, SQM believes that while there is still uncertainty surrounding this market, total volumes for potassium chloride will reach about 750,000 mt during 2022.

Enviro Groups File Suit over BLM Approval of Bayer Phosphate Mine

News, News Briefs, Pacific N.W., Phosphate

Three environmental organizations have filed suit in U.S. District Court in Idaho urging that the U.S. Bureau of Land Management’s approval of P4 Production LLC’s open pit Caldwell Canyon phosphate mine be rejected due to BLM’s allegedly faulty environmental review of the project.

P4, a subsidiary of Bayer AG, argues the crucial mine on the Caribou/Targhee National Forest is needed to sustain the company’s elemental phosphorus plant operations near Soda Springs, formerly owned by Monsanto Inc. The mine’s ore would be used to produce the herbicide glyphosate, used in Roundup weed-killing products.

Company officials said the Caldwell Canyon Mine would sustain about 185 mining jobs and 585 plant jobs for about 40 years, and would aid the region by providing $47 million annually in payroll, taxes, royalties, and purchases, as well as sustaining support and service jobs.

BLM approved the Caldwell Canyon Mine in August 2019 (GM Aug. 16, 2019) after issuing a final environmental impact statement three months previously. The project is designed to develop three leases on Schmidt Ridge in Dry Valley about 13 miles northeast of Soda Springs.

P4 would use mining methods at the Caldwell Canyon Mine similar to those used at the company’s Blackfoot Bridge Mine. Work would begin in time to transition from the Blackfoot Bridge Mine near the Blackfoot River, where ore is projected to be depleted in less than seven years.

In total, mining and support facilities would disturb about 1,559 acres – 153 acres of BLM public land, seven acres of previously disturbed U.S. Forest Service land, 230 acres of Idaho State Endowment land, and 1,169 acres of private land. The expected mine life would be 42 years, followed by an expected two years of reclamation.

Bloomberg Law reported that the Center for Biological Diversity, Western Watersheds Project, and WildEarth Guardians in their May 13 filing charge that BLM violated the National Environmental Policy Act (NEPA) by failing to consider the effects of the mine’s ore processing on air quality, radiation risks, and “impacts related to water, noise, and wildlife.”

BLM also violated NEPA by failing to take a hard look at the mine’s effects on greater sage grouse, the groups contend. Instead, BLM “grouped all wildlife species into a single discussion made up of unhelpful generalities,” they said.

They charged that BLM did not consider a reasonable range of alternatives to the project, rejecting the alternative of maintaining existing lease boundaries to protect greater sage grouse, whose population has declined in recent years.

BLM considered only two alternatives other than the “no action alternative” that were “not varied enough to allow for a real, informed choice,” the groups said, citing precedent. They added that the bureau violated the Clean Water and Federal Land Policy and Management acts by failing to require that the mine meets Idaho water quality standards.

BLM is “extremely unlikely to be able to support the same authorizations on remand,” they stated. The groups originally sued to block the project in April 2021.

The case is being overseen by U.S. District Judge B. Lynn Winmill.

BHP Sees “Strong Case” for Potash Expansion

Australia, Featured, News, Potash, Saskatchewan

BHP Group Ltd., Melbourne, is looking at options to bring forward first production for its US$5.7 billion Jansen Stage 1 potash project in Saskatchewan from calendar 2027 into 2026, according to a May 17 presentation by CEO Mike Henry. The group also has begun studies of the feasibility and economics of Jansen Stage 2, which would add another 4 million mt/y.

“Jansen Stage 1 is compelling in its own right, but now the overall Jansen proposition is even more attractive,” Henry told participants at a Bank of America-organized “Global Metals, Mining, and Steel Conference” in Miami.

Early this month, BHP was reported to be considering ways it could speed up development of the Jansen project as prices surged amid supply shortfalls (GM May 6, p. 36).

The events of recent months playing out in Ukraine have highlighted the higher-than-usual potential for supply side disruption in the potash market, with Western sanctioned Belarus and Russia accounting for around 40% of global product. Many believe the Western sanctions on the two countries will remain in place for at least the medium term – and perhaps long term.

“For BHP, all of this has positively reinforced the decision that we took to enter potash,” said Henry.

He told conference participants that the group is looking at options to accelerate first production from Jansen’s Stage 1 to start as soon as 2026. But he conceded “the Saskatchewan winter build conditions make it hard to consider an acceleration beyond that.”

He said the Stage 1 project is “tracking to plan,” with US$1.4 billion of contracts awarded so far, which is some $200 million more since BHP reported its half-year results in February (GM Feb.18, p. 35).

Stage 2 could be brought to market more quickly than expected “if the market suits,” the CEO said.

BHP’s Board only gave the final go-ahead for Jansen Stage 1 last August, after nearly a decade of evaluations and deliberations (GM Aug. 20, 2021).

Henry told participants that he wished the project had been approved five or even 10 years ago. If it had, it would be generating an extra US$2-$3 billion of EBITDA a year, he said.

“Even without the events in Ukraine, potash’s fundamentals are good. We have been positive on potash dynamics now for many, many years. Strong potash demand growth will be driven by ongoing global population growth, changing diets, and stronger expectations globally in terms environmental stewardship,” said the CEO.

Before Russia’s invasion of Ukraine, BHP was forecasting new potash supply would be needed by the end of the decade.

Jansen’s Stage 1 is expected to produce 4.35 million mt/y of potash once fully ramped up.

“Stage 2, if it proceeds, would add another 4 million mt/y, at a lower capital intensity than Stage 1. At US$800-$900/mt, it would be almost 30% lower because Stage 2 will be able to leverage the infrastructure being put in place with Stage 1, and this includes the shafts,” Henry told conference participants.

BHP estimates that Stage 2 would have an Internal Rate of Return (IRR) of around 18-20% and a payback period of around four years at long-term consensus prices that are well below current spot prices.

BHP’s Jansen project has potentially four stages with an envisioned eventual production capacity of between 16-17 million mt of potash a year – equivalent to about 25% of the current market, albeit by the time the new production was brought on stream, the market would have grown further, the CEO noted.

Each stage would have lower operating costs, lower capital intensity, faster payback, and with higher incremental returns than Stage 1.

“If we decide to bring on all four stages, and even if potash prices were at just half of where they are today, we would be generating about US$4-US$5 billion of annual EBITDA,” said Henry.

BHP sees a path to a Jansen potash business that is at least equivalent in size and scale as its current petroleum business, which it is currently divesting/demerging via the merger of BHP Petroleum with Woodside Petroleum. BHP’s shareholders will emerge with a little less than half of the enlarged business.

BHP’s petroleum business has delivered around US$3 billion per annum in EBITDA on average over the past five years. The CEO pointed out that the free cash flow is even more favorable than petroleum for potash.

Henry told conference participants the other appeal of potash is that its market and pricing are uncorrelated and even “negatively correlated” with other commodities that BHP produces, while the Canadian location brings geographical diversity in operating jurisdiction and markets.

“Potash within BHP’s portfolio will bring a greater cash flow stability and returns stability, with the fundamentals for potash remaining strong,” said Henry.

He said at the time of the final investment decision, BHP had over 50% of the engineering for Stage 1 completed, which has given the group greater confidence in the project schedule and capital cost ranges.

Train Collision Not Impacting ICL Iberia’s Deliveries

Europe, Israel, News, News Briefs, Potash

ICL Iberia’s potash deliveries have not been impacted by the accident involving the collision between a freight train carrying potash and a passenger train in northeastern Spain’s Barcelona province in the early evening on May 16.

A spokesperson for parent company ICL Group Ltd. confirmed to Green Markets the potash cargo was that of ICL Iberia and that the accident has had no influence on the Spanish operations’ supplies.

The driver of the passenger train was killed in the collision, which occurred after the third car of the freight train derailed at the entrance to the Sant Boi de Llobregat station at around 6 p.m. local time and hit the front cab of a passenger train that was leaving the station at that time, according to local media reports, citing the regional rail company FGC. More than 80 people were also injured – 86 according to some reports.

The causes of the accident are under investigation by FGC and the Mossos d’Esquadra regional police.

ICL Iberia owns the Cabanasses underground mine and Suria processing plant, located near Barcelona. The company produces salt as well as potash at the operation, where it expects to reach annual run-rate of approximately 1 million mt of potash by the end of the second quarter of this year (GM May 13, p. 31). ICL Iberia also operates a terminal in the port of Barcelona, where it completed a new terminal in early 2020.

OCP 1Q: Higher Prices Offset Lower Sales Volumes; Volumes to be Raised 10% in 2022

Earnings, Morocco, News

OCP Group SA, Casablanca, reported a 117% rise in EBITDA to MAD11.6 billion in the first quarter ended March 31, 2022, on revenues of MAD25.33 billion. This compares to the year-ago MAD5.34 billion and MAD14.29 billion, respectively. Revenues were up 77% year-over-year.

In U.S. dollars, EBITDA also more than doubled, to $1.23 billion, up from $596 million, while revenues grew by 68% to $2.67 billion from $1.59 billion the previous year.

OCP attributed what it described as the “record results” to the strong market conditions, as well as operating efficiencies. It said the Russia-Ukraine conflict has exacerbated the tight supply/demand situation in the phosphate market and has pushed prices even higher.

The group also noted that phosphate price increases have been supported by rising raw materials prices, particularly ammonia and sulfur.

OCP said the first-quarter revenue growth reflected higher year-over-year selling prices across all product categories, which more than offset lower volumes. It did not report sales volumes for the period.

The group’s capital expenditure in the quarter totaled MAD2.99 billion, a 71% increase over the same prior-year MAD1.75 billion. In dollar terms, capex increased by 61%, to $315 million versus the year-ago $196 million.

Looking ahead to the rest of the year, OCP said the strong first-quarter performance supports the group’s positive outlook for full-year 2022.

Robust market conditions, representing underlying global demand, as well as tight supply conditions and rising raw material prices, are expected to continue to support high prices, it said.

OCP expects to increase volumes in 2022 by approximately 10% “to serve customers in high growth markets where it has established leading share positions.”

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.