All Posts from June 21, 2019

The Mosaic Co.

Management Briefs

The Mosaic Co., Plymouth, Minn., announced on June 18 that it has named Christopher A. Lewis as Senior Vice President – Human Resources, effective June 19. He will report to President and CEO Joc O’Rourke, and will join the company’s senior leadership team. Lewis will relocate from Houston, Texas, to Mosaic’s new headquarters in Tampa, Fla.

Lewis was most recently Vice President, Project Execution, for Spectra Energy Corp.’s merger into Calgary-based Enbridge, Inc. Previously, he worked for 10 years at DCP Midstream LLC, a Denver-based natural gas company, where he started as the head of Human Resources while the company was formed as a spinoff from Duke Energy in 2007.

From 2010 to 2016, Lewis was DCP’s Chief Corporate Officer, a multi-functional role that included leadership of the human resources function. Earlier in his career, he held regional and global senior human resources positions at Thomson Multimedia (formerly RCA, GE consumer electronics) and DHL Inc. He holds a bachelor’s degree in industrial safety from Central Missouri State University.

Shrieve Chemical Co. – Management Brief

Management Briefs, Texas

Shrieve Chemical Co., The Woodlands, Texas, has hired Justin Schultze, formerly of Westlake Chemical, as Sulfuric Acid Marketing Manager, effective immediately. He will work out of The Woodlands office and will be training and working closely with Jerry Sinitiere, a sulfuric industry veteran of 32 years, as they prepare for Sinitiere’s eventual retirement, slated to be late 2020.

Schultze, who will report to Shrieve Chemical President Ted Threadgill, can be reached at 1.281.367.4226 or jschultze @shrieve.com.

The Stoller Group Inc.

Management Briefs, Specialty

The Stoller Group Inc., Houston, announced the death of company founder Jerry H. Stoller, 84, on June 19. He served as Chairman of the Board of Stoller USA Inc. and The Stoller Group Inc.

“All of us are mourning the passing of our company’s founder, Jerry Stoller,” said Stoller Group President Guillermo de la Borda. “Jerry will be remembered as an entrepreneur and a revolutionary pioneer in plant physiology, plant nutrition, and plant hormone technology. He dedicated his life to finding ways to help good things grow.”

Stoller founded Stoller USA Inc. in 1970. Today, the Stoller Group currently employs over 1,000 people and provides its products and services to over 60 countries. Stoller also created the Stoller Foundation, which incubates and accelerates nonprofits.

 

Central Garden & Pet Co. – Management Brief

Management Briefs, Specialty

Central Garden & Pet Co., Walnut Creek, Calif., has elected Michael Griffin as a new independent director, effective June 15, 2019. The election increases the company’s number of directors to 11. The company noted that Griffin has more than 35 years of experience in the consumer products industry, including executive stints at Proctor & Gamble and Activision Publishing. He has a bachelor’s degree in mathematics from Albion College and an MBA from the University of Michigan.

Enviros, Landowners Cite Downstream Selenium as Simplot Seeks Mine Expansion

News, News Briefs, Pacific N.W.

Earthworks, a Washington-based environmental organization with offices in Missoula, Mont., and Berkeley, Calif., and the Crow Creek Conservation Alliance (CCCA), a group of private Idaho landowners, said trout downstream from the J.R. Simplot Co.’s Smoky Canyon Mine near the Idaho/Wyoming border continue to show elevated levels of selenium.

Independent tests confirmed by Simplot’s monitoring data verify that brown trout and Yellowstone Cutthroat trout sampled from Sage Creek and Crow Creek contain selenium concentrations far exceeding the 8.2 mg/kg criteria recommended by the U.S. EPA, the two organizations said.

Simplot’s testing showed fish tissue levels from Crow Creek reached 23 mg/kg in 2018, compared to 10 mg/kg the previous year. Lower Sage Creek samples tested at 34 mg/kg in 2018, down from 46 mg/kg in 2017, but up from under 20 mg/kg in 2010.

Earthworks and CCCA have been conducting their own fish sampling for years with the assistance of a fisheries biologist. About five years ago, Earthworks took over the Greater Yellowstone Coalition’s program of testing native Yellowstone Cutthroat tissue samples from affected streams.

Selenium levels at Sage Creek remain roughly four times the EPA criteria and more than 2.5 times EPA standards in Crow Creek downstream from Sage Creek, the groups said. Crow Creek is about 35 miles from Montpelier in Caribou County near Afton, Wyo.

A chemical element found naturally in soil, selenium can prove toxic in concentrated amounts and cause deformities in fish. In 1996, livestock died from ingesting selenium-tainted vegetation near historic phosphate mines in southeastern Idaho. It has been determined that the primary selenium problem area is within about 75 square miles of active and historic mine leases.

Earthworks and CCCA said selenium has been contaminating Idaho’s water ways for more than two decades, adding that a new $30 million water treatment facility installed by Simplot in upper Sage Creek that started operating in December 2017 is processing only half of polluted flows. Simplot also has rerouted a stream away from tainted waste rock.

“The treatment facility is a step in the right direction, but the pollution continues to flow into our streams and contaminate the trout. I hope Simplot sees that they have more work to do on cleanup and prevention,” said Pete Riede, a CCCA member and private land owner along Crow Creek.

Simplot worked in 2006 with federal and state agencies to install a pipeline to route Pole Canyon Creek around overburden from past mining. It also built an infiltration basin upstream to direct water away from the overburden, and added a cap and cover system in 2013 to further reduce selenium leaching

Bonnie Gestring, Northwest Program Director for Earthworks, expressed concerns about Simplot’s plans to expand its Smoky Canyon Mine, which do not address further steps to reduce the contamination. She called for Simplot to ensure better pollution control and treatment.

“Simplot needs to get a handle on its current pollution before it expands once again. Two decades of pollution is more than the public or any neighbor should have to withstand. … We have streams that really can’t take any more selenium – even a small amount.”

The final environmental impact statement (EIS) for the East Smoky Canyon Mine expansion and draft record of decision are expected to be issued by the U.S. Forest Service in July. A draft EIS was released last fall. Earthworks provided the most extensive comments, according to BLM officials.

Josh Jordan, Simplot Senior Manager of Communications and Public Relations, told Green Markets that company officials have seen the relatively new numbers regarding selenium content in downstream fish. He said Simplot understands the need to reduce those numbers and is committed to eliminating water contamination.

“All the things we are seeing from the water treatment facility are very promising. We will certainly do everything we can to use the latest technology,” Jordan said. “We’re dedicated. We’re there for the long term.”

Highfield Resources Ltd. – Management Brief

Management Briefs, Potash

ASX-listed potash developer Highfield Resources Ltd., Navarre, Spain, has appointed qualified mining engineer and Spanish national Leonardo Torres-Quevedo Angoloti as a Project Construction Manager for its Muga potash mine. Angoloti has over 20 years of experience in project management, specifically focused on large construction projects in Spain.

He previously worked for nine years with Bovis Project Management, the last two of which were spent working as a project management consultant on the Muga project at Highfield’s Pamplona office. Highfield earlier this month received the key environmental permit required to move the Muga project forward (GM June 7, p. 30).

OCI, ADNOC to Combine MENA Fertilizer Assets, Create Top Nitrogen Exporter

ADNOC - Abu Dhabi, Ammonia, Europe, Featured, Methanol, Middle East, News, Nitrogen, Urea

Netherlands-headquartered OCI NV (OCI) and The Abu Dhabi National Oil Co. (ADNOC) plan to combine their Middle East and North African fertilizer assets in a new joint venture, which – the parties said – will become the largest export-focused nitrogen fertilizer platform globally, and the largest producer in the MENA region.

It will have a combined production capacity of 5 million mt/y of urea and 1.5 million mt/y of sellable ammonia. The combined saleable capacity represents approximately 10 percent of 2018’s combined ammonia and urea global seaborne exports, according to OCI.

The announcement on June 17of the new strategic partnership by the companies followed media speculation over the weekend that they were considering combining their Middle East fertilizer businesses, and will see state-owned ADNOC combine its fertilizer business, ADNOC Fertilizers, into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform to form the new joint entity.

OCI and ADNOC will own a 58 percent and 42 percent stake, respectively, in the jv, which is expected to generate between $60-$75 million in annual synergies, predominately through commercial synergies, the companies said.

Annual revenues for the combined entity are $1.74 billion with an EBITDA of around $800 million, based on 2018 pro forma figures, OCI said.

“This combination brings greater geographic diversity to the platform’s MENA production channels, enabling greater combined market access to strengthen market share and better serve its customers around the world,” said the two companies.

The new entity, which will be headed by OCI CEO Nassef Sawiris, will have a centralized commercial team, supported by a robust storage and distribution infrastructure with access to key ports on the Mediterranean, Red Sea, and Arabian Gulf, they said.

In conjunction with this jv, ADNOC Fertilizers has also signed a new long-term gas supply agreement with ADNOC, which will provide its facilities in Ruwais with the required feedstock for its operations based on a competitive pricing formula.

The new joint entity will be based in Abu Dhabi and incorporated in the UAE’s international financial center, the Abu Dhabi Global Market (ADGM), furthering the development of fertilizer expertise and trading in Abu Dhabi. The board of the new entity will consist of six members nominated by OCI and four nominated by ADNOC. H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and CEO of the ADNOC Group, will be chairman of the board.

OCI’s MENA assets include those of the wholly-owned Egyptian Fertilizer Co. (EFC), its 60 percent stake in Egypt Basic Industries Corp. (EBIC), its 51 percent stake in Sorfert Algerie in Algeria, and a global trading platform based in the UAE. The company’s MENA facilities can produce up to 3.2 million mt of gross ammonia and 2.9 million mt of urea annually. Its MENA trading platform can effectively reach a diverse customer base and has access to key distribution infrastructure.

ADNOC Fertilizers operates two plants in ADNOC’s integrated downstream complex in Ruwais in the UAE. The first plant, FERTIL-1, began production of ammonia and urea in 1983, and the second plant, FERTIL-2, became operational in 2013. The two plants have a combined annual capacity of 1.2 million mt of gross ammonia and 2.1 million mt of urea.

ADNOC Fertilizers’ key markets for its granular urea include the Indian sub-continent, the Americas, and East Africa. ADNOC is currently the sole shareholder in its fertilizers subsidiary, having acquired the 33 percent stake held by Total SA, France, in late 2018.

OCI MENA

Assets
Plant Location Capacity mt/y
EBIC (wholly owned) Sokhna port, Egypt Net ammonia 0.73
EFC (60 percent owned) Sokhna port, Egypt Urea 1.648
Sorfert (51 percent owned) Arzew Industrial Complex in Northwest Algeria near three Algerian ports Urea 1.259
Net ammonia 0.80

Key Financial Pro Forma Metrics 2018
Sold own-produced volumes Ammonia: 1.2 million mt
Urea: 2.8 million mt
Revenue $1.24 billion
Adjusted EBITDA $501 million
Net debt $698 million

Data source: OCI presentation

ADNOC Fertilizers

Assets
Plant Location Capacity mt/y
Fertil-1 Ruwais, UAE Urea 0.830
Ammonia 0.475
Fertil-2 Ruwais, UAE Urea 1.270
Ammonia 0.730

Key Financial Pro Forma Metrics 20181
Sold own-produced volumes Urea: 2.2 million mt
Revenue $596 million
Adjusted EBITDA $239 million
Net cash $41 million

1 ADNOC Fertilizers to be contributed on a debt-free basis

Data source: OCI presentation

“This partnership creates a first-of-its-kind export platform with best-in-class cash conversion metrics,” said Sawiris, who, in addition to assuming the role of CEO of the new joint entity, will remain in his current role as OCI CEO. “This platform has significant potential for future growth and value creation.”

OCI and Saudi Basic Industries Corp. (SABIC) have held talks this year about a potential sale of OCI’s methanol assets following an approach by the Saudi company (GM March 8, p. 1). OCI indicated in May that negotiations were still underway and an update may be available later this summer when second quarter earnings are released (GM May 31, p. 1). It said methanol is taking an increased amount of time for the company to evaluate all strategic options. OCI’s methanol assets are valued at $4 billion and include a 50 percent stake in the new Natgasoline plant in Texas, as well as a plant at OCI Beaumont and BioMCN in The Netherlands.

“Pooling our assets and capabilities is a value-enhancing step for both companies, allowing us to leapfrog competitors to become the top nitrogen export platform globally. It will also enable us to access new markets, benefitting both existing and new customers,” said UAE Minister of State and ADNOC Group CEO Sultan Ahmed Al Jaber.

The new business combination will improve the profitability and cash flow of ADNOC’s fertilizer portfolio, and is another milestone in the delivery of ADNOC’s 2030 strategy and ambitions to expand the group’s Downstream portfolio, he said.

The UAE group has sought to expand its downstream operations and bring in new partners to unlock the potential of its subsidiaries and expand into new international markets, and to help diversify the emirate’s oil-dependent economy.

Morocco’s phosphates giant, OCP SA, and ADNOC in May last year revealed they had agreed to explore the phased creation of a new global fertilizers jv (GM May 18, 2018). While the status of that potential partnership is unclear in the light of the latest combination plans, the OCP-ADNOC hook-up envisaged comprising two fertilizer production hubs – one in the UAE and one in Morocco (utilizing both existing and new assets) – giving the proposed jv global market reach.

Deal Gets Thumbs up from Analysts

Analysts see the planned OCI-ADNOC Fertilizers combination of assets as largely positive.

“ADNOC’s search for an international partner to transition the company to more upgraded products and increased geographical coverage is a sign the UAE wants to diversify its oil and gas and is a strategic play that others in the region may follow,” said Green Markets Research Director Alexis Maxwell. “For OCI, this deal represents long-desired global expansion growth.”

Berenberg analyst Rikin Patel told Bloomberg that it looks like “a sensible deal, which should generate commercial synergies and create a stronger export platform for nitrogen fertilizers.”

Patel said the OCI assets may be valued at around $5 billion, as it deserves a multiple of about 10 times earnings due to its superior efficiency, according to the report. According to an OCI presentation, the company’s Middle East and North African fertilizer operations generated an EBITDA of about $501 million last year.

S&P Global on June 20 upgraded its long-term issuer credit and issue ratings on OCI and its senior secured notes from “BB-” to “BB” with a stable outlook.

In its research update, S&P Global commented that it expects the recently announced jv with ADNOC “to further improve OCI’s business and financial risk through larger scale, greater diversification, substantial synergies, higher and more resilient profit margins, and stronger free cash flow generation.” The ratings company said this follows a significant strengthening of OCI’s operating performance and steep deleveraging in 2018.

The OCI-ADNOC transaction is expected to close in the third quarter of 2019, subject to legal and regulatory conditions.

J.P. Morgan acted as sole financial advisor and Cleary Gottlieb Steen & Hamilton LLP as legal counsel to OCI on the transaction. Citi acted as exclusive financial advisor and Shearman & Sterling as legal counsel to ADNOC on the transaction.

 

Mosaic to Permanently Close Plant City

Featured, Florida, News, Phosphate

The Mosaic Co., Plymouth, Minn., said June 18 it will close its idled Plant City phosphates manufacturing facility in Hillsborough County, Fla. The plant was idled in late 2017 because it was one of the higher-cost phosphates facilities in Mosaic’s Florida Operations and due to global phosphate market conditions (GM Nov. 3, 2017). An announcement was expected, as Mosaic said in May a final decision on the fate of the plant would be announced by the end of June (GM May 10, p. 1).

“Our decision to close the Plant City phosphate facility reaffirms our commitment to low-cost operation,” said Mosaic President and CEO Joc O’Rourke. “We will continue to meet global demand for high-quality phosphate fertilizers with production from our low-cost facilities in Florida, Louisiana, Brazil, and Peru, and through our joint venture in Saudi Arabia.”

During the second quarter, Mosaic expects to recognize a notable non-cash charge of up to $390 million for the permanent closure of the facility, including asset write-offs and an increase of the asset retirement obligation liability. Annual cash payments to manage the closure of the facility over the next five years are expected to be similar to payments incurred while the plant was idle in 2018. Mosaic will seek to mitigate a portion of closure costs by evaluating innovative approaches to water management and to repurposing part of the facility for productive use.

The small team of Mosaic employees currently responsible for care and maintenance activities will remain on site to manage closure and compliance responsibilities over the next several years. About 430 workers were impacted by the idling of the plant in late 2017. The company told The Lakeland Ledger that 200 found jobs at other locations, 130 took early retirement, and 100 received severance.

Mosaic bought the plant in 2014 from CF Industries Holding Inc., Deerfield, Ill. (GM March 24, 2014; Nov. 4, 2013). Operational since 1975, Plant City produced approximately 1.3 million mt of finished phosphates in 2017, its last year of operation, though capacity was put higher at closer to 2 million mt.

Nutrien Ag Solutions Partners with BASF

News, News Briefs

Nutrien Ag Solutions, Loveland, Colo., on June 17 announced the launch of a digital collaboration with xarvio Digital Farming Solutions, part of BASF’s Agricultural Solutions division, which will give customers access to the xarvio™ Scouting app through the Nutrien Ag Solutions Customer Portal.

Nutrien said the Scouting app, which allows growers to detect and identify weed and pest pressures in their crops throughout the growing season, will be one of the agronomic tools offered on an open digital ecosystem that the company is building. Nutrien said the digital platform will leverage “deep agronomic data science and leading-edge technology” to help growers achieve the best results by offering independent, field-zone-specific agronomic advice.

“We are pleased to further our collaboration with leading agricultural companies such as BASF via our Customer Portal,” said Mike Frank, Nutrien’s Executive Vice President and CEO of Retail. “Our goal is to become the ag retailer of the future, and partnerships with innovators such as BASF’s xarvio Digital Farming Solutions help enable us to provide more value to our customers.”

Nutrien said it is also exploring the agronomic intelligence offered by xarvio Field Manager, which delivers timing and variable rate map applications in various crops for weed, disease, and pest management. BASF said the xarvio Scouting and Field Manager apps are being used by farmers in more than 100 countries worldwide.

“As we begin our digital collaboration with Nutrien Ag Solutions, we are proud to have the xarvio Scouting app featured on the Nutrien Ag Solutions Customer Portal and to explore the agronomic intelligence of our xarvio Field Manager,” said Paul Rea, Senior Vice President for BASF Agricultural Solutions, North America. “Through our work together, BASF xarvio Digital Farming Solutions and Nutrien Ag Solutions can help change the industry by providing growers with the products, services, and now digital tools to support their success.”

Canadian Potash Producers Announce Summer Fill Programs; Intrepid Still Evaluating

Featured, News, Potash

Canadian potash producers announced summer fill programs on June 18-19, with prices falling in the $285-$290/st FOB range out of Midwest Cornbelt terminals for orders placed by the close of business on June 27.

Nutrien Ltd. was first out of the gate on June 18, posting fill prices of $290/st FOB Midwest terminals and $265/st FOB NOLA barge for third-quarter supply. Those postings are in effect for orders placed through June 27 and delivered by Sept. 30. Nutrien said all orders received after June 27 will be $25/st higher for delivery on Oct. 1 or later.

“The overall state of the global potash market and the strong outlook for commodity prices means that we expect a very strong uptake to this program,” Nutrien said. “We have a tight allocation of supply for Q3 following our summer mine shutdowns, and we will close the order book early if we reach our targets earlier than June 27.”

The Mosaic Company followed on June 19, announcing potash summer fill offers for orders placed by June 27 and shipped by Sept. 30 at $285/st FOB Cornbelt river warehouses, $290/st FOB Cornbelt inland warehouses, and $295/st rail-DEL to most Cornbelt locations. The company said it will participate in barge summer fill offers “on a spot basis,” but indicated no firm price levels for barge fill tons.

Mosaic is also posting a $25/st increase for orders placed after June 27 and shipped in the fourth quarter.

In its June 18 announcement, Nutrien stressed that “any orders received for prompt application will remain at spring season prices.” Green Markets has reported a Cornbelt potash price range of roughly $305-$325/st FOB for much of the spring season. The last official potash postings from Nutrien and Mosaic were announced in January at $330-$335/st FOB Midwest terminals (GM Jan. 11, p. 13), up $10/st from the winter fill offers posted by both companies.

The summer fill announcements follow a bullish take on potash delivered on May 28’s Investor Day by Susan Jones, Nutrien’s Executive Vice President and CEO of Potash, who said Nutrien expects expanded potash sales and capacity at stable prices (GM May 31, p. 1).

Nutrien also announced in May (GM May 17, p. 1) that it plans to cut production capacity at its Vanscoy potash mine in Saskatchewan from 2.2 million mt to 1.7 million mt in the third quarter of 2019. The company plans to increase production at its lower-cost mines, particularly the 6.5 million mt/y Rocanville mine, where a $3 billion expansion was completed in the fall of 2017 (GM Oct. 13, 2017).

Denver-based Intrepid Potash Inc. told Green Markets on June 20 that it has not yet released a summer fill program for potash, but internal discussions are underway. The company’s last postings include 60 percent standard MOP at $350/st FOB Moab and Wendover, Utah; 60 percent granular at $340/st FOB Carlsbad, N.M., and $355/st FOB Moab and Wendover; and 62 percent standard at $347/st FOB Carlsbad.

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