All Posts from November 22, 2023

Heringer 3Q Volumes Climb 81%

Brazil, Earnings, Indicators, Specialty

Brazil’s Fertilizantes Heringer reported an 81.2% increase in third-quarter volumes, to 783,957 mt from the year-ago 432,601 mt, but the climb was not enough to push net income into the black. The company reported a net loss of R$62.7 million ($12.8 million) on net revenue of R$1.64 billion, an improvement over the year-ago loss of R$110.8 million and R$1.8 billion, respectively.

Heringer reported improved margins in the third quarter due to a stabilization in prices. The company reported a negative EBITDA of R$3.5 million versus the year-ago negative R$45.9 million.

During the quarter both conventional and specialty fertilizer volumes moved up. Conventional were up 84.6%, to 532,000 mt from the year-ago 288,000 mt, while specialty rose 73.9%, to 252,000 mt from 145,000 mt.

Lower fertilizer prices had a greater impact on Heringer’s nine-month period. The company reported a net loss of R$329.5 million on revenue of R$3.91 billion, compared to a year-ago loss of R$77.1 million on revenue of R$4.12 billion. EBITDA was a negative R$280.5 million compared to the year-ago negative R$63.3 million. Despite the lower financial performance, nine-month volumes increased 65.5%, to 1.61 million mt from 975,966 mt, as lower prices moved tons. Conventional volumes were up 85.9%, to 1.06 million mt from the year-ago 570,000 mt, while specialty were up 36.7%, to 555,000 mt from 406,000 mt.

Price Declines Impact OCP’s First Nine Months

Earnings, Indicators, Phosphate Rock, Phosphoric Acid

Casablanca-based OCP Group SA reported a 60% drop in EBITDA, to MAD17.18 billion ($1.7 billion) for the nine months to Sept. 30, 2023, down from MAD42.96 billion ($4.31 billion) during the same period last year, according to a Nov. 20 earnings statement.

Nine-month revenue fell 32% year-over-year, to MAD61.04 billion ($6.03 billion) from MAD89.54 billion ($8.96 billion) last year, with OCP attributing the drop to price declines across all its product categories compared to “the exceptional price environment” of 2022.

“OCP’s nine-month results were bolstered by the group’s third-quarter performance, which represented a strong sequential rebound compared to second-quarter levels,” said OCP Group Chairman and CEO Mostafa Terrab.

He noted favorable market trends that began in August and continued through September and into the fourth quarter, reflecting “gradually increasing product prices, supported by strengthening of demand in major importing regions.”

Nine-month fertilizer revenues were 29% lower year-over-year in US dollar currency, while phosphoric acid revenues decreased by 51% and phosphate rock revenues were down by 42%. OCP attributed the downturns to lower year-over-year prices and lower export volumes to key importing regions.

However, the group said export volumes “substantially rebounded” during the third quarter, reflecting sales delays in rock and acid experienced during the first half of 2023. Fertilizer sales accounted for 69% of OCP’s 2023 nine-month revenues, up from 65% in the same prior-year period.

The group said it gained “significant traction” for its TSP product, with TSP sales volumes up 20% year-over-year, to 1.2 million mt from 1.0 million mt in last year’s nine-month period and 0.9 million mt in the first nine months of 2021.

OCP’s total nine-month fertilizer sales volumes (TSP/DAP/MAP/NPK/NPS) reached 7.7 million mt, a 7% increase from last year’s 7.2 million but down from 8 million mt in 2021.

OCP said the first of three new fertilizer production lines at Jorf Lasfar were completed in the second quarter and it is currently ramping up production of TSP. Two other lines are expected to begin operation in early 2024.

OCP Revenues by Product ($ million)

Product 9M-2023 9M-2022 % change
Phosphate Rock 847 1,461 (42)
Phosphoric Acid 456 931 (51)
Fertilizers 4,168 5,841 (29)

Chemtrade Touts Strong 3Q Performance

Canada, Earnings, Sulfur

Chemtrade Logistics Income Fund, Toronto, reported third-quarter adjusted EBITDA of C$142.1 million, up 3.7% from the year-ago $137.1 million. This moved nine-month adjusted EBITDA to $418 million versus the year-ago $326.6 million.

Chemtrade is raising full-year guidance, now expecting it to exceed $490 million, which will be the highest amount achieved in company history, handily beating last year’s record level by at least 13%. Prior guidance had been above $475 million. Year-ago actual was $430.9 million.

“The strong performance that we delivered in the third quarter, both financially and operationally, further builds on the solid track-record that we have established in recent years and positions us for a record year in 2023,” said Scott Rook, Chemtrade President and CEO.

“While these results reflect strength across a number of products in our diversified portfolio, they are really a testament to the ongoing focus and execution of the entire Chemtrade team,” Rook added. “Despite a decline in revenue attributable to lower sulfur and caustic soda prices, the commercial initiatives, along with a focus on operating performance, were pivotal in driving yet another quarter of growth in adjusted EBITDA and distributable cash.”

Despite the increased adjusted EBITDA, net earnings of $70.8 million were down 6% from the year-ago $75.3 million, mainly due to non-cash expenses resulting from an increase in the market value of convertible debentures.

Revenue of $483.5 million was off 7% from the year-ago $519.9 million, driven by lower prices for sulfur and caustic soda, which were partially offset by higher prices for water products, sodium chlorate, regen acid, and chlorine.

NCG Completes Gas Contracts with Nutrien, TRINGEN

Ammonia, Featured, Trinidad and Tobago, Urea

The National Gas Co. of Trinidad and Tobago (NGC) on Nov. 20 announced the completion of Gas Sales Contracts (GSCs) with PCS Nitrogen Trinidad Ltd. (Nutrien) and the Trinidad Nitrogen Co. Ltd. (TRINGEN).

“When you think of this country’s contribution as a leading exporter of ammonia, globally, the importance of these gas sales contracts cannot be understated,” said NGC President Mark Loquan. “At NGC, we want to do our part to ensure our downstream sector remains globally competitive and remains a major contributor to Trinidad and Tobago’s sustained economic development.”

“Our teams have been working on these GSCs with our Point Lisas partners for some time, and these signings are the culmination of careful planning, hours of negotiation, and NGC’s unwavering commitment as the aggregator of gas,” he added. “Specifically, I’d like to thank the teams at Nutrien and TRINGEN for their partnership and I thank the team at NGC for their dedication.”

In the case of Nutrien, NGC said the supply of natural gas will support the company’s four anhydrous ammonia plants and one urea plant, all located at the Point Lisas Industrial Estate (PLIE). NGC said the GSC will ensure that TRINGEN’s two independent ammonia plants, as well as its gas turbine power generation (GTG), will continue to operate at the PLIE.

In recent weeks, NGC said it has successfully closed other ammonia sector GSCs, notably with Proman for the execution of Gas Sales Contracts for Caribbean Nitrogen Co. Ltd. (CNC) and Nitrogen (2000) Unlimited (N2000), as well as with Point Lisas Nitrogen Ltd. (PLNL) (GM Oct. 6, p. 1).

NGC said it is continuing to work with other key business partners in the sector to close GSCs that will enable these businesses to continue on their growth path.

Belaruskali Takes Legal Action Against Lithuania Over Potash Transit Ban

Belarus, Featured, NPK, Potash

Belarus’ Foreign Ministry and state-owned potash producer Belaruskali OAO are preparing to take legal action against Lithuania over the country’s ban on transporting Belarusian potash, or NPK fertilizers, through Lithuanian territory, according to bne IntelliNews, citing the website of Lithuania’s public broadcaster LRT.

Belaruskali has filed a notice of arbitration, alleging that Lithuania’s actions constitute a breach of a bilateral investment-protection agreement, and it is seeking approximately €1 billion (approximately $1.1 billion) in compensation, according to the report.

Lithuania’s government terminated the railway transit contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belaruskali as of Feb. 1, 2022, over national security concerns (GM Jan. 14, 2022). The Lithuanian government’s decision came in the wake of EU and US sectoral sanctions on Belarus, which included, among other things, a ban on the trading and transit of potash.

The removal of the Lithuanian rail route effectively blocked Belaruskali’s key export route. Before the imposition of Western sanctions, the Belarus producer and its marketing/export arm, Belarusian Potash Co. (BPC), shipped 10-11 million mt of potash annually through the Lithuanian port of Klaipėda.

Lithuania’s Transport Ministry confirmed the initiation of legal proceedings but declined to provide further comment, according to the report.

Since the Lithuanian rail ban, Belarus began reorienting transshipment of its potash exports to Russian ports and has also increased its exports to China by rail.

Belarus in July reiterated its plans to export some 8 million mt of potash this year, the state-run news agency BelTA reported, citing Belarusian First Deputy Prime Minister Nikolai Snopkov (GM July 21, p. 1). He said Belarusian potash transshipment through Russian ports could increase to 8.4 million mt this year, up from 3 million mt in 2022.

Belarus railed more than 1 million mt of potash to China in 2022, according to an Interfax report in January, citing Belarus’ then Transport and Communications Minister Alexey Avramenko (GM Jan. 6, p. 28).

According to Green Markets calculations, however, global potash imports of Belarusian potash to various countries were only 3.5 million mt this year through July, equal to last year’s level (GM Sept. 29, p. 27).

PhosAgro, Global Ports Partner at St. Petersburg

Baltic Sea, Featured, Phosphate, Russia

Russian phosphate producer PhosAgro Group and Global Ports, a stevedoring division of Delo Group, have entered into an agreement to transship PhosAgro’s fertilizer through the First Container Terminal operated by Global Ports in St. Petersburg, Russia. The agreement also covers increased shipments through Global Ports’ Petrolesport Terminal, also in St Petersburg.

The agreement follows a Memorandum of Cooperation (MOC) inked between the two parties in April for the handling of an increased volume of PhosAgro’s fertilizers (GM April 21, p. 28). According to the MOC, the fertilizers to be transshipped for export will be produced at PhosAgro’s Cherepovets plant in Russia’s Vologda region.

The agreement was signed for a five-year period and will be effective from 2024-2028. The parties will be able to export at least 3 million mt/y, according to Global Ports, with the fertilizers loaded from special containers onto seagoing vessels.

The new cargo volumes “will increase the capacity utilization of Great Port of St. Petersburg, which is the most important transport hub for Russian foreign trade,” said Global Ports CEO Albert Likholet.

“For PhosAgro, the Russian market has been and remains a priority,” said Mikhail Rybnikov, PhosAgro CEO. “At the same time, under the conditions of external restrictions, our company was able to quickly redirect export flows, increasing the supply of eco-efficient fertilizers to the markets of friendly countries. Partnership with Global Ports will enable PhosAgro to expand and diversify export capabilities.”

Global Ports handled 0.7 million mt of PhosAgro fertilizers at its Petrolesport Terminal in 2022. According to Global Ports, the Russian fertilizer group stopped the transshipment of fertilizers through Russian logistics company Ultramar LLC’s terminal in the Russian Baltic Sea port of Ust-Luga last year, but was not confirmed by Green Markets.

Global Ports in 2022 began work to adapt its First Container Terminal in St Petersburg to facilitate the handling of non-containerized cargoes to compensate for the decline in container transshipments via the Baltic Sea.

Yara, Northern Lights Ink World’s First Cross-Border CCS Agreement

Ammonia, Featured, Norway, The Netherlands

Yara International ASA reported on Nov. 20 it has inked a binding commercial agreement with Norwegian CO2 transport and storage supplier Northern Lights JV DA for the shipping of CO2 from the ammonia production at Yara Sluiskil in the Netherlands to permanent storage on the Norwegian continental shelf.

Yara aims to reduce the annual CO2 emissions from the process gas by 800,000 mt at its ammonia production at Sluiskil and said the deal with Northern Lights will enable the first cross-border transportation and storage of CO2. The first tonnes of CO2 are expected to be shipped in 2025.

The two parties agreed to the main commercial terms of the agreement back in the late summer of 2022 (GM Sept. 2, 2022) and have since been firming up the final contractual details.

“Cutting 800,000 mt of CO2 in Yara Sluiskil corresponds to 0.5% of the total annual emissions (2022) in the Netherlands,” said Yara Netherlands Vice President Michael Schlaug.

Yara Sluiskil will expand its capacity to liquify 12 million mt of CO2 over the next 15 years with an estimated capex of approximately €200 million (approximately $218.6 million at current exchange rates), Schlaug said.

Northern Lights JV will ship liquified CO2 from Yara Sluiskil to Øygarden in Norway. The liquefied CO2 initially will be stored in onshore tanks at that location, prior to injection into an offshore saline aquifer via pipeline for permanent and safe storage, 2,600 meters below the seabed offshore of Øygarden. Operations will continue for 15 years.

Yara Sluiskil is one of the world’s largest ammonia and mineral fertilizer plants. The CCS project forms part of Yara’s ongoing strategic transition to decarbonize and future-proof its core production assets.

“This commercial agreement gives us the opportunity to further utilize the capacity of our storage site below the North Sea,” said Northern Lights Managing Director Børre Jacobsen. “It confirms the commercial potential for CCS and demonstrates that the market for transport and storage of CO2is evolving rapidly.”

Northern Lights JV DA is a registered, incorporated General Partnership with Shared Liability (DA) owned by Equinor, Shell, and TotalEnergies, and is the transport and storage part of the Norwegian government’s Longship project aimed at developing a full-scale CCS value chain in Norway.

Grupa Azoty Start Talks to End Sale of Puławy Subsidiary

Ammonia, Featured, Poland, UAN, Urea

Polish fertilizers and chemicals group Grupa Azoty SA will start talks with Polish energy group Orlen SA aimed at ending the potential takeover of Azoty subsidiary Zakłady Azotowe Puławy, Azoty said in a Nov. 20 statement. Azoty said its management board adopted the resolution to enter talks with Orlen on Nov. 20.

However, Orlen’s President of the Management Board and CEO Daniel Obajtek, writing on X (formerly Twitter), said Orlen “maintains its readiness” to take over the Puławy unit, and “the decision of the management board of Grupa Azoty to suspend the sale of the subsidiary does not serve the purpose of stabilizing the group’s financial position or the fertilizer market.”

Both Azoty and Orlen are state controlled, and there has been speculation that the Puławy acquisition move was government-driven, aimed at helping the ailing fertilizer and chemical producer.

In its statement, Azoty said its decision not to sell Puławy was “influenced by several factors,” including the conclusion of an analysis conducted by an external consulting firm of the potential transaction’s impact on its value creation capacities.

The fertilizer and chemicals group continues to seek ways to rebuild its market value and optimize its businesses, Grupa Azoty Vice President of the Management Board and Deputy CEO Marek Wadowski said in the company statement.

Azoty and Orlen signed a cooperation and non-disclosure agreement on Orlen’s potential acquisition of Puławy in early June (GM June 9, p. 1). The agreement came as Azoty attempted to improve its financial position after warning that it would breach debt covenants at the end of the second quarter (GM May 26, p. 26; May 19, p. 5). The company posted a 2Q net loss of Pln543 million, or approximately $125 million at then current exchange rates.

Azoty was able to secure a waiver of certain covenants and amendments to its group loan agreements and those of its Zakłady Chemiczne “Police” SA subsidiary with 13 financing institutions in early September (GM Sept. 8, p. 26).

The group said in this week’s market filing that it is continuing discussions with financial institutions. The group posted a third-quarter negative EBITDA of Pln348 million but highlighted an uptick in its Agro/Fertilizers business segment amid improving domestic fertilizer demand.

Obajtek in late September reiterated Orlen’s interest in acquiring the Puławy subsidiary and said an economic analysis of the potential acquisition was ongoing (GM Sept. 29, p. 27). Obajtek said the analysis was expected to be completed by the end of this year.

Puławy’s production capacity includes 1.24 million mt/y of ammonia, 1.19 million mt/y of urea, and 1.2 million mt/y of UAN, according to the Green Markets database. In addition, the subsidiary in 2020 commissioned a new AN/CAN fertilizer plant with total production capacity of up to 820,000 mt/y (GM July 10, 2020). One production line is for granulated AN with 1,200 mt/d capacity, while the second is for CAN-27 production at 1,400 mt/d.

Pacific Green Plans on Schedule in Washington

Ammonium Nitrate, CAN-17, News Briefs, Nitrogen, U.S.

Pacific Green Fertilizer Corp. reported that the front-end engineering design (FEED) study for its new 625,000 mt/y green nitrogen production facility in Richland, Wash., (GM March 31, p. 1) is set to conclude by the end of the year, according to plans. The company, owned by Swiss-based Atlas Agro, is focusing production on ammonium nitrate-based fertilizer products.

Atlas Agro North America President Dan Holmes told Green Markets that the products expected to be produced include CAN-17, CAN-27, ANSol-20, and CN-9. “We are excited to support farmers in the PNW with locally produced zero-carbon fertilizers,” he said.

The company has been lining up local farmers for the green fertilizer. “Consumer goods companies and farmers are increasingly tuned into green nitrogen fertilizers being inevitable for crop nutrition,” Holmes said. “We have several dialogues ongoing.”

While not the first to sign up, Stemilt Growers of Wenatchee, Wash., a local fruit grower, has been outspoken in its support for the project, reaching out to the company as early as May 2022. Stemilt and its distributor, G.S. Long Co., have already signed firm contracts to buy.

The $1.2 billion project’s timeline is for groundbreaking in 2024, with the plant to be operational in 2026-2027.

Pacific Green inked a real estate purchase and sale agreement with the Port of Benton, a municipal corporation in Washington, on March 8. Holmes has praised the collaboration with the Port, City of Richland, and the Tri-City Development Council (TRIDEC) in resolving logistical and operational challenges at the site, particularly with respect to lining up rail and barge access.

The plant will be the first of a series that Atlas Agro plans to build in multiple regions across the world. Atlas Agro is also planning an $850 million, 500,000 mt/y green nitrogen plant in Brazil and plans to eventually build 7-9 plants in the country (GM May 12, p. 1). It is also considering building a plant in Paraguay.

In July, Atlas Agro announced that Sydney-based financial services firm Macquarie Asset Management would invest $325 million in the company and related projects via the Macquarie GIG Energy Transition Solutions fund.

And in October, Atlas Agro was selected to begin award negotiations as part of the US Department of Energy’s (OCED) development of the Pacific Northwest Hydrogen Hub (GM Oct. 20, p. 1; Oct. 13, p. 1).

Nebraska Cooperatives Pursue Merger

News Briefs, U.S.

Two Nebraska cooperatives – Farmers Cooperative Elevator Company (FCE) in Hemingford and Panhandle Cooperative (PCA) in Scottsbluff – announced in mid-November that their Boards of Directors have signed a letter of intent to explore a unification of the two companies.

“With the changing demands of the economy of scale, both cooperative Boards recognize the potential benefits of unifying their organizations,” the businesses said in a joint statement. “The agricultural landscapes, climates, and needs of each cooperative have some variation, which means the unified cooperative will find creative solutions to serve all members effectively.”

The Boards said the combined co-op will establish specialized divisions in agronomy, grain, livestock feed and management, energy, market analysis, and retail grocery. The Boards are currently working on a new name for the unified cooperative, updated By-Laws, and a Plan for Merger, all of which will be made available to members of both co-ops in early December.

“A merger of the two cooperatives will offer patrons a broader range of services, increased access to markets, and the potential for improved bargaining power, which will lead to mutual growth and strengthen the agricultural industry in the entire region,” the statement said. “These advantages will not stop at the farm gate. The unified cooperative will continue to invest in local infrastructure, educational programs, and social initiatives, enriching the lives of both farmers and non-farming residents alike.”

Informational meetings will be held for members of both co-ops in mid-December, with each holding a special meeting to certify the count of mail-in ballots after the meetings. If approved by each Board and their members, the merger is anticipated to be effective on March 1, 2024.

Farmers Co-op operates grain, agronomy, and feed divisions from Nebraska locations at Gordon, Hay Springs, and Hemingford. The company has 1,675 stockholders. Panhandle Cooperative has agronomy, feed, energy, and grocery divisions at Scottsbluff and Kimball, Neb., as well as a grocery location at Torrington, Wyo.

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