All Posts from September 22, 2023

Simplot to Close Lathrop Fertilizer Facility

California, Featured, U.S.

The J.R. Simplot Co., Boise, Idaho, reported on Sept. 21 that it has decided to close its fertilizer manufacturing facility in Lathrop, Calif., no later than Aug. 31, 2024. The company announced the decision now in an attempt to minimize disruption to employees, community members, customers, and other stakeholders.

“We recognize the very real and often difficult impact a plant closure has on people and the community,” said Garrett Lofto, J.R. Simplot President and CEO. “We want to thank all of our Lathrop employees who have supported our efforts. This decision does not reflect the effort, pride, and commitment they’ve shown over the years.”

Simplot said it has experienced decreasing demand for products distributed from its Lathrop facility and increasing operating costs at the location for several years. The Lathrop facility was built in the 1950s, and after thorough examination the company determined that updating the facility to meet current and future demands would not be feasible.

The closing timeline will enable Simplot to make sufficient plans for its continued support for customers who may be impacted. Simplot employs about 150 people at its Lathrop facility. Many employees will remain at the location through its closing date. The plant at one time had DAP/MAP capacity of 100,000 mt/y, according to the Green Markets Database.

“We are committed to our customers and partners and will work closely with them to minimize disruption and facilitate a smooth transition,” said Doug Stone, President of Simplot’s AgriBusiness Division. “We will continue to provide high quality products and excellent service to our fertilizer customers in California and throughout North America.”

The Lathrop outage could easily be made up from Simplot’s recent five-year agreement to take 100% of the MAP produced at Itafos Inc.’s Conda, Idaho, plant beginning on Jan. 1, 2024 (GM Sept. 8, p. 1).

Itafos puts Conda’s phosphate production capacity at 550,000 mt/y, which includes MAP, MAP with micronutrients, superphosphoric acid, merchant-grade phosphoric acid, and ammonium polysulfate. Approximate MAP capacity has been put at 340,000 mt/y, with 170,000 mt/y for the other phosphate products. The company also has hydrofluorosilicic acid capacity of approximately 27,000 mt/y (GM July 1, 2022).

Simplot also has phosphate production capacity of 500,000 mt/y at its Rock Springs, Wyo., facility, and 450,000 mt/y at its Pocatello, Idaho, plant, according to the Green Markets database.

Sollio Agriculture Opens New CRF Plant in Ontario

Canada, Eastern Canada, Featured, Northeast, Urea

Montreal-based Sollio Agriculture, the Agri-business Division of Sollio Cooperative Group (formerly La Coop fédérée), on Sept. 18 inaugurated CRF Agritech, a new controlled-release fertilizer (CRF) production plant in St. Thomas, Ont.

The project was launched in 2021 after Sollio Agriculture entered a joint venture with several of its cooperatives in Québec, its Agromart retail partners in Ontario and the Maritimes, and fertilizer technology provider Pursell, Sylacauga, Ala. (GM Sept. 3, 2021).

With an area of 25,800 square feet, the new plant required an investment of more than C$25 million. At full capacity, it will manufacture over 100,000 mt/y of next-generation CRF, including PurYield, for farmers across Eastern Canada and the Northeastern US. It will also be able to produce other coated fertilizer for uses other than agricultural. 

“This strategic partnership between Pursell and the Sollio Agriculture network allows us to expand the potential market for this technology and support nutrient management initiatives associated with the use of fertilizer products,” said Sollio Agriculture CEO Casper Kaastra. “PurYield is an exciting addition to our portfolio, providing substantial benefit to farmers across the region.”

 “We’re proud to extend the scope of our technology to new markets and establish ourselves for the first time in Canada with a partner recognized in the agricultural industry,” said Pursell CFO Joe Brady. This was the first license of Pursell technology outside of the US.

Pursell, which opened its flagship fertilizer coating plant in Sylacauga in early 2018, is also operating a newer plant in Savannah, Ga. (GM May 28, 2021).

 As part of the Fertilizer Accelerating Solutions & Technology Challenge of the Ministry of Agriculture, Food and Rural Affairs of Ontario, CRF Agritech was awarded C$154,000 (GM April 28, p. 29). This grant made it possible to speed up production and farmers’ adoption of the new generation of fertilizer technology.  

Initial studies conducted by the Sollio Agriculture research team and McGill University show that the use of PurYield fertilizer has the potential to reduce greenhouse gas emissions by 30%. Additional scientific testing and validation is currently underway.

Thanks to a grant of C$180,000 awarded by the Natural Sciences and Engineering Research Council of Canada, announced in August, McGill researchers will be able to compare PurYield fertilizer to commonly used uncoated urea fertilizer for its ability to increase growth, yield, and quality of corn grain, as well as reduce greenhouse gas emissions. Sollio has committed to providing an additional $30,000 per year in cash and in-kind contributions for three years. The research project is also in collaboration with Avantis Cooperative, Sainte-Marie, Quebec.

In addition to CRF products that contain nitrogen, phosphate, and potash, as well as customized plant nutrition options, Pursell technology also enables the addition of micronutrients, biologicals, growth enhancers, and soil health promoters.

Cinis to Build SOP Plant in Kentucky; K+S Agrees to Offtake, MOP Supply

Featured, Germany, Northeast, Saskatchewan, South Central, Sulfate of Potash, Sweden, U.S.

Swedish green technology company Cinis Fertilizer will invest 1 billion Swedish kronor ($89.4 million) in a new 300,000 mt/y sulfate of potash (SOP) production plant in Hopkinsville, Ky., after signing a 10-year agreement with US battery material manufacturer Ascend Elements, Westborough, Mass.

Ascend is currently building a new battery plant in Hopkinsville and it will supply Cinis with 240,000 mt/y of input sodium sulfate starting in 2026.

Cinis expects to begin SOP production in 2026. It has signed a letter of intent with Germany’s K+S Minerals regarding the offtake of the finished product. In addition, K+S will supply potassium chloride from its mine in Saskatchewan.

Cinis and K+S also have offtake and supply agreements in Sweden (GM Sept. 8, p. 26; July 1, 2022), where Cinis is currently building its first production facility, which has a planned start early next year. A second Swedish facility, in Skelleftea, is scheduled to start production in mid-2025. Cinis plans to have 1.5 million mt/y of SOP capacity by the end of 2030 at six facilities, three of which are now designated.

“In the past year, we have experienced massive international interest in our environmentally friendly fertilizer, where circularity and fossil-free production are key,” said Cinis Founder and CEO Jakob Liedberg. “For manufacturers of batteries, it is important that the entire production chain meets high requirements for resource efficiency and environmental friendliness. The agreement with Ascend Elements in addition with the letter of intent with K+S, which includes the purchase of our full plant production capacity, gives us the confidence we need to establish Cinis Fertilizer on the American market.”

The facility will be built in close vicinity to Ascend’s operations in Hopkinsville, which entails cost-effective logistics solutions. Cinis has entered into an agreement with the city of Hopkinsville regarding the purchase of land for the plant and has begun discussions with a regional power supplier regarding the supply of fossil-free electricity.

“The fast growth of industrial in connection with the Inflation Reduction Act, currently taking place in USA contributes to our decision to carry out Cinis Fertilizer’s expansion in North America,” Liedberg added. “This was further strengthened by the great interest shown by prominent investors in their recent investments in Ascend Elements.”

Cinis said it will produce the world’s most environmentally friendly mineral fertilizer by recycling industrial waste products from the car battery manufacturing industry as well as the pulp and paper industry. It said the patent protected technology will use half as much energy as today’s production methods, resulting in a fertilizer with a close to zero carbon footprint.

OCP Welcomes Court Decision in Phosphate Trade Cases; Mosaic Downplays

Featured, Morocco, Phosphate, Russia, U.S.

Morocco’s OCP Group has praised two recent decisions (Sept. 19 and Sept. 14) by the US Court of International Trade (CIT). In the Sept. 19 decision CIT remanded a decision by the US International Trade Commission (ITC) in which it found material injury in its final decision in the countervailing duty investigations with respect to imports of phosphate from Morocco and Russia (GM March 11, 2021).

OCP said it prevailed on its objections to a key Commission finding that, according to the Court, was “factually unsupported” and yet “undergirds the Commission’s determination across all statutory factors.” OCP said it looks forward to continuing to cooperate fully with the Commission as it reconsiders its determination on the basis of the Court’s ruling.

CIT said that while the plaintiffs brought multiple challenges to the ITC ruling, ITC grounded its findings on an unsupported assumption that fertilizer could be reshipped from one destination to another to meet existing demand.

CIT cited industry testimony that it was not economically feasible to ship barges positioned upriver back down the river to meet demand elsewhere, such as the Delta. Plaintiffs had argued that it was more feasible to simply import product to meet those needs, as domestic freight costs were prohibitive. This all relates to the fact that imports grew during a time of low demand spurred on by three seasons of flooding.

CIT particularly zeroed in on the testimony of Donal Lambert, President, EuroChem North America Corp. EuroChem was a consolidated plaintiff in the case. Plaintiff’s motion was supported by plaintiff-intervenors PhosAgro PJSC, International Raw Materials Ltd., and Koch Fertilizer LLC.

Another factor offered by plaintiffs was that domestic producers had idled capacity during this timeframe, thereby necessitating the need for even more imports.

Mosaic on Sept. 21 said CIT appeals are common in trade remedy cases, and in most cases remanded to the ITC for reconsideration. It said the original finding of injury is affirmed.

Mosaic said CIT remanded on one specific factual issue out of many that the ITC relied upon. It said neither the ITC nor the US Department of Commerce (DOC) have thus far changed anything from their earlier determinations, and as a result, countervailing duties on phosphate fertilizers remain in effect with no changes to the rates applied at the border.

“The basic facts that led to countervailing duties on imports from Morocco and Russia remain unchanged,” said Mosaic CEO Joc O’Rourke. “We will continue to participate actively before the agencies and the courts to defend the original findings.”

CIT directed ITC to take new evidence, reconsider existing evidence, or take any other action allowed by its procedures on remand to come to a conclusion supported by substantial evidence. ITC is directed to file its remand redetermination within 120 days of the Sept. 19 date. Thereafter, all the parties will have time to file comments.

CIT’s Sept. 14 decision addressed the 19.97% duty on imports of phosphates from Morocco. The Court sent the matter back to the DOC to reconsider the calculations it made in the case, particularly with respect to its decision to exclude certain OCP costs. CIT gave the DOC 90 days to submit its remand redetermination, with the parties allowed time to comment thereafter.

As for Russian duties, the rate was 9.19% for PhosAgro, 47.05% for EuroChem, and 17.2% for other Russian companies (GM Feb. 12, 2021).

Canada, India Spat Prompts Travel Restrictions, May Impact Trade; Three-Year Potash Contract in Place

Belarus, Canada, Featured, India, Potash, Russia

There were fears that some Canadian firms that generate revenues from sales to India may see a drop in stock prices after Prime Minister Justin Trudeau on Sept. 18 accused the Indian government of involvement in the killing of a prominent Sikh leader in Surrey, B.C., in June. There was speculation that potash miners Nutrien Ltd. and The Mosaic Co., both members of Canpotex Ltd., might move down. Canpotex lists India among its five largest export markets.

While both stocks were off slightly on the New York Stock Exchange between Monday and Thursday’s close, neither company wanted to comment. A recent decision by the US Court of International Trade remanding phosphate countervailing duties back to the US International Trade Commission was another possible factor (See related story).

“Canadian potash is vital to India’s food security and Canpotex has been a reliable supplier to India for 50 years,” said Gordon McKenzie, Canpotex President and CEO last year when the organization inked a new three-year contract with three Indian companies (GM Sept. 30, 2022). “Canpotex is committed to supporting India’s potash needs as their agriculture sector continues to grow, particularly in light of current restrictions on Russia and Belarus.”

At the time, Canpotex signed Memorandums of Understanding (MOUs) with three of its customers in India: Indian Potash Ltd., Coromandel International Ltd., and Chambal Fertilisers and Chemicals Ltd. The MOUs confirmed Canpotex’s willingness to supply, and each customer’s willingness to acquire, up to 500,000 mt of potash annually during the period from Jan.1, 2023, to Dec. 31, 2025.

India Potash Ltd. Managing Director P.S. Gahlaut told Reuters on Sept. 22 that his company does not expect any impact on potash imports from Canada. “Canpotex’s deal with Indian companies are commercial contracts,” Gahlaut said. “So far, it is business as usual for us.”

On Sept. 18, Prime Minister Justin Trudeau announced that Canadian investigators were “pursuing credible allegations of a potential link” between Indian agents and the shooting of Hardeep Singh Nijjar, 45, outside a temple in B.C. last June. Trudeau said he had raised the issue directly with Prime Minister Narendra Modi and called on India to cooperate in the investigation, emphasizing that “any involvement of a foreign government in the killing of a Canadian citizen on Canadian soil is an unacceptable violation of our sovereignty.”

The Indian foreign ministry has rejected the charges as “absurd and motivated.” It repeated calls for Canada to crack down on figures such as Nijjar, whom India had designated a terrorist bent on promoting the so-called Khalistan movement, which during the 1980s and early 1990s violently sought to carve out an independent Sikh state in India’s Punjab region. Several other Sikh activists have died overseas under suspicious circumstances in recent months.

Ties between the nations are at their lowest point in decades due to tensions over demands by some Sikhs in Canada – the largest population outside of India’s Punjab state – for an independent homeland. Both countries expelled senior diplomats from the other side.

Officials in New Delhi have long accused Canada of serving as a haven for Sikh separatists and doing little to protect Indian missions and consulates from protests carried out by these groups. On Sept. 20, New Delhi issued warnings for its citizens living and studying in Canada to exercise caution in areas where there are anti-India activities and “politically condoned hate crimes.”

The notice was shared widely on social media in India along with calls to boycott Canadian brands such as coffee chain Tim Hortons and frozen food manufacturer McCain Foods. Indian media has taken a nationalist tone in their coverage of the issue, questioning the veracity of Trudeau’s claims and asking why no evidence has yet to be released. 

Prime Minister Narendra Modi, who has yet to address Trudeau’s accusations, is widely seen by analysts as benefitting politically from the diplomatic spat ahead of elections next year, when he’ll be vying for a third term in power. His party has pushed a Hindu nationalist agenda and the government takes a rigid position against secessionist Sikh groups, which tracks well with voters.

At the same time, Trudeau’s minority government is kept in power by the New Democratic Party, whose leader is Jaymeet Singh, a Sikh. There are some 1.4 million Canadians of Indian heritage, or 4% of the population, many of them Sikhs.

By Sept. 21 the situation had been exacerbated, with India suspending visa applications in Canada. The move meant Canadians would not be able to travel to India if they didn’t already have a visa, affecting both business and leisure travelers. Canadians made 280,000 tourist arrivals in India last year, according to Indian government data, making it the No. 5 source of such visitors.

Montreal-based engineering firm SNC-Lavalin Group Inc., which now operates under the brand name of AtkinsRealis, has limited travel to India for Canadian employees to “essential reasons only” until further notice, the firm told Bloomberg.

Orica Touts Strong Performance, Exits Venezuela

Ammonia, Australia, Earnings

Melbourne-based explosives manufacturer Orica Ltd. on Sept. 19 confirmed its full-year outlook for fiscal 2023 is in line with the guidance given in the first-half results in May (GM May 19, p. 25), and said the strength of the underlying business performance is expected to continue into the 2024 financial year.

For the second half of FY2023, the company expects improvements in both trade working capital and operating cash flow, resulting from reduced inventory valuation and inventory volume optimization. Net finance costs in the second half are also anticipated to be slightly lower than for the first half of FY2023.

Orica expects strong business performance in 2024 “supported by the ongoing execution of the strategy, commercial disciple, strong customer demand, and increased earnings” from its blasting and digital technology offering.

The company has a number of major turnarounds scheduled in the first half of 2024, including one at the Kooragang Island ammonia plant in New South Wales, which occurs every six years. The plant will be down for around 11 weeks across two stages in October and February.

Jefferies analyst Richard Johnson, as cited by a Dow Jones report, noted that “this shut means that Orica will be short circa 70,000 mt of ammonia, or circa 160,000 mt of ammonium nitrate.” Based on some very broad assumptions, he said the dollar impact of this loss could be around A$30 million ($19.4 million).

Orica said it continues to remain cautious of external challenges from geopolitics, inflationary pressures, and high energy costs. It said the business will continue ongoing cost-efficiency initiatives to reduce the impact of these external factors. Orica will report its fiscal 2023 full-year results on Nov. 9.

Orica in its Sept. 19 ASA release confirmed its intention to exit Venezuela following the cessation of its operations in the country in 2019 after US sanctions were imposed on Venezuela, and due to what Orica described as “the complex operating environment.”

Orica said it is finalizing a sale of the legal entities and expects to complete this during the current month. It puts the current estimated loss on sale, including the non-cash impact of reclassifying historical amounts deferred in the Foreign Currency Translation Reserve (FCTR), at A$20 million after tax, which will be reported as an individually significant item.

Grupa Azoty Posts Second-Quarter Loss

Ammonia, Earnings, Poland, Urea

Polish fertilizers and chemicals group Grupa Azoty SA posted a Pln543 million (approximately $125 million at current exchange rates) net loss for the second quarter ended June 30, 2023, according to a company statement of preliminary results. The group reported a Pln799.6 net profit for second-quarter 2022 (GM Oct. 7, 2022).

Azoty expects to report a second-quarter EBITDA loss of Pln608 million versus an EBITDA of Pln1.24 billion in last year’s second quarter.

The loss would have been even greater had it not been partially offset by a Pln289 million contribution from the sale of CO2 emission allowances purchased on the market in previous periods by Azoty subsidiaries Zakłady Azotowe Puławy S.A., Zakłady Chemiczne “Police,” and Zakłady Azotowe Kędzierzyn S.A., according to the Sept. 18 statement.

Revenues for the quarter are expected to be 46% off at Pln3.49 billion, down from the prior-year Pln6.41 billion.

Azoty’s Agro/Fertilizers segment is expected to report a second-quarter EBITDA loss of Pln520 million, down from the year-ago positive EBITDA of Pln657 million. The group reported a 24% decrease in total fertilizer sales volumes in the quarter, citing low demand. Compound fertilizer sales volumes saw an even steeper decline, with sales volumes down 49% year-on-year.

“Unfavorable conditions prevailed in Polish agriculture, with grain prices following a downward trend in the domestic market, leading to diminished demand and downward pressure on fertilizer prices,” Azoty said.

The group also cited an increase in imports of urea and ammonia into the European Union and the domestic market during the EU’s six-month suspension of tariffs on urea and ammonia. The import duties came back into effect on June 17, though some origins remain exempt from the tariffs, including Trinidad and Tobago, Egypt, and Algeria (GM June 23, p. 29). Duties on ammonia and urea imports originating from Russia and Belarus remained in effect through the six-month suspension.

Due to the weak demand, Azoty said it aligned its production in the second quarter with the prevailing supply and demand conditions. Its total fertilizer output was 43% lower in the quarter compared with last year’s second quarter, while production of compound fertilizers was down 49% year-over-year.

Azoty’s Chemicals segment, which produces sulfur, technical grade urea, and melamine, is expected to report a second-quarter EBITDA loss of Pln252 million versus the year-ago positive EBITDA of Pln431 million.

The second-quarter earnings were much lower than market expectations. Azoty’s shares dropped as much as 4.9% in Warsaw immediately following the release of the preliminary results on Sept. 18, their lowest level since June 13, according to a Bloomberg report.

Azoty earlier this month signed waiver and amendment letters with 13 financing institutions whereby they agreed to waive certain covenants laid down in loan agreements to the group and its “Police” subsidiary (GM Sept. 8, p. 26). The group had been seeking covenant waivers from its lenders since June amid an expected breach in its debt/EBITDA ratio covenants at the end of the second quarter.

For the six months to June 30, 2023, Azoty expects to report an EBITDA loss of Pln1.009 billion and consolidated revenue of Pln7.39 billion. However, Azoty expects fertilizer markets to improve during the second half of the year, based on the upward trend in fertilizer demand observed in the third quarter. This is expected to have a positive impact on the group’s financial results, Azoty said.

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