| Universal Harvester |
503.00 |
5
Spot Barge Prices
st/FOB U.S. Gulf
| Ammonia |
430-435 |
| Urea (g) |
680-710 |
| Urea (p) |
650-670 |
| DAP |
480-495 |
The Week in Fertilizer Stocks
| Producer |
Symbol |
Price |
Week Ago |
Year Ago |
| Agrium |
AGU |
85.79 |
86.38 |
90.85 |
| CF Industries |
CF |
185.80 |
188.89 |
134.89 |
| CVR Partners |
UAN |
27.84 |
28.00 |
18.33 |
| Intrepid Potash |
IPI |
23.37 |
23.30 |
33.61 |
| Mosaic |
MOS |
50.84 |
51.17 |
76.75 |
| PotashCorp* |
POT |
43.31 |
43.50 |
57.43 |
| Rentech Nitrogen |
RNF |
28.10 |
27.95 |
N/A |
| Terra Nitrogen |
TNH |
248.92 |
284.00 |
98.18 |
| Distribution/Retail |
| Andersons Inc. |
ANDE |
49.41 |
48.41 |
48.02 |
| Deere & Co. |
DE |
80.39 |
79.34 |
90.38 |
| Scotts |
SMG |
52.20 |
52.85 |
56.75 |
| * represents three-for-one stock split |
Phosphate Holdings Inc. (PHI), which owns Mississippi Phosphates Corp., moved into the loss column for the fourth quarter and year ending Dec. 31, 2011, citing weaker DAP prices and maintenance problems in the fourth quarter. PHI reported a net loss of $576 million ($.07 per diluted share) for the fourth quarter, versus a year-ago net income of $853,000 ($.10 per share). Operating losses were $1 million, versus the year-ago income of $1.3 million. EBITDA was $3.5 million, down from the year-ago $5.2 million.
For the year, losses were $808,000 ($.10 per share), versus net income of $1.06 million ($.13 per share) for 2010. Operating losses were $800,000, compared to 2010’s income of $2.3 million. EBITDA was up, at $15.9 million from 2010’s $15.1 million.
“Our fourth quarter operating results were impacted by a planned maintenance turnaround early in the quarter and by falling DAP prices late in the quarter,” said Robert Jones, PHI CEO. “During December, posted DAP prices per short ton, FOB NOLA, dropped from approximately $560 to approximately $450. With sulfur prices fixed for the quarter and ammonia prices at elevated levels, our margins contracted. This margin squeeze was partially offset by very encouraging results from our October/November turnaround. In December 2011, we had the highest DAP and sulfuric acid production since mid-2008. We continue to experience production improvements in 2012 as compared to recent historical results.
“From a market perspective,” added Jones, “during the fourth quarter of 2011, the average posted DAP price was $552 per short ton, NOLA, sulfur prices were posted at $220 per long ton, CFR, Tampa, and ammonia prices hit a peak of $705 per metric ton before closing at $555 per metric ton, CFR, Tampa.”
PHI fourth-quarter net sales were up 45 percent, to $99.6 million from the year-ago $68.5 million. PHI said the average DAP sales price for the quarter was $539/st, up 1 percent from the year-ago average of $534/st. PHI sold 183,436 st of DAP during the quarter, with 57,011 going to domestic markets.
PHI net sales for the year 2011 were up 35 percent, to $352.3 million from 2010’s $261.1 million.
Citing a positive outlook for U.S. corn acres in 2012 to 95.9 million acres, Jones noted that nonetheless, distributors and retailers were very cautious in stocking inventories for the planting season “This reluctance has led to further price deterioration with the average first quarter 2012 posted DAP price of $444 per short ton, NOLA, and $516 per metric ton, U.S. Gulf. These depressed DAP prices will negatively impact our first quarter results. However, in the first two weeks of April, product movement has been brisk and DAP prices improving.”
PHI continues to review strategic options and will not discuss earnings with analysts in a conference call until this review is complete. It said that as of Dec. 31, 2011, it had a cash balance of approximately $3 million, and $15 million in borrowings under its revolving credit agreement. Approximately $3.2 million was spent on capital expenditures in the fourth quarter of 2011, and $12.5 million for the year 2011. Based on current phosphate market conditions, DAP production rates and available credit facilities, PHI believes that it has adequate liquidity to meet its operating and other cash flow needs throughout 2012.
The U.S. Environmental Protection Agency has approved an Interim Record of Decision that would cap rather than extract radioactive slag, buried phosphorus, and heavy metals that remain at the site of the former FMC Corp. elemental phosphorus complex west of Pocatello, Idaho.
From 1947 to December 2001, FMC operated the world’s largest elemental phosphorus plant until it was shut down. All of its structures, including four massive electric furnaces, have been torn down and removed. Since 1990, that site and adjacent property – where the J.R. Simplot Co. continues to operate a phosphate fertilizer plant – have been designated the Eastern Michaud Flats Superfund site. Unlike the Simplot plant, the FMC plant operated within the Fort Hall Indian Reservation boundaries in Power County.
Shoshone-Bannock tribal officials had urged that the FMC waste be removed rather than left on the property for fear it would contaminate the nearby Portneuf River, which runs through the reservation. They have argued that the billions of dollars in profits that FMC made from its elemental phosphorus plant should be spent on completely cleaning up the property.
After receiving hundreds of comments about the plan, EPA announced the “cap and retention” cleanup strategy at a special meeting April 13 in the Chubbuck City Council chambers. Officials said the existing property poses risks to people and the environment.
The plan, which will be funded by FMC, calls for capping major sections of the property. Installing extraction and treatment wells downstream would capture runoff pollutants. Drilling wells and actual removal of dirt are expected to take a year to start.
EPA will negotiate with FMC to forge a consent decree and draw up engineering and design plans for the cleanup. Once that is finalized, FMC will hire contractors to design and implement the project, which will be monitored by EPA.
The first EPA Record of Decision (ROD) regarding the FMC property was signed in 1998. Shoshone-Bannock opposition to a plan that calls for capping the waste has delayed reaching an interim ROD for more than a decade.
Tribal officials have called the EPA plan short-sighted, but EPA officials counter that removing all the waste would be prohibitively expensive and dangerous. As a concession to the tribes, EPA will fund a third party of experts to examine whether it is feasible to remove and treat the waste. EPA officials have said the undertaking will require removing large volumes of earth, plus special precautions to minimize surface runoff and air pollution. Hauling in clean soil and contouring hills near the property will involve hundreds of acres. It is estimated the entire remediation project could take up to four years. The extraction wells could be installed before the capping.
FMC ponds used to manage wastewater were capped and closed under a 1999 Resource Conservation and Recovery Act (RCRA) consent decree. In 1998, FMC paid $11.9 million – at that time the largest civil penalty settlement ever – under a 1976 hazardous waste law. It also had to cap the ponds, which had caught fire at times over the decades. Construction of the pond caps was completed by 2005.
Power County lost its major tax base when the FMC operation shut down. Plans call for the property to be developed commercially and industrially after the property is cleaned up.
A patent infringement lawsuit filed Jan. 9, 2009, by Dr. John Larry Sanders and Specialty Fertilizer Products LLC, Leawood, Kan., against The Mosaic Co., Cargill Inc., and Cargill Fertilizers Inc. over the defendants’ product, MicroEssentials, continues to linger in the U.S. District Court for the Western District of Missouri, while the plaintiffs have sent it back to the U.S. Patent and Trademark Office (PTO) for reexamination of the patentability of the claims.
In late February, the Court agreed to stay the lawsuit until a decision is made, saying that a reexamination by the Patent Office could simplify the issues to be litigated in this matter and facilitate any eventual trial of the case. Earlier in the litigation, Mosaic had won at the lower court level, but it was reversed on appeal and sent to the U.S. District Court.
“Re-examinations are taken very seriously by the U.S. PTO because, like ours, most re-exams have serious consequences,” Dr. Sanders told Green Markets last week. “The U.S. PTO gives no specific timeline, but we expect the results could come anytime.”
Sanders said the infringement allegation involves its micronutrient patents, and not its widely-distributed Avail product, which enhances phosphate use.
Sanders, like Mosaic, declined to discuss the merits of the case.
Earlier in February, the Court had ordered the parties to participate in a settlement conference with an outside mediator. However, those discussions did not result in a resolution.
In the meantime, MicroEssentials has grown within Mosaic to pull in over $500 million each year in revenues. It now represents 14 percent of Mosaic phosphate sales, and is expected to grow as more capacity comes online. The company has committed some $70 million to expand capacity of the product from 1.5 million tons to 2.3 million tons per year. Mosaic said that in North America, in only a few years of distribution, MicroEssentials has captured an approximate 9 percent share of all phosphate products sold.
Mosaic has also launched new MicroEssential products – MicroEssentials S9, a production specifically developed for Brazil; MicroEssentials S5, which is focused on grain production; and Nexfos, a feed phosphate product.
Mosaic says MicroEssentials generates approximately 5 percent more margin than does DAP, or an approximate $38 per ton of incremental gross margin on a product ton basis. While it does incur additional research and development, marketing, and technical sales costs of about $10 per ton, that leaves a net incremental cost of $28 per ton.
Mosaic told analysts Feb. 22 that MicroEssentials allows it to overcome growth constraints it has in its phosphate business. The company said it is constrained by rock resources and P205 production. “Relative to DAP, we can produce about 15 percent more finished MicroEssentials product per ton of phosphoric acid and at higher margins. So our returns on a ton of P205 are substantially higher than DAP,” said Mosaic Senior Vice President-Commercial Richard McLellan.
Mosaic says field tests show the product increased yields by 2.7-7.7 more bushels per acre than competing products.
Boston — The Massachusetts Department of Environmental Protection (MassDEP) has assessed a $26,000 penalty against The Suttles Truck Leasing Co. for violating state hazardous waste management, industrial wastewater, and underground storage tank regulations. An inspection of the facility last April by MassDEP following a nitric acid release found the company in violation of hazardous waste requirements, including failure to notify the department of hazardous waste activity and of waste oil recycling, failure to comply with container management requirements, and storing waste oil longer than allowed. Other violations included operating a wastewater pre-treatment system without a licensed wastewater treatment operator, failure to keep inventory records for underground storage tanks on the property, and failure to comply with other underground storage tank requirements. A payment of $6,500 is being required, with the remainder being suspended if the company returns to compliance. In addition, MassDEP is requiring three supplemental environmental projects – at a cost of $19,500 – involving providing a thermal imaging unit for the Grafton Fire Department, $10,000 to help fund the Grafton’s Reverse 911 System, and emergency responder hazardous materials cargo tank training for up to 100 members of the Grafton, Upton, Oxford, and New Bedford fire departments. The nitric acid incident April 8 caused release of a vapor cloud and forced officials to evacuate the neighborhood, including the North Grafton Elementary School. Company officials blamed the release on employee error. The vapor cloud, which appeared to have a reddish tint, resulted when an employee mistakenly mixed four gallons of nitric acid with 20 gallons of wastewater in a 200-gallon container, Fire Chief Michael Gauthier said, explaining that nitric acid reacts violently when mixed with water.
Toledo, Ohio — S&L Fertilizer which took over all the city’s biosolids contracting in a controversial move by the city council late last year, now is being required by Ohio EPA to hire a consultant to assure there’s no leakage from the S&L processing site into Lake Eerie and the Maumee River. “S&L will have two years to hire the consultant, develop testing and analysis procedures, and report back to the EPA,” reported Ohio EPA spokesperson Dina Pierce. Apparently Ohio EPA decided to take action due to numerous complaints received from N-VIRO which lost the estimated $1 million a year biosolids contract to S&L and city council members. N-VIRO complained to the Ohio EPA that the S&L site isn’t equipped to handle the volume of sludge. Councilman D. Michael Collins told Green Markets that Lake Eerie constitutes over 20 percent of America’s freshwater supply, and is one of our country’s most valuable natural resources. Collins said he cares about maintaining the integrity of the area and is very concerned about the environmental impact of sewage sludge on the western basin of Lake Eerie. According to Collins, the amount of sewer sludge going to the facility has increased to 50,000 tons each year, and the sludge is dumped on 70 acres of ground at Maumee Bay. Another 25,000 tons went to the landfill. “A consultant needs to perform an in-depth study for relationship between sewage sludge and algae blooms,” insisted Collins. The councilman has also demanded public records from port of authority, S&L, and the Ohio EPA. Dr. Robert Vincent has used satellite photography in the area, and reports an increase of algae bloom contamination over the past three years. In the fall of 2011, the city of Toledo had dual contracts with N-VIRO and S&L.
Tel Aviv — The Israeli government’s committee on national infrastructures has decided to grant Dead Sea Works a delay in harvesting the salt at the Dead Sea. The company was supposed to carry out an immediate project to remove salt as an intermediate step before the large scale project for harvesting salt begins. The committee said that the Dead Sea Works and its parent company, Israel Chemicals (ICL), are moving ahead rapidly on the full scale program and therefore it agreed to forgo the immediate harvesting. However the committee decision did not take into account a legal challenge against the agreement between the government and ICL by the country’s leading environmental lobby, the Israel Union for Environmental Defense (IUED). The IUED is demanding that the agreement with ICL on the salt harvesting be amended charging that it is not in the public interest. The lobby charged the government with "once again giving into one of the country’s most powerful companies at the expense of the public." The IUED demanded that salt harvesting begin immediately to halt continued damage to the environment. Israel’s Supreme Court is due to hear the appeal in the coming weeks. In January the Israeli government approved the agreement with ICL whereby the company would cover 80 percent of the cost of removing the salt from the ponds it uses for potash production at the southern end of the Dead Sea. The government would cover the remainder of the cost which is estimated at $1.1 billion. The removal of the salt is crucial in order to stem the rise of the level of the southern end of the Dead Sea, which threatens hotels located adjacent to the inland sea. Half of the government payment will be offset by indirect payments by the company and raising royalties from 5 to 10 percent on production above 1.5 million tons.
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