All Posts from May 24, 2019

IPL Impacted by Weather, Plant Problems, Gas Prices; Gibson Island Decision Imminent

Australia, News

Incitec Pivot Ltd. (IPL) reported a 72 percent drop in net profit after tax (NPAT) excluding individually material items (IMI) to A$41.9 million for the first-half ending March 31, 2019, from the year-ago $147.1 million. Statutory NPAT was up at $41.9 million from $7.6 million. EBIT was $118.7 million, up from $4.3 million, while EBITDA was $264.2 million versus $148 million. Revenues were up at $1.74 billion from $1.68 billion.

The company cited a $60 million impact from the Queensland rail outage on Phosphate Hill earnings and $16 million from increased costs, driven by elevated gas pricing following a third-part gas supply disruption to the St. Helens, Ore., site. There was also a $65 million decrease due to the impact of significant outages at the Waggaman, La., ammonia plant ($45 million) and Phosphate Hill ($20 million). Australian fertilizer sales were down $21 million due to drought.

First-half Waggaman EBIT was off 79 percent, to US$10 million on total revenues of $88.6 million (external customers) from the year-ago $48 million and $101.5 million, respectively. Tons sold were off 10 percent, to 384,300 mt from 449,600 mt, while tons produced were off 35 percent, to 287,700 mt from 441,200 mt.

An external power failure in January uncovered several defects in the Waggaman CO2 recovery system. The company noted that operational disruptions are not uncommon for a relatively new plant. The plant was offline about 50 days in the first-half. IPL said the root causes were identified, and repairs and upgrades completed. It also undertook additional maintenance, allowing the next planned turnaround to be deferred 12 months to early fiscal year 2021. There was a first-half EBIT impact of $45 million (US$32 million).

The company said compressor electronic controls issues that arose in late March were rectified in mid-April, and that the plant has since been operating consistently.

The first-half realized ammonia price was $297/mt, up from the year-ago $285/mt. Realized gas costs were up at $3.59/mmBtu from $3.10/mmBtu, while gas efficiency was at 36/mmBtu per mt versus the year-ago 32/mmBtu per mt. The average six-month Tampa price was $315/mt CFR, up from the year-ago $300/mt.

Expected ammonia production for the second-half is 370,000-400,000 mt, and full-year 660,000-690,000 mt. The gas conversion rate for the second-half is seen as 33 mmBtu, with full-year at 35 mmBtu. The company is estimating a second-half Henry Hub gas cost of $2.77/mmBtu, and $3.08/mmBtu for the full-year. Estimated Tampa ammonia prices for the second-half are $285/mt, with $298/mt for the full-year.

The company saw a $16 million (US$12 million) impact from the October 2018 rupture of the Enbridge natural gas pipeline at its St. Helens plant. It noted that all of the U.S. Northwest experienced significantly higher gas prices during the supply curtailment. It said gas prices are now trading lower within historical levels. The unit is within the company’s Dyno Nobel Americas Agriculture & Industrial Chemicals (Ag & IC) unit.

The Ag & IC unit reported a first-half EBIT loss of $2.7 million on revenues of $56.3 million, compared to the year-ago loss of $300,000 and $47.7 million, respectively. The company said its Cheyenne, Wyo., plant operated reliably during the half, with ammonia production up 14 percent and UAN 42 percent compared to year-ago levels, mainly due to an extended turnaround in the year-ago period.

Phosphate Hill first-half production was off 32 percent, to 311,900 mt from 459,800 mt. The facility had an EBIT loss of $28.9 million on revenues of $187.8 million, compared to the year-ago positive $23.3 million and $242.1 million, respectively.

IPL said it lost some 250,000 mt of production for fiscal year 2019 due to the 100-year flood that caused a late-January through end-April rail closure between its Phosphate Hill plant and Townsville. Production restarted in mid-May. The first-half EBIT impact was $60 million, with $55 million expected in the second-half.

There was also a $20 million EBIT impact due to manufacturing issues at the Phosphate Hill facility because of a phosphoric acid reactor integrity issue, resulting in significant downstream impact. A comprehensive review of linings has been completed and a sequenced reline of two small reactors will be completed in 2019, with no expected impact on production rates.

The company expects a decision soon on the future of its Gibson Island nitrogen plant. The company is in ongoing discussions for a gas supply agreement through 2022. The company has a temporary one-year gas contract that runs through Dec. 31, 2019. If one is not forthcoming at the right price, IPL said it will close the plant, which employs 450.

Analysts told Australia’s Financial Review that IPL is hard-pressed to find a gas contract with a price that will economically keep the aging plant afloat. The latest revised closure costs are $65-$75 million. The closure assumes that ammonia will be imported through the existing storage tank to support IPL’s Big N business and industrial customers, reducing the available land for sale, with those proceeds now seen as $30 million. The distribution center at the site will remain to service customers.

Gibson Island first-half urea equivalent production was down 38 percent, to 136,900 mt from 220,100 mt, though this was due to a planned outage for maintenance.

IPL said 2019 EBIT is skewed to the second-half given the significant level of non-recurring items in the first-half, though this excludes any one-off costs should it decide to close the Gibson Island plant. It said it is well positioned to benefit from expected improved second-half demand. IPL cut its dividend from 4.5 cents to 1.3 cents.

Dyno Nobel Americas US$ M

Revenues 1H-19 1H-18 Change%
Explosives 388.2 377.4 3
Waggaman 88.6 101.5 (13)
Ag & IC 56.3 47.7 18
Total 533.1 526.6 1
EBIT 1H-19 1H-18 Change%
Explosives 55.4 54 3
Waggaman 10 48 (79)
Ag & IC (2.7) (0.3) (800)
Total 62.7 101.7 (38)
Australian $
Revenue 744.9 677.8 10
EBIT 87.9 130.9 (33)

Anuvia Touts New Study, Endorsement

News, News Briefs, Specialty

Anuvia Plant Nutrients, Zellwood, Fla., on May 21 announced that an independent study by Environmental Resources Management (ERM), a global environmental consulting firm, verified the sustainability impact of Anuvia’s technology on corn, rice, and cotton.

Anuvia said the study found that its plant nutrient technology reduces greenhouse gases (GhG) on production by up to 32 percent compared to the use of conventional fertilizers, while at the same time increasing farmers’ profitability. Greenhouse gases are produced when nutrients in traditional fertilizer are lost as gas or vapor into the atmosphere, largely in the form of N2O and CO2. Agriculture accounts for nearly 10 percent of all greenhouse gas emissions in the U.S., according to EPA.

Data was gathered in cooperation with several universities and agricultural centers in the U.S. It was then combined with international data standards for environmental impact to determine final results.

Anuvia said it outperformed conventional fertilizers in both the sourcing and manufacturing of the product (called the Cradle to Gate Phase) and the Use Phase, which is when the nutrients are actually distributed onto the field. Highlights included 10 percent reduction of greenhouse gases on corn, 32 percent reduction of greenhouse gases on cotton and rice, and 4 to 13 times lower carbon footprint (against traditional inorganic fertilizers) from manufacturing process.

“This was an in-depth, rigorous exercise to assess carbon footprint through every phase of the product life cycle, including sourcing materials, manufacturing, and in use on field,” said ERM Technical Director Braulio Pikman, who was the lead author of the study. “In this respect, the results of study truly stand out, suggesting that Anuvia can make a significant, immediate impact on reducing greenhouse gases globally, while at the same time, help agriculture become even more efficient and effective.”

Anuvia said based on the study, it is possible to state that for every million acres of crops that use Anuvia, the reduction of greenhouse gases is the equivalent of removing 20,000 to 30,000 cars from the roads. With 90 million acres of corn in the U.S. alone, this would conservatively translate to 1.8 million cars removed in perpetuity. Anuvia said its product is already in use on more than 500,000 acres, with production capacity planned to dramatically increase by 2020.

“Our innovative technology helps large-scale commercial farms become more sustainable immediately,” said Anuvia CEO Amy Yoder. “Consumers and mainstream retailers like Walmart are increasingly demanding sustainable practices across the supply chain. Anuvia helps farms stay competitive in this changing landscape.”

Anuvia also argues that its nutrient system is more efficient in feeding plants and farmers can grow bigger and better crops, reaping more from their current acreage. With an average yield increase of 5.1 percent across major crops such as corn, rice, wheat, canola, and cotton, farmers ultimately see a 3-5x ROI.

Anuvia also rolled out an endorsement from Southern States Cooperative, Richmond, Va. “As a cooperative owned by 200,000 farmers, we have a responsibility to our members that products we recommend will work as promised on the field,” said Southern States COO Steve Becraft. “Anuvia’s performance yield and profitability has earned our trust and the trust of our members.”

Penalty Levied for Ammonia Release

Ammonia, News, News Briefs

Kayem Foods Inc., Chelsea, Mass., will pay a $138,281 civil penalty on Clean Air Act claims that its refrigeration system failed to meet industry safety standards, take adequate precautions, and perform worse-case calculations for an ammonia gas release from its plant, according to Bloomberg Law, citing settlement documents filed on May 16.

The settlement, for which Kayem did not admit liability, was filed in the U.S. District Court for the District of Massachusetts along with a Justice Department complaint specifying “a number of violations” at the plant identified by EPA during a 2014 inspection.

Federal regulations require that owners or operators of stationary systems containing at least 10,000 pounds of anhydrous ammonia take certain precautions to avoid and mitigate releases of the poisonous gas into the environment. Kayem, a processed meat manufacturer, was potentially liable for a civil penalty of up to $99,681 a day for each violation of the Clean Air Act occurring on or after November 2, 2015, the complaint states.

The seven-count complaint also includes allegations that Kayem failed to develop adequate standards to ammonia deliveries, failed to calibrate its ammonia detection system as recommended, and did not have an adequate community emergency response plan.

The proposed settlement still must be approved by the district court.

SiteOne Adds Stone and Soil Depot

News, News Briefs

SiteOne® Landscape Supply Inc., Roswell, Ga., announced on May 22 that it has acquired Stone and Soil Depot Inc., a distributor of hardscapes and landscape supplies with three locations in the Greater San Antonio, Texas, market.

“Stone and Soil Depot is a terrific addition to SiteOne as they add both natural and manufactured stone products, as well as landscape supplies to our existing irrigation, agronomic, nursery and landscape lighting product lines in Central Texas,” said SiteOne Chairman and CEO Doug Black.

“This acquisition aligns with our mission to be the best full-line distributor to landscape professionals and represents our second dedicated hardscape and landscape supply company in Texas. We are thrilled to have Stone and Soil Depot’s extremely talented and seasoned team join the SiteOne family,” added Black. He noted that it is SiteOne’s fifth acquisition to date in 2019 as it continues to expand the number of markets in which they provide a full range of products and services to customers.

CVR Energy Weighs Options, Owns 34 Percent Stake in Nitrogen Producer

News, News Briefs

Oil refiner CVR Energy Inc., Sugar Land, Texas, said on May 21 it has engaged Bank of America Merrill Lynch as its financial advisor to assist it in evaluating potential strategic alternatives, including a potential sale.

The energy firm owns 34 percent of nitrogen producer CVR Partners LP, which is traded on the New York Stock Exchange under the symbol UAN. CVR Partners has plants in Coffeyville, Kan., and East Dubuque, Ill. CVR Energy subsidiaries also serve as the general partner of CVR Partners.

CVR Energy said it intends to evaluate alternatives in combination with its ongoing focus on accomplishing its strategic objectives, prudently managing costs, and operating its businesses safely and reliably.

CVR Energy also announced that a subsidiary has entered into a definitive agreement for the sale of its 1.5-million-barrel Cushing, Okla., crude oil terminal and related assets to an affiliate of Plains All American Pipeline LP for total consideration of approximately $36 million, and concurrently closed the transaction.

“CVR Energy is committed to maximizing value for its stockholders,” said CVR Energy CEO Dave Lamp. “Both the sale of the Cushing terminal, which allowed us to derive value from an underutilized asset, and the exploration of potential strategic alternatives, support this commitment. We are excited about the company’s prospects and ability to enhance stockholder value through our initiatives, regardless of the outcome of a strategic alternative process.”

CVR Energy said it does not have a defined timeline for the exploration of strategic alternatives and makes no assurances that its evaluation will result in any transaction being announced or consummated. The company does not currently intend to discuss or disclose further developments with respect to this process, unless and until its board of directors approves a specific transaction or otherwise determines that further disclosure is appropriate.

CVR Energy operates the Coffeyville refinery in Kansas and the Wynnewood refinery in Oklahoma. The company “is already trading at a hefty price,” analysts at Tudor, Pickering, Holt & Co. said in a note to clients, cited by Bloomberg. “We struggle to see who the likely buyer would be.” Shares closed down 1.76 percent on May 22 to $46.42.

Billionaire investor Carl Icahn took a controlling stake in CVR Energy in 2012. As of April 10, Icahn Associates Holding held 71 percent of the company, according to Bloomberg.

Icahn has long been a vocal opponent of the biofuel credits that independent U.S. refiners such as CVR pay when they can’t blend renewable fuels like ethanol or biodiesel with petroleum. Icahn became a special regulatory adviser to President Donald Trump following his election, before stepping down in August 2017.

In an April filing with the U.S. Securities and Exchange Commission, CVR reiterated that it is cooperating with the U.S. Attorney’s office for the Southern District of New York following a September 2017 subpoena related to Icahn’s activities regarding renewable fuels policy and his role as special adviser.

 

 

 

Gensource Unveils Maverick Project; Includes Offtake Equity Holder, Third-Party Investor

Featured, News

Gensource Potash Corp., Saskatoon, on May 22 unveiled a second potash project for its Vanguard area in Saskatchewan that includes both an offtake/equity agreement and a third-party investor. Gensource said it has entered into nonbinding Memoranda of Understanding (MOU) with a large and well-respected international fertilizer manufacturing and distribution company to form a joint venture company to develop the Maverick Project.

The jv will construct, own, and operate the potash production facility. The parties have reached an agreement in principal on an offtake amount of 250,000 mt/y for ten years, with an option to renew, typical take or pay offtake, product sale and title transfer at the mine site, a market-based pricing formula, equity contribution, and jv operating structure.

As for the equity, the party would make a direct equity investment, along with Gensource and a third-party investor. The investment will be in the form of cash and equal to 25 percent or more of the jv ownership. In addition to this investment, the offtaker has also introduced senior debt financing relationships to the project that will help further accelerate project finance activities.

There is also a nonbinding MOU for the largest equity investment of about 33 percent from a third-party investor, identified as a private investor strategically invested in and owner of a highly respected and established shipping and commodity transportation group that is internationally active in the field of shipping chemicals, oil, and agricultural product for world-wide active commodity producers and trading houses.

Gensource said the group also owns real estate and has development interests, going back to the 1950s. It said the investor wishes to become actively involved in the project as part of its strategic plan to further diversify its investments on a long-term basis.

“We are extremely pleased to see Maverick advance as quickly and decisively as it has,” said Gensource President and CEO Mike Ferguson. “The fact that Maverick has received formal interest on offtake as well as equity investment as a “bundle” is significant; significant not only because it underscores the commitment to the project by Maverick’s offtaker and the third-party investor, but also because of the accelerating effect it will have on the completion of the senior financing package for Maverick.

“Further, Gensource is pleased to have formal commitment now for two of its small-scale, efficient, and environmentally sustainable projects, a situation that speaks to the validity of the company’s business model and overall approach to the required change in the potash industry, added Ferguson.”

The Maverick project is being developed alongside Gensource’s other project, Vanguard One (GM Oct. 19, 2018). Gensource said this agreement is with a senior North American agriculture industry leader. It is also for an offtake of 250,000 mt/y. Gensource said while it continues to advance the financing, that under the circumstances, due to its recent and significant advancement, Maverick may be implemented ahead of Vanguard One.

Gensource is working with Roc Global LLC, New York, as its exclusive financial advisor.

 

Itafos – Management Brief

Management Briefs

Itafos, Toronto, reports that Dr. Mhamed Ibnabdeljalil has been appointed interim CEO, effective immediately. He currently serves on the company board of directors and will continue in that role. Dr. Ibnabdeljalil succeeds Brian Zatarain, who is stepping down as CEO to pursue other interests.

Dr. Ibnabdeljalil previously served as the Executive Vice President and Chief Commercial Officer of OCP Group SA. While there, Itafos noted that he played an integral role in the corporate and strategic restructuring of OCP, reshaping its role in the phosphate fertilizer sector as a global leader. He has also served as a director on more than a dozen boards of fertilizer companies in Europe, India, Middle East, and Americas.

“We are pleased that a leader of Dr. Ibnabdeljalil’s caliber and experience has agreed to lead the company on an interim basis,” said Itafos Chairman Brent de Jong. “With more than two decades of experience, Dr. Ibnabdeljalil has a deep understanding of the phosphate fertilizer industry and the opportunities ahead of the company. Our knowledgeable board will continue to lend its expertise to Dr. Ibnabdeljalil and the organization while we identify our next CEO and will ensure a smooth transition.

“On behalf of the board, I would like to thank Mr. Zatarain for his service and contributions to the company,” de Jong added.

Actagro – Management Brief

Management Briefs, Specialty

Nutrien Ltd., Loveland, Colo., announced on May 22 that Casey McDaniel was hired to serve as Managing Director of Actagro, effective May 21, 2019. Nutrien said he has a long history in sales, marketing, business development, and strengthening strategic alliances. He has held various executive roles with Pinnacle Agriculture, including Vice President of Proprietary Businesses, as well as responsibility for the Meridian wholesale business.

“Casey is well acquainted with both Nutrien and Actagro, and he is excited to lead Actagro as a separate business within the Nutrien family,” said Mike Frank, CEO of Retail for Nutrien. “He will strive to build on our existing partnerships, and develop domestic and international markets for Actagro’s industry-leading soil and plant health technology.”

McDaniel will be headquartered out of Fresno, Calif., which is where Actagro, a developer, manufacturer, and marketer of environmentally sustainable soil and plant health products and technologies, is based. Nutrien concluded its acquisition of Actagro in March.

Martin Midstream Partners LP – Management Brief

Management Briefs

Martin Midstream Partners LP announced on May 21 that after 29 years of service Ron Garner, Vice President of Fertilizer, is retiring effective May 31.

“Ron has served as the leader of the partnership’s fertilizer division within the Sulfur Services segment since it was established,” said Ruben Martin, President and CEO of Martin Midstream GP LLC, the general partner of the Partnership. “He has managed his team with excellence and integrity while successfully growing our sulfur-based fertilizer division. All of us here wish him and his family a happy, healthy retirement.”

Garner joined Martin Resource Management Corp. in 1990 and was promoted to Vice President of Fertilizer in 1998, continuing in that role when Martin Midstream Partners LP was founded in 2002. He has been active in numerous industry associations throughout his career, including the Texas Ag Industries Association and the Southwest Fertilizer Conference (SWFC). He has served as President of the board of directors for the Tennessee Plant Food Association and on the SWFC board since 2004 in various capacities, including Program Chairman, General Conference Chairman, Executive Committee Chairman, and currently Local Arrangements Chairman.

 

 

CSX Corp. – Management Brief

Management Briefs

CSX Corp., Jacksonville, Fla., on May 21 announced the appointment of Farrukh A. Bezar as Senior Vice President and Chief Strategy Officer, effective May 29. He will report to CSX President and CEO Jim Foote.

Bezar joins CSX with over 25 years of strategic leadership experience in the transportation and logistics industry. He most recently served as founder and managing partner of Lynwood Partners, a transportation and logistics advisory firm. He also served in senior leadership roles within the transportation and logistics functions at Clarendon, Booz Allen Hamilton, and A.T. Kearney. Bezar previously held sales and marketing positions at the Atchison, Topeka, and Santa Fe Railway Co., and served as a financial analyst with Chase Manhattan Bank.

Bezar received a B.A. in Economics and Political Science from Northwestern University and an MBA in Management, Marketing, and Transportation from the J.L. Kellogg Graduate School of Management at Northwestern University.

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