All Posts from May 24, 2024

Canadian Rail Strike Likely Postponed to July as Talks Continue; Fertilizer Canada Urges Government Action

Canada, Featured, Transportation, Vancouver

Negotiations continued this week between The Teamsters Canada Rail Conference (TCRC) and Canadian National (CN) and Canadian Pacific Kansas City (CPKC) railroads to avert a strike that TCRC had earlier warned could happen as soon as May 22 (GM May 3, p. 1).

While the two sides remained at an impasse following a revised proposal from CN on May 16 and an offer from CPKC on May 15 to enter binding arbitration to avoid a work stoppage, CPKC reported that a legal strike or a lockout would not likely occur before mid-July, based on timelines around an expected ruling from the Canadian Industrial Relations Board (CIRB) on whether a strike would have safety implications.

The CIRB has requested submissions from the railroads and the TCRC, as well as other interested stakeholders, by May 21, and the parties will have until May 31 to file replies. According to CPKC, a legal strike or lockout cannot occur until the CIRB renders a decision, followed by a 72-hour notice as required by the Canada Labour Code.

“Recognizing our supply chains require certainty, now more than ever, CPKC has proposed to the TCRC that both parties agree on the services that should be maintained in the event of a strike or lockout,” CPKC said in a statement. “We believe this would eliminate the need for the CIRB referral process and bring much needed clarity regarding the timing of any potential strike or lockout.”

“If no maintenance of services agreement is reached, based on precedent, it is unlikely the parties will be in a position to initiate a legal strike or lockout within the next 60 days,” CPKC added.

The threat of a rail strike continues to raise alarms from Canadian industry groups, however, including Fertilizer Canada.

“The fertilizer industry is very concerned by the potential for disruptions at both CN and CPKC railways and the devastating impacts that these disruptions will have on the fertilizer industry, Canada’s economy, and domestic and international food security,” Fertilizer Canada said in a May 23 statement to Green Markets.

“Canadian, American, and international farmers rely on Canadian fertilizer to maximize crop yields and the fertilizer industry relies on rail to get our products to market,” Fertilizer Canada said. “The current situation with the involvement of the Canadian Industrial Relations Board adds additional uncertainty for businesses.”

Fertilizer Canada is urging the Canadian government to use “all its tools available” to ensure both parties reach an agreement.

“To address the repetitive and frequent supply chain disruptions, we are asking the government to strengthen the collective bargaining process for those working in Canada’s supply chain and for industry predictability,” Fertilizer Canada said. “As well, to protect food security, we are asking the government to recognize fertilizer as an essential good that should continue to ship during work stoppages.”

The National Grain and Feed Association (NGFA) also issued a statement on May 22 urging CIRB to take action to head off a railroad strike or lockout. Shutdowns or slowdowns of rail-dependent facilities would result “in harmful consequences for Canada’s agricultural producers and industry as well as domestic and global food security,” the NGFA said. 

“A stoppage of rail service would materially harm Canada’s farmgate prices for commodities, Canada’s ag shippers and exporters, and its global customers,” the NGFA said. “The impact of a strike would be particularly severe as trucking is not a viable option for many agricultural shippers due to their high-volume needs and the long distances for many of the movements.”

Global shipping company Maersk reported on May 9 that it was “working closely” with CN, CPKC, and terminal operator DP World to speed up Canadian West Coast port operations to reduce congestion, including diverting cargo from Centerm in Vancouver to Prince Rupert, B.C.

CHS, West Central Ag Sign Nonbinding LOI for Merger

Featured, U.S.

CHS and West Central Ag Services, a cooperative based in Ulen, Minn., with nine agronomy centers in northwestern Minnesota, have signed a nonbinding letter of intent for West Central to join CHS to better serve owners and customers and position the co-op for future growth.

“Our two cooperatives are aligned in our vision to advance the cooperative system and best serve our owners by connecting our producers to the global marketplace,” says Duane Brendemuhl, West Central Board President and Chair. “This proposed transaction provides an opportunity to bring more value to our farmer-owners and compete more effectively with other local ag companies, while positioning us for the future success of a combined cooperative through efficient, globally connected supply chains.”

CHS said the proposed transaction aligns with strategic investments for CHS to grow the global agricultural supply chain while providing end-to-end value and enhanced market access for the cooperative system. CHS and West Central are already partners in an agronomy joint venture based in Hannaford, N.D. (GM Dec. 9, 2010).

“CHS and West Central Ag Services have a longstanding, strong relationship based on mutual trust and respect, as evidenced by our joint venture Central Plains Ag Services,” said Rick Dusek, Executive Vice President of Ag retail, Distribution and Transportation at CHS. “Better connecting the global agriculture supply chain and investing in the speed and space of our assets provides better market access and creates more value for farmer-owners.”

CHS and West Central Ag said they will now begin due diligence on the proposed transaction, which is subject to necessary approvals.

BHP Investors See Anglo American Within Reach as Talks Begin

Featured, South Africa

Shareholders in BHP Group told Bloomberg that they see the world’s largest miner moving one step closer to a $49 billion takeover of Anglo American Plc after Anglo rejected a third approach but agreed to talks and granted its suitor an extra week, to May 29, to commit to a binding bid.

As a deadline approached on May 22, BHP again sweetened its all-share proposal but stopped short of altering a structure that would oblige the target to spin off its South African iron ore and platinum businesses before the remainder is bought up.

“Anglo is now showing signs of capitulation with the extension,” said Prasad Patkar, Head of Qualitative Investments at Platypus Asset Management in Sydney, which owns BHP stock. “At a price, Anglo is a seller, and at any price, BHP is a buyer. So I think that deal will get done.”

The two sides are now closer in their view on the valuation, according to people familiar with the matter. But the complexity of BHP’s plan remains a key sticking point in a blockbuster deal to create the world’s biggest copper miner, investors pointed out.

“I would argue with the one-week extension, there is greater likelihood of a deal getting across the line as Anglo’s Board are finally talking,” said Ben Cleary, Portfolio Manager at Tribeca Investment Partners.

The focus now is on whether BHP’s executives can use the coming week to convince Anglo’s Board and its shareholders that they can get the deal to the finish line, without excessive regulatory or social turbulence. That could include making employment or other commitments in South Africa to ease concerns there.

“It’s clear that Anglo must accept BHP’s much-improved offer,” said Tim Elliott, who manages almost $2 billion across Regal Funds Management Pty’s global resources funds, including BHP and Anglo shares. “Not only do Anglo shareholders now receive a strong premium, but they receive BHP shares that are deeply undervalued and deliver ongoing exposure to many of the highest quality mines in the world, as well as substantial synergies from the combined group.”

“While there may be a degree of value leakage regarding the listed South African assets, Anglo’s own plan involves similar value leakage through the sale of high quality coking coal mines at what no-doubt will be a deep discount to fundamental value based on coal transactions in recent years,” Elliott added.

Market moves still suggest lingering investor skepticism around the latest offer. At current prices, May 22’s informal approach from BHP values Anglo at roughly £30.24 ($38.48) a share, while Anglo’s stock closed on May 22 at just under £27 in London.

“We do understand the strategic rationale and we think even at the revised price overnight, there’s potentially maybe even a little bit more wiggle room for them to negotiate,” said Dominic Mlcek, Portfolio Manager at Infinity Asset Management Pty. “We wouldn’t be displeased with them getting it at or a little bit above the current offer.”

But even if investors believe a deal is now more likely to succeed, it doesn’t mean they necessarily support it. BHP shares in Sydney were down around 3% in afternoon trade at A$44.84.

“We’re not happy about the deal, we’re not happy about the price,” said Patkar from Platypus Asset Management. “Even the price is almost a secondary thing – the size of the deal and the complications that are associated with trying to extract value out of something as big as this is. History is against these guys.”

Under the latest proposal, Anglo holders would get 0.8860 BHP shares for each ordinary share they own. Anglo holders would own about 17.8% of the combined group after completion and they would get two seats on the Board of Directors.

Unigel Creditors Approve Restructure, Bankruptcy Avoided

Ammonia, Brazil, Featured, Urea

Unigel, the struggling Brazilian chemical and fertilizer maker, obtained approval from a majority of creditors, including Pacific Investment Management Co. (PIMCO), for its out-of-court restructuring plan, according to Bloomberg, citing people familiar with the matter. Unigel didn’t immediately reply to a request for comment.

Holders of more than 50% of its debt backed the proposal, according to the people, who asked not to be identified because they are not authorized to speak about it. The company had until May 20 to gather support from more than 50% of creditors and avoid a bankruptcy filing (GM Feb. 23, p. 31).

Unigel skipped the payment of coupons on its dollar and Brazilian real-denominated notes amid plummeting earnings. Losses piled up after lower prices of urea and ammonia pressured its operations, leading it to breach covenants on its bonds, which include maintaining debt levels low enough relative to a measure of earnings.

The plan, first presented in February, originally had the backing of PIMCO, DoubleLine Capital, Amundi SA, Banco BTG Pactual SA’s asset-management unit, Moneda, Verde Asset Management, and Vontobel Asset Management.

Only certain financial creditors will have their claims restructured under the plan, Unigel said earlier this year. The proposal aims at restructuring about 3.9 billion reais ($763 million) in existing debt.

The company was founded by Henri Slezynger and is one of the main fertilizer makers in an economy that is 25% agribusiness. The family, which owns Unigel through a holding company, agreed to give up its controlling stake as part of the restructuring.

Western Potash Temporarily Suspends Operations at Milestone Project

Canada, Featured, Potash, Saskatchewan, Vancouver

Vancouver-based Western Resources Corp. on May 21 reported that its Board of Directors on May 17 decided to temporarily suspend operations at wholly-owned subsidiary Western Potash Corp.’s Milestone Phase I Project in Saskatchewan, so that the company can focus its efforts on discussions of additional project financing.

The company said the project is approximately 93% complete in the existing plan. Construction of the process plant has been completed and most of the equipment has been dry commissioned. Management expects that two new horizontal caverns will be added, which the company and Western Potash believe will bring the project to initial production stage.

Western Potash’s mining team, which is developing a new mining plan, is actively working to optimize that plan, which will allow work on the new caverns to begin soon after financing is secured. Milestone Potash Phase 1’s anticipated initial production is 146,000 mt/y.

“It’s unfortunate that the project’s startup has been further delayed but we believe that this suspension is necessary, prudent, and in the best interests of the company and Western Potash Corp.,” said Western Potash CEO and President Bill Xue.

“We remain committed to completing this exciting project, which is nearing initial production stage,” Xue added. “We are optimistic that despite our current challenges, and those we have faced in the past that were met and overcome, our efforts here to secure business and financial partners, who will work together with the company to complete the project, will be successful.”

LSB Inks Low-Carbon ANS Agreement with Freeport

Clean Ammonia, Low-Carbon, Nitrogen, U.S.

LSB Industries announced on May 22 that it has entered into an agreement to supply up to 150,000 st/y of low-carbon ammonium nitrate solution (ANS) to Freeport Minerals Corp., Phoenix, Ariz., which plans to use the ANS for its US copper mining operations.

LSB will supply the ANS from its El Dorado, Ark., facility for five years, commencing on Jan. 1, 2025, with a phasing in of the contracted volumes. LSB said its low carbon products stem from the carbon capture and sequestration project with partner Lapis Energy (GM April 29, 2022), who will capture and permanently sequester more than 450,000 mt/y of CO2 from El Dorado’s ammonia production.

“This important agreement validates our belief that our industrial and mining customers will identify the low carbon nitrogen products that we plan to produce as an important part of their decarbonization journeys and value them accordingly,” said Mark Behrman, LSB President and CEO. “We view this contract with Freeport as a major step towards attaining our vision of becoming a leader in the global energy transition and look forward to partnering with them as a strategic supplier as they advance toward their net zero aspiration.”

LSB said the carbon sequestration at El Dorado is expected to result in more than 375,000 mt of low carbon ammonia that the company can sell or upgrade to other low carbon nitrogen products, such as ANS. The project is expected to commence operations in 2026, pending approval by the US EPA of LSB’s and Lapis’ Class VI permit application, which the companies expect to receive in the second half of 2025.

Truterra Carbon Program Marks Three-Year Progress

Clean Ammonia, Low-Carbon, U.S.

Sustainability solutions provider Truterra LLC, Arden Hills, Minn., announced on May 21 that its carbon program has paid more than $21 million to farmers for the sequestration and reduction of more than 1.1 million mt of carbon in its first three years.

Truterra, a subsidiary of Land O’Lakes, said its carbon program has also seen significant growth in total acres enrolled, which increased 99% from 2022 to 2023, and 151% from 2021 to 2022. Farmer participation also increased 58% from 2022 to 2023. The carbon program is delivered through Truterra’s network of local ag retail advisors, who work directly with farmers.

“Our carbon program is gaining momentum as a leader among farmers and retailers. Our differentiated approach matches agronomics with economics to help farmers make sustainable practice changes,” said Truterra President Jamie Leifker. “What’s more, these carbon assets could help organizations with sustainability goals who choose to make agriculture part of their toolkit of solutions.”

Nutrien Restarts Rocanville Production after Fatality

Canada, News Briefs, Potash, Saskatchewan

Nutrien Ltd. said it was planning to resume production on May 22 at its Rocanville potash mine in Saskatchewan after the mine was temporarily shut down following the death of a worker on May 19.

Nutrien said authorities are conducting investigations into the accident, which took place at the railcar-loading facility, and the company is conducting its own investigation and is cooperating with Saskatchewan’s Ministry of Labour Relations and Workplace Safety.

“Our current focus is on ensuring we have support services available to all those involved,” the company said in a statement, adding that it was “unlikely” it would have “further details until the completion of internal and external investigations.”

Rocanville is the largest of Nutrien’s six potash mines in Saskatchewan, with a nameplate capacity of 6.5 million mt/y.

The United Steelworkers union (USW), which represents 650 Rocanville employees, also issued a statement. “Our community is in mourning over this tragic incident at our mine site and our thoughts go out to the family, friends, and our union family who are deeply impacted,” said Derek Palmer, President of USW Local 7916.

FCA Members Approve Merger with Gold-Eagle

News Briefs, U.S.

The Boards of Directors of Farmers Coop Association (FCA) and Gold-Eagle Cooperative (GEC), two regional co-ops with agronomy, grain, energy, and feed businesses in Iowa and southern Minnesota, announced on May 17 that FCA members have approved a merger proposal whereby Gold-Eagle will acquire the assets and liabilities of FCA.

FCA members voted 95% in favor of the merger, which will take effect on July 1, 2024, with the merged company operating under the Gold-Eagle Cooperative name. Gold-Eagle’s Board of Directors will expand to include two voting directors and one association from FCA’s board, for a total of 11 directors and two associates.

Chris Boshart, General Manager of Gold-Eagle, will oversee the combined organization. Randy Broesder, FCA’s General Manager, will help ease the transition in the coming weeks before his retirement at the end of June.

“Gold-Eagle looks forward to welcoming the members and employees of FCA into the fold and wish to thank the FCA membership for the trust placed in GEC by voting in favor the merger,” GEC said in a statement. “Gold-Eagle is excited to bring on FCA’s businesses and locations to streamline processes, cut costs, and better utilize resources to ultimately benefit the farmer patrons.”

Founded in 1916, FCA operates four agronomy, grain, energy, and feed locations in Iowa and southern Minnesota. Gold-Eagle was formed in 1908 and currently has 16 agronomy, grain, feed, and bulk fuel locations in north-central Iowa.

UAN Spill Goes to AG for Enhanced Enforcement

News Briefs, U.S.

Iowa’s Environmental Protection Commission (EPC) voted unanimously on May 22 to refer a March UAN spill (GM March 29, p. 29; March 15, p. 1) to the Iowa Attorney General for enhanced enforcement, according to reports in the Iowa Capital Dispatch. DNR’s own administrative fines are capped at $10,000, but the Attorney General can seek more.

NEW Cooperative on March 11 notified the DNR of the release from its Red Oak, Iowa, facility. The cooperative, which said it worked quickly to mitigate the damage, did not challenge the Iowa Department of Nature Resources (DNR) referral to the EPC (GM May 10, p. 30), according to the Dispatch, which also reported that an assistant attorney general indicated the office would pursue the case.

The product was discharged into a drainage ditch, then into the East Nishnabotna River. The latest information is that a valve on a clogged fertilizer line was left open over the weekend. The line then became unclogged and released some 265,000 gallons of UAN-32, which killed almost all the fish and aquatic creatures downstream for about 60 miles.

DNR described the spill as one of the worst river contamination incidents in the state’s history, noting that it was deadly to aquatic life until it reached the Missouri River and was diluted by the larger water flow.

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.