All Posts from June 26, 2020

Court Allows Use of Existing Dicamba Stocks; Bayer Agrees to Dicamba, Roundup Settlements

Featured, News

The Ninth Circuit Court of Appeals on June 19 ruled that farmers and commercial applicators will have until July 31 to use any remaining stocks of the dicamba herbicides Engenia, FeXapan, and XtendiMax that were in their possession as of June 3, provided their state governments have not issued earlier deadlines.

The court ruling was in response to an emergency motion for contempt filed against the U.S. Environmental Protection Agency (EPA) on June 11 by the original plaintiffs in the case, including the National Family Farm Coalition, Center for Food Safety, Center for Biological Diversity, and Pesticide Action Network (GM June 19, p. 1)

The court on June 3 cancelled the registrations for Bayer’s XtendiMax, BASF’s Engenia, and Corteva’s FeXapan for the 2020 growing season (GM June 5, p. 1). EPA then issued a directive on June 8 allowing growers and commercial applicators until July 31 to use existing stocks of the herbicide that were in their possession on June 3, while ending all new sales and distribution (GM June 12, p. 1).

The plaintiffs, however, argued that EPA’s continued use guidance violated the court’s order to vacate the registrations. In its response to the petition, EPA claimed that approximately four million gallons of dicamba herbicides were still in growers’ possession or in the retail/wholesale distribution chain, and that it had received letters from multiple trade associations – including the Agricultural Retailers Association (ARA) – arguing that the court’s decision to halt sales of the herbicides would cause significant economic damage for farmers.

In another major development, Bayer on June 24 announced that it has reached a number of settlements, potentially totaling $12.1 billion, resolving Roundup product liability litigation, dicamba drift litigation, and PCB water litigation.

The company said it will pay up to $400 million to resolve the multi-district litigation pending in the U.S. District Court for the Eastern District of Missouri involving claims of crop damage from dicamba drift for the 2015-2020 crop years. Claimants will be required to provide proof of damage to crop yields and evidence that it was due to dicamba in order to collect.

Bayer also announced a series of agreements that resolve cases representing most of the company’s exposure to water litigation over PCBs, which Monsanto legally manufactured until 1977. Bayer said it has agreed to pay a total of approximately $650 million to a class that includes all local governments with EPA permits involving water discharges impaired by PCBs.

By far the largest and most significant settlement involves Roundup, however. Bayer said it has agreed to make a payment of $8.8-$9.6 billion to resolve approximately 75 percent of the current Roundup cases involving roughly 125,000 filed and unfiled claims. The settlement includes an allowance expected to cover unresolved claims, and $1.25 billion to support a separate class agreement to address potential future litigation.

Bayer said the three Roundup cases that have already gone to trial will continue through the appeals process and are not covered by the settlement. Bayer said the agreements contain no admission of liability or wrongdoing, and stressed that the company’s customers “who depend on glyphosate-based herbicides for their livelihoods” will see no change in the availability of Roundup products as a result of the agreements.

“First and foremost, the Roundup™ settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end,” said Werner Baumann, Bayer CEO. “It resolves most current claims and puts in place a clear mechanism to manage risks of potential future litigation. It is financially reasonable when viewed against the significant financial risks of continued, multi-year litigation and the related impacts to our reputation and to our business.”

The settlements were applauded by the National Corn Growers Association. “We respect Bayer’s decision to settle many of these cases in order to move forward as a company while keeping glyphosate available to the farmers who rely on it,” said NCGA President Kevin Ross. “NCGA acknowledges that Bayer has not admitted fault through this decision and continues to reiterate a commitment to the safety of the product. Corn farmers work hard every day to produce safe and affordable food, fuel, and fiber for the country and the world. Responsible use of products like glyphosate is an important part of our ability to do just that in a long-term, sustainable fashion.”

Cash payments related to the settlements are expected to start in 2020, and are not expected to exceed $5 billion in 2020 and again in 2021, with the remaining balance paid in 2022 or thereafter. Bayer said it will make use of existing surplus liquidity, future free cash flows, the proceeds from its Animal Health divestment, and additional bond issuances to finance the settlements. Bayer said it expects to keep investment grade credit ratings and its dividend policy.

Bloomberg said the settlements “should bring investors a clearer pictures of the company’s liabilities and removes a significant risk.” Bloomberg noted that Roundup generates $3-$3.5 billion in sales for Bayer in a given year, with a margin below 10 percent.

In related Roundup news, Judge William Shubb of the U.S. District Court for the Eastern District of California this week blocked California’s effort to require cancer warning labels for glyphosate under the state’s Proposition 65. Shubb’s ruling said that requiring the labels would violate First Amendment protections since EPA and other regulators have backed glyphosate’s safety. The ruling was hailed by Bayer.

As for Bayer’s Xtendimas dicamba herbicide, Bloomberg said reregistration of the product this fall is more important to Bayer that the mass tort agreement to settle dicamba drift litigation. “Dicamba approval underpins the company’s biotech seed trait conferring herbicide resistance, which could generate $300-$420 million of EBIT in 2020,” Bloomberg said.

In its June 24 statement, Bayer said it expects a contribution from BASF toward the $400 million dicamba settlement. BASF said in an emailed statement to Bloomberg that it “will evaluate any proposal” from Bayer, but at this time the company has not yet agreed to contribute.

Water Rule Takes Effect in All States but Colorado; California Judge Blocks Legal Challenge

Featured, News, U.S.

The Navigable Waters Protection Rule (NWPR), the Trump administration’s proposed replacement for the 2015 Waters of the U.S. (WOTUS) rule, survived a major legal test on June 19 when a federal judge in California rejected a request for a nationwide injunction of the rule. Hours later, however, a federal judge in Colorado blocked the rule in that state.

The NWPR was approved by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers earlier this year (GM Jan. 24, p. 1) to replace the Obama-era WOTUS rule and more narrowly define the types of water governed by the Clean Water Act (CWA). The NWPR was slated to take effect on June 22, but a coalition of 17 liberal states and cities challenged the rule and sought an injunction based on charges that the EPA and Corps violated multiple federal laws in drafting the rule and repealing WOTUS.

After hearing a lengthy session of arguments on June 18, however, Judge Richard Seeborg of the U.S. District Court for the Northern District of California ruled that the federal agencies had not violated the Administrative Procedure Act in crafting the NWPR.

“Were the court tasked with the question of whether the new rule represents wise environmental policy or the best approach to protecting water resources that could be supported by scientific data, the result might be different,” Seeborg wrote. “The court’s narrow role, however, is only to evaluate whether the rule has been adopted in compliance with the requirements of the Administrative Procedure Act. In that context, plaintiffs have not made a sufficient showing to support an injunction or an order delaying the effective date of the new rule.”

Hours after Judge Seeborg’s ruling, however, a federal judge in Colorado agreed to freeze the NWPR in that state. As a result, the new rule is technically now in effect in all states but Colorado, although other lawsuits challenging the NWPR are pending in district courts across the country.

Colorado’s legal challenge was filed in the U.S. District Court for the District of Colorado. According to Bloomberg Law, Judge William J. Martinez said some of the state’s arguments were “unusual and partly self-contradictory,” but concluded that the state met the bar for a preliminary injunction, which puts the NWPR on hold in that state while the litigation plays out.

A coalition of tribal governments, environmental groups, and labor advocates have also sued to stop implementation of the NWPR. The suit was filed concurrently in the U.S. District courts in Tucson, Ariz., and Seattle, Wash., on behalf of plaintiffs that include Earthjustice, the Sierra Club, Mi Familia Vota, and a number of tribal governments in Arizona and Washington.

The NWPR identifies four water categories that are federally regulated under the CWA: territorial seas and traditional navigable water, such as the Atlantic Ocean and the Mississippi River; perennial and intermittent tributaries; certain lakes, ponds, and impoundments; and wetlands that are adjacent to jurisdictional waters.

The rule also details which waters are not subject to federal control, including features that only contain water in direct response to rainfall; groundwater; many ditches, including most farm and roadside ditches; prior converted cropland; farm and stock watering ponds; and waste treatment systems.

At the time of its release in January, the new rule was praised by The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA), both of which had voiced strong opposition to the 2015 WOTUS rule.

“We are pleased the new rule is realistic, practical, consistent with the Clean Water Act, and based on science,” said ARA President and CEO Daren Coppock in a January statement. “The rule it replaces was not realistic or practical, and it overstepped the boundaries of its authorizing statute. Under this rule, our members and their farmer customers will be able to operate with much more certainty. And the waters of the U.S. will continue to be protected as required by Congress, despite the doomsday predictions of some opponents.”

AdvanSix – Management Brief

Management Briefs

AdvanSix, Parsippany, N.J., on June 22 announced the appointment of Kelly Slieter as Senior Vice President and Chief Human Resources Officer. She will report directly to Erin Kane, President and CEO, and be a member of the company’s executive leadership team.

The company said she brings over 20 years in various human resources leadership roles across multiple industries. She most recently served as Vice President of Human Resources within the Performance Materials and Technologies division of Honeywell International. Previously, she held positions of increasing global responsibility at Honeywell, Tyco International, and Bristol Myers Squibb.

Slieter has both an M.A. and a B.A. in Human Resources and Industrial Relations from the University of Minnesota.

Florida Fertilizer Co. – Management Brief

Florida, Management Briefs, Obituary

Edgar Davis, 94, the founder of Florida Fertilizer Co., Wauchula, Fla., passed away on June 22. He founded the company in 1959 after a stint as a partner at Davis Feed and Fertilizer. Florida Fertilizer remains a family business today.

A graduate of the University of Florida with a bachelor’s degree in Agriculture, Davis was a member of countless organizations and served on state and regional task forces, boards, and committees. He served as Chairman of the Board of the Florida Agricultural Research Institute (FARI), now known as the Florida Fertilizer & Agrichemical Association (FFAA), and was a FARI Board member from 1975-1993. In 1999, he was honored as the first recipient of FFAA’s Lifetime Achievement Award in recognition of his long and outstanding leadership and service to Florida’s agchem industry and association.

Davis was preceded in death by his wife of 68 years, Ruth “Tena” Germain Davis, who passed away in 2016. He is survived by three children, 11 grandchildren, and five great-grandchildren.

In lieu of flowers, the family requests that donations be made to Resthaven Assisted Living, 298 Rest Haven Rd., Zolfo Springs, Fla., 33890, or Riverview Heights Missionary Baptist Church, 1321 E. Main St., Wauchula, Fla., 33873.

Ma’aden Wa’ad Al Shamal Phosphate Inks $4.1 B Finance Deal

News, News Briefs, Phosphate, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden), Riyadh, said its 60 percent-owned phosphates subsidiary, Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC), has signed new agreements to reschedule and refinance some $4.1 billion in debt to strengthen its cash position, according to a company filing to Tadawul, the Saudi stock exchange, on June 21.

MWSPC has signed new financing deals valued at $2.3 billion to pay down existing loans. It will also reschedule and transfer a $1.8 billion loan provided by Saudi Arabia’s Public Investment Fund (PIF) – the Kingdom’s sovereign wealth fund. As part of the agreement, this loan will now be held by Saudi Arabia’s Public Pension Agency.

The refinancing allows MWSPC to reduce interest expenses and push back payments to 2022, according to Saudi Arabia’s financial news portal, Argaam, citing Ma’aden CEO Mosaed Al-Ohali speaking to CNBC Arabia.

A number of local and international lenders took part in the refinancing, including Alinma Bank, National Commercial Bank, Al-Rajhi Bank, Bank Albilad, Riyad Bank, Saudi British Bank, Bank AlJazira, Samba Bank, and Saudi Fransi Bank, according to Ma’aden’s statement.

TheMosaic Co., which holds a 25 percent interest in MWSPC, said the refinancing marks MWSPC’s transition to its operational financial structure as the joint venture completes its ramp up to full capacity.

“This refinancing removes recourse to Mosaic by all lenders to MWSPC, and defers principal paydown until June 30, 2022, enhancing expected free cash flow,” said Mosaic. “In addition, Mosaic’s contractual commitment to make future cash contributions to MWSPC has now been eliminated.”

The phosphate subsidiary, in which SABIC owns the remaining 15 percent interest, officially started “commercial” operations at its ammonium phosphate plant at Ras Al-Khair on Saudi Arabia’s East Coast on Dec. 2, 2018. But, according to a market source at the time, MWSPC had been selling DAP cargoes for some time before that (GM Dec. 7, 2018). Trial DAP production began at the 2.9 million mt/y capacity plant on July 8, 2017 (GM July 14, 2017).

MWSPC also operates phosphate mining and other production facilities at Wa’ad Al Shamal, in Saudi Arabia’s far north.

It was Ma’aden’s second’s phosphate production project, and the Saudi mining company is now planning a third large-scale phosphate complex, “Phosphate 3.” The 1.1 million mt/y capacity ammonia plant for the new complex already is under construction adjacent to MWSPC’s ammonium phosphate site and that of Ma’aden Phosphate Co., Ma’aden’s first phosphate fertilizer venture (GM Oct. 26, 2018).

The Saudi mining company has yet to make a decision on when to start construction of the phosphate fertilizer production component of Phosphate 3, but last December its then President and CEO Darren Davis said the company would likely make a decision in 2020 (GM Dec. 6, 2019).

Ma’aden previously has said it plans to build Phosphate 3 in phases and anticipated a completion by 2025. The expected cost of Phosphate 3 is put at SAR24 billion ($6.4 billion). On completion, it will increase Ma’aden’s capacity to supply phosphate fertilizer to global markets by 3 million mt/y, with total production capacity of nearly 9 million mt/y (GM Nov. 2, 2018).

ICL Consolidates Crop Nutrition Sales & Marketing

Israel, News, News Briefs, Specialty

ICL Group Ltd., Tel Aviv, plans to consolidate its sales and marketing infrastructures for crop nutrition inputs. Following the consolidation, sales and marketing efforts of commodity and specialty fertilizers will be undertaken by a single commercial organizational unit that will be managed on a regional basis, the Israeli company said on June 22.

ICL expects this change will optimize sales and marketing channels, better address the ongoing needs of its customers, enhance adoption of new products, and broaden regional sales across the company’s ag-related operating division. The change will not impact ICL’s financial reporting.

“The consolidation of our sales and marketing efforts in the agricultural business is being undertaken as ICL continues to evaluate ways to achieve commercial excellence and increase the efforts of our global operations,” said ICL President and CEO Raviv Zoller. “We believe that establishing a single commercial unit facing agricultural end markets will allow us to better leverage our region-specific knowledge, agronomic and R&D capabilities, logistical assets, and customer relationships, as well as to enhance the global operational scale of our crop nutrition business.”

Eli Amon, ICL’s Innovative Ag Solutions (IAS) EVP, will lead the consolidated crop nutrition business as well as the IAS business. Amon has been with ICL for 29 years, serving in several executive sales, marketing, and logistics roles.

Omnia Holdings Mulls Offer for Oro Agri Sale

Africa, News, News Briefs, Specialty

South African chemicals, mining, and fertilizers group Omnia Holdings Ltd. reported that it has received a nonbinding indicative offer for Oro Agri SEZC – a manufacturer of agricultural adjuvants, pesticides, and foliar nutrients for agricultural, greenhouse, nursery, and turf applications, with sales in over 80 countries – that it acquired on April 30, 2018 (GM June 28, 2018).

In a June 22 trading statement and update, Omnia said Oro Agri is not a business that it considered to be for sale, but the offer received “deserves the boards’ consideration.”

“An engagement process under an agreed exclusivity with the undisclosed party is currently underway,” said Omnia. “Shareholders will be advised if the engagement process progresses to the point of a potential transaction that may have a material effect on the price of Omnia’s shares.”

Omnia paid $96 million for Oro Agri, with the acquisition aimed at expanding the South African company’s global reach in agricultural markets.

The South African company has been working on turnaround and restructuring plans, which in fiscal 2020 (April 1-March 31, 2020) have focused on creating a sustainable platform for growth while addressing cost reduction, effectively managing working capital, and ensuring a return on capital previously invested.

Omnia said it expects to post annual headline earnings per share (EPS) – the main profit measure used in South Africa – of between 177 cents and 196 cents (approximately 10 to 11 U.S. cents at current exchange rates) for FY2020, compared with a headline loss of 112 cents a year earlier.

Egypt’s Kima 2 NH3 & Urea Plants Pass Contractors’ Performance Test

Ammonia, Egypt, News, News Briefs, Scandinavia, Urea

Stamicarbon, Sittard-Geleen, The Netherlands, reported that the performance test of Egyptian Chemical Industries’ (Kima) new ammonia-urea Kima-2 complex in the Aswan industrial area was recently successfully completed and the plants were handed over to the customer. Their construction was a joint project of Italy’s Tecnimont SpA as EPC contractor and Stamicarbon as urea technology licensor, two sister companies within the Maire Tecnimont Group.

Anhydrous ammonia production began at the 1,200 mt/d ammonia plant, using KBR’s Purifier technology, in July of last year (GM July 12, 2019). Over the past year, Egyptian Chemical Industries has focused on getting the Kima-2 urea plant up and running.

The new urea facilities include a urea melt unit, using Stamicarbon’s Pool Reactor design, and a urea granulation plant, using Stamicarbon’s granulation design. Both units have 1,575 mt/d capacity, providing the Kima-2 complex the capacity to produce around 550,000 mt of urea annually.

Russia’s Ultramar Launches Rail Link at Ust-Luga Terminal Under Construction

News, News Briefs, Russia

Russian logistics company Ultramar LLC is reported to have launched the rail link with its new transshipment terminal for fertilizers and iron ore raw materials under construction in the Russian Baltic Sea port of Ust-Luga. The first freight train is reported to have arrived at the site this week.

The first phase of the terminal will see annual throughput capacity of 5 million mt, rising to an envisaged 12 million mt/y once fully operational.

Once commissioned, the new terminal will eliminate the shortage of port transshipment in the Russian northwest, according to Ultramar.

Russian fertilizer groups PhosAgro and Acron last year inked deals for the transshipment of some of their products through the new terminal. PhosAgro’s transshipments at the time of the contract signing were expected to begin in mid-2021 (GM June 14, 2019).

PhosAgro already transships product via the existing Smart Bulk Terminal at Ust-Luga port, put into operation in 2015 with fertilizer handling capacity of 1-1.5 million mt/y.

Acron Group and Ultramar signed a transshipment agreement and warehouse leases at Ust-Luga, also in June 2019 (GM June 14, 2019). The deal provides for the long-term transshipment of over 1.2 million mt/y of fertilizer. The two companies have also executed a lease agreement for four warehouses in the port, each with a capacity of approximately 140,000 mt, that are scheduled for commissioning in the second-half of 2021.

Uralchem inked a memorandum of cooperation (MOC) with Ultramar in November 2018 for potential transshipment of some of its mineral fertilizers via the new fertilizer terminal (GM Nov. 2, 2018). However, it could not be confirmed by press time whether the MOC has since been firmed up.

EuroChem AG is planning to build a transhipment terminal in Ust-Luga, and earlier this month the project was reported to have secured approval for the design and estimates by the St. Petersburg branch of Russia’s Main State Expert Appraisal Department, according to Russia’s AK&M Information Agency, citing a department statement (GM June 19, p. 27).

But it is unclear if the terminal project is one that EuroChem is going it alone on, or whether it has partners, including Ultramar. EuroChem told Green Markets last weekthat itis not making any comment on developments concerning its planned Ust-Luga terminal at the present time.

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