All Posts from August 27, 2021

Itafos Back to Black in 2Q; Results Up Despite June Turnaround

Earnings, News, Phosphate

Phosphate producer Itafos Inc., Houston, reported second-quarter net income of $9.6 million, up from a year-ago loss of $20.8 million. Revenues were $103.3 million, up from $62.1 million, while adjusted EBITDA rose to $33.7 million from $11.3 million.

While second-quarter production was off 20 percent at the Conda, Idaho, plant due to a full scope turnaround in June, the company noted that NOLA DAP prices were up 111 percent during the quarter, averaging $570/st compared to the year-ago $270/st. Total capital expenditures during the quarter were $18.2 million due to the turnaround, versus the year-ago $3 million.

Itafos said factors driving the year-over-year improvement included: no significant phosphate fertilizer supply capacity additions, which resulted in continued drawdown of global phosphate fertilizer inventory levels; strong phosphate fertilizer demand underpinned by global coarse grains and oilseeds at multi-year low stocks-to-use ratios and the highest prices in nearly a decade, supporting demand and fertilizer relative affordability; and countervailing duty orders on phosphate fertilizer imports to the U.S. from Morocco and Russia.

“We continued to deliver strong operational and financial performance during Q2 2021, resulting in H1 2021 adjusted EBITDA at Conda of $61.9 million and $54.3 million on a consolidated basis,” said G. David Delaney, Itafos CEO. “Our H1 2021 consolidated results exceeded our previously issued H1 2021 guidance range of $45-$50 million, reflecting the continued strength of the agriculture and fertilizer market fundamentals along with our solid operational performance. We expect these positive trends to continue and are raising our full year guidance for 2021 accordingly.”

The company revised its full-year adjusted EBITDA guidance to $110-$120 million from the previous guidance of $95-$105 million. The company expects the current global agriculture and phosphate fertilizer fundamentals to remain strong throughout the remainder of 2021.

“We are also pleased to announce that we have closed a refinancing of our existing secured term loan debt and amendments to our primary remaining debt facilities,” Delaney added. “This refinancing extends the maturity of our debt at a lower interest rate while providing flexibility to deleverage our balance sheet with the cash flows of the business.”

Itafos closed a three-year $205 million secured term loan. The proceeds were used to repay an existing secured term credit facility and to pay related transaction costs and fees. In connection with the closing, the company also completed an amendment to its existing secured working capital facility at Conda to increase the commitment amount from $20 million to $40 million and extend the term, among other modifications.

Six-month net income was $11.5 million on revenues of $193.5 million, up from the year-ago loss of $39.1 million and $137.5 million, respectively. Adjusted EBITDA was $54.3 million, up from $10.5 million.

Conda 2Q-21 2Q-20 YTD-21 YTD-20
Tons Produced (mt) 107,517 134,391 252,708 273,287
Net Income ($M) $24.4 $3.4 $39.1 $4.4
Revenues   ($M) $103.3 $61.9 $193.5 $132.9
Adjusted EBITDA ($M) $37.7 $14.5 $61.9 $22.8

CVR Defers October Coffeyville Turnaround; COVID-19, Louisiana Travel Restrictions Cited

Featured, News, Nitrogen, Texas

CVR Partners LP, Sugar Land, Texas, announced on Aug. 25 that it currently intends to defer the scheduled turnaround at its Coffeyville, Kan., nitrogen fertilizer facility from October 2021 (GM Aug. 6, p. 28) to third-quarter 2022.

“The health and safety of our employees, contractors, and communities remains our critical priority,” said Mark Pytosh, President and CEO of CVR Partners’ general partner. “Between the recent spike in COVID-19 cases and the addition of Louisiana to Kansas’ travel quarantine list, we thought it prudent to reconsider the timing of this turnaround.

“Our proactive performance of maintenance activities during recent downtime events, together with a planned short, opportunistic outage later in the year, should enable us to safely defer this turnaround and complete the installation of the urea expansion project,” he added. “This turnaround deferral should also position us to capitalize on the strong margin environment we are currently seeing for both ammonia and UAN.”

The company said it will continue to monitor its marketing and operating conditions and make adjustments, if needed, to its turnaround and maintenance planning.

CVR now expects its total forecasted turnaround spending for 2021 of approximately $8-$10 million of expense for the Coffeyville facility to be spent in 2022, which will be in addition to the planned 2022 turnaround for its East Dubuque nitrogen fertilizer facility.

The Kansas Department of Health and Environment (KDHE) amended its travel quarantine list to include those arriving from the state of Louisiana, effective Aug. 13. The travel quarantine period for the non-vaccinated is seven days with a negative test result or 10 days without testing.

KDHE has also amended its list to state that anyone who attends an in-state or out-of-state mass gathering of 500 or more where individuals do not socially distance and wear a mask should follow the quarantine guidelines. Previously, the list included out-of-state mass gatherings only.

“The virus does not know the boundaries of our state, and we must all take steps to protect those close to us by staying home after attending any large events,” said KDHE Secretary Dr. Lee Norman.

Acron Swings to Black in 1H; EBITDA Hits Record High

Ammonia, Ammonium Nitrate, Earnings, News, NPK 16-16-16, Russia, Urea

Acron Group, Moscow, reported first-half net profit of RUB26,678 million, up from the year-ago loss of RUB986 million. In U.S. dollar equivalent, net profit was $400 million.

Revenue was up 52 percent year-over-year to RUB85,982 million from RUB56,432 million. The U.S. dollar equivalent was up 42 percent, to $1.16 billion from $813 million. The company said higher revenues included a 9 percent increase in the sales of key products to 4.2 million mt, as well as higher global dollar denominated prices for mineral fertilizers and a 7 percent increase in the average USD-RUN exchange rate. Output of key products was up 6 percent to 4.16 million mt (GM July 16, p. 33).

First-half EBITDA was at a record high. It increased by a factor of 2.6 year-over-year to RUB40,271 million from RUB15,308 million, or by a factor of 2.5 in U.S dollars to $542 million from $221 million.

“Given the Group’s strong financial position, we stepped up the Talitsky potash project and started preparing for deep upgrades at the Ammonia 2 unit and Urea 1-4 units at our Veliky Novgorod site,” said Alexander Popov, Chairman of the Board of Directors. “All of these projects align with the Group’s ESG principles: improving equipment efficiency, preserving natural resources, and developing our footprint regions.

“The revised increased capex budget will not affect our commitment to a stable dividend payout,” he added. “The benchmark of at least US$200 million per calendar year in dividends remains unchanged.”

First-half cost of sales was up 2 percent year-over-year to RUB32,465 million, mainly due to higher sales and prices for potash and electric and thermal energy, which were significantly offset by reduced depreciation and amortization and a decline in expenses for third-party services related to rock mined at Oleniy Ruchey.

Selling, general, and administrative expenses were up 16 percent to RUB5,390 million, mainly due to higher personnel costs, because salaries were adjusted and foreign-currency staff costs rose as the ruble fell.

Transportation expenses were up 34 percent to RUB13,890 million, driven by increased sales and a higher cost of logistics outside Russia due to a weaker ruble. Increased sales to Latin America, including transportation, also contributed to the change in this item.

As of June 30, 2021, total debt was RUB100,044 million, down 13 percent from RUB115,116 million on Dec. 31, 2020. In U.S. dollar equivalent, total debt was US$1.38 billion, down 11 percent from US$1.56 billion, respectively.

As for market trends, the company said global urea prices continued to grow in the second quarter, with Baltic FOB reaching $450/mt, a record high since 2012. It said the increase was driven by several factors, including continued strong seasonal demand in Europe and the U.S., India’s urea purchases, high grain prices, and increased production costs due to higher global prices for natural gas. Limited urea volume available for export from China also contributed. Acron said urea purchases from India and Brazil gave the market additional support in the third quarter against the seasonal drop in demand in Europe and the U.S.

Acron said second-quarter ammonium nitrate and UAN prices increased to their highest levels since 2014 due to strong seasonal demand in the Northern Hemisphere and growth in urea prices.

NPK prices also increased in the second quarter, mainly driven by higher prices for basic products (urea, DAP, and potassium chloride). The increase in basic product prices outstripped blends because of their higher liquidity, so the NPK 16-16-16 premium over the basic product basket decreased to 0-5 percent from the historical average of 20 percent.

Nutrien Receives CADE Approval for Terra Nova Agrícola Acquisition

Brazil, News, News Briefs, Saskatchewan

Nutrien Ltd., Saskatoon, said on Aug. 25 it has received approval from Brazil’s Administrative Council for Economic Defense (CADE) to acquire Terra Nova Agrícola (GM July 9, p. 1), which operates in the state of Minas Gerais. The purchase allows Nutrien to expand its retail network in Brazil by nine, to a total of 33.

Total revenue from Terra Nova’s crop inputs business is estimated at 250 million Brazilian reals (US$47.6 million), with average EBITDA margins of approximately 10 percent, which Nutrien said is in line with similar transaction metrics of ag retail businesses acquired by Nutrien in the U.S.

Since making the Terra Nova announcement, Nutrien has also announced that it plans to buy Brazil’s Bio Rural, Mato Gross do Sul (GM Aug. 13, p. 35), which would add another nine outlets. CADE approval for this deal is still awaited. In total, Nutrien has made five acquisitions in Brazil in the last 18 months.

Tessenderlo Agro 1H EBITDA Off on Higher Costs; Revs Up on Increased SOP Volumes

Earnings, Europe, News, Specialty

Tessenderlo Group, Brussels, reported first-half Agro adjusted EBITDA of €75.2 million on revenues of €373.5 million, versus the year-ago €84.5 million and €362.2 million, respectively. The company said the adjusted EBITDA, when excluding the foreign exchange effect, was in line with last year, though off 3.5 percent. It said the segment was significantly impacted by the increase in raw materials, such as sulfur, and also by increased transportation costs.

The company said Tessenderlo Kerley Inc.’s (TKI) adjusted EBITDA remained stable, while that of NovaSource increased thanks to higher volumes. Crop Vitality adjusted EBITDA decreased, as higher sales volumes were more than offset by lower margins.

Agro revenue was up 9.6 percent. The company attributed the uptick to increased volumes from TKI’s partnership agreement with Kemira Oyj, announced in 2020, in which Kemira produces premium sulfate of potash (SOP), both standard and water-soluble grade, at Helsingborg, Sweden, and TKI partially markets these products.

Company-wide, adjusted EBITDA was up 6.9 percent to €184.7 million from the year-ago €182 million, excluding the effect of foreign exchange. Revenue was up 12.9 percent, to €1.02 billion from €935 million.

The company expects that the 2021 adjusted EBITDA will be in line with the 2020 adjusted EBITDA. It said this guidance already takes into account the expected negative foreign exchange effect in 2021, following the weakening of the U.S. dollar.

Hydrite to Expand Production Capacity in Indiana

Amthio, Eastern Cornbelt, Featured, News, Specialty

Hydrite Chemical Co. is expanding ATS=™ (ammonium thiosulfate) and Thio 25-17™ (potassium thiosulfate) production capacity at its plant in Terre Haute, Ind. The company announced that its Board of Directors has approved the capex to install an additional sulfur burner and thiosulfate production line, which is expected to be online for the 2023 spring season.

“With all of our recent announcements, we continue to demonstrate how committed Hydrite is to the agricultural market and thiosulfates,” said Kevin Honkamp, Hydrite President. “This expansion will give Hydrite’s customers even greater assurance of our ability to supply, along with improved flexibility across products.”

Hydrite recently completed the construction of a 1.8 million gallon Thio 25-17™ storage tank at Terre Haute, which brings total potassium thiosulfate storage capacity to 2.5 million gallons at the site (GM May 28, p. 1). A new three million gallon ATS=™ is expected to be completed before year-end, which will bring total ammonium thiosulfate storage capacity at the site to 6.8 million gallons.

Hydrite also announced on July 14 that it has formed a new joint venture with Thatcher Company of California Inc., called Sacramento Ag Products LLC, which will produce thiosulfate products for the West Coast agricultural market and bisulfites for industrial market applications (GM July 16, p. 1).

Headquartered in Brookfield, Wisc., Hydrite is an integrated manufacturer and supplier of chemicals and sulfur derivatives, with a network of production facilities, warehouses, and laboratories in Illinois, Wisconsin, Iowa, Indiana, California, and Texas. The company employs nearly 1,000, with services in food and dairy sanitation, organic processing, liquid sulfites, foam control, water treatment, and compliance management. Hydrite also owns and operates a private fleet of more than 255 units, including tractors, van trailers, tankers, and railcars.

CN Back on Track After Potash Derailment

Canada, Featured, News, Potash

Canadian National Railway Co. told Green Markets on Aug. 26 that on Wednesday evening, Aug. 25, the company had safely removed some 30 potash railcars that derailed Saturday, Aug. 21, in a rural area some 30 miles west of Moncton, New Brunswick, and that the tracks had reopened. Some of the potash spilled, and some 20 railcars were reported to have landed on their side. There was a total of 133 railcars.

Nutrien Ltd., Saskatoon, confirmed that the train was hauling potash for Canpotex Ltd., the company that exports Canadian potash for Nutrien and The Mosaic Co.

CN said there were no injuries, leaks, fires, or dangerous goods involved. After the derailment, CN traffic had been rerouted through the Newcastle line, which runs north through Miramichi.

The Canadian Transportation Safety Board (TSB) is investigating the incident. As of Aug. 26, TSB told Green Markets it was still assessing the occurrence and gathering information.

While the derailment was essentially just a five-day delay of potash to the export market, it was to an already tight market. Canpotex reported that it is sold out into November.

“One of the realities of the current environment with things being so tight is that major producers are effectively sold out through much of the balance of the year,” Mark Thompson, Nutrien Executive Vice President, Chief Strategy and Sustainability Officer, told attendees of the Raymond James Diversified Industrials Conference on Aug. 25.

Tessenderlo Kerley México’s New Liquid Fertilizer Storage Terminal in Full Operation

Amthio, Featured, Mexico, News, Potassium Thiosulfate, Specialty

Tessenderlo Kerley México reported that its new La Barca liquid fertilizer storage terminal in Western Mexico is now in full operation, ensuring greater availability for the states of Jalisco, Michoacán, Nayarit, and Colima.

The company said the terminal features equipment with high-precision calibration and operates under the strictest safety standards. It supplies the liquid fertilizers potassium thiosulfate (KTS), calcium thiosulfate (CaTs), ammonium thiosulfate (Thio-Sul), magnesium thiosulfate (MagThio), and ammonium polysulfide (Nitro-Sul).

The company said more and more Mexican farmers have adopted the use of liquid fertilizers that have proven to be the ideal tool for new precision farming and improving soil that has salinization problems. The La Barca terminal supplies thiosulfates for corn, berries, vegetables, avocados, agave, pineapples, papayas, and other tropical crops.

The company said the increase in installed capacity guarantees an improved service to farmers, as well as enabling more flexible orders and better delivery times. It said it also ensures better planning of supply logistics between the production plants in the U.S. and the storage centers in Mexico. It added that this will prove to be especially valuable in the busiest months, when the respective sales seasons of both countries coincide.

Egypt Sets Up New $1.6 B Company to Produce Methanol and Ammonia

Ammonia, Egypt, Featured, Methanol, News

Egypt’s Petroleum and Mineral Resources Ministry has announced the creation of Misr Methanol and Petrochemical, a new $1.6 billion company that will produce 1 million mt/y of methanol and 400,000 mt/y of ammonia during its first phase, according to Bloomberg. It will be based in the Suez Canal Economic Zone’s Ain Sokhna Region.

The company will be jointly owned by Abu Qir Fertilizers, Helwan Fertilizers, and Al Ahly Capital Holding. The first two companies will hold 35 percent stakes each, while Al Ahly retains 30 percent.

Mosaic Board Approves Share Repurchase, Note Redemption, Credit Line Upgrade

News, News Briefs, Tampa

The Mosaic Co., Tampa, on Aug. 23 announced measures to strengthen and optimize its capital base.

The Board of Directors approved a new $1 billion share repurchase authorization, which replaces the previous authorization that had $700 million of the original $1.5 billion remaining. The company said this new expanded authorization reflects Mosaic’s unchanged commitment to a balanced deployment of excess capital that includes returning capital to shareholders.

In addition, last week the company also completed the previously announced early redemption of $450 million in notes that were due November 2021. The company said this represents the first step toward reaching the company’s goal of retiring $1 billion of debt over time. The company expects to meet the debt retirement goal and execute share repurchases using strong cash flow generated in 2021 and beyond.

Mosaic also increased and extended its committed line of credit. The 5-year, $2.5 billion facility matures in August 2026 and replaces the $2.2 billion line of credit maturing in November of 2022. The company said this increase in size provides additional security and flexibility and reflects the growth in the business.

On Aug. 19, the Board declared a quarterly dividend of $0.075 per share on the company’s common stock. The dividend will be paid on Sept. 16, 2021, to stockholders of record as of the close of business on Sept. 2, 2021.

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