All Posts from September 27, 2019

Heringer Control May Go to Uralkali, Uralchem; One Plant Returns to Production

Brazil, Featured, News, News Briefs, Russia

Brazil’s Fertilizantes Heringer SA, Viana, may wind up under the control of Russian players Uralkali Group and Uralchem Group pending regulatory approval, according to Brazil regulatory filings. Controlling shareholder Heringer Participacoes and its quotaholders executed a binding letter of intent with Uralkali and Uralchem to subscribe for the new issuance of common shares, in Heringer’s capital increase, for 2 reals per share.

After the completion, Uralkali and Uralchem will hold shares representing the control of Fertilizantes Heringer. The total amount of capital increase will be no less than $59 million and no more than $115 million.

Uralkali and Uralchem are already active in Brazil, selling potash and nitrogen, respectively. Heringer, which filed for judicial recovery/bankruptcy in February (GM Feb. 8, p. 1; April 12, p. 27) at last count has eight blending plants in the country, up from seven earlier this year. It had 19 running in late 2018 (GM April 19, p. 26). As of August, the company was down to seven plants, but it reported this week that its Tres Coracoes – MG blending plant in the state of Minas Gerais, a major coffee growing area, is returning to production on Oct. 1.

While Heringer results have improved, they still remain in the loss column (GM Aug 30, p. 29). Heringer reported a six-month 2019 net loss of R110.6 million on revenues of R325.9 million, versus a year-ago loss of R324.1 million and R1.93 billion, respectively. Sales volumes dropped to 203,672 mt from the year-ago 1.59 million mt.

A group led by the Heringer family has had control of Heringer with a 51.5 percent stake. The company free float was 29 percent, with Nutrien Ltd., Saskatoon, and OCP SA, Casablanca, each having approximately 10 percent of the company.

In 2018, Nutrien, which has been expanding its position in Brazil, was rumored to be in talks with Heringer (GM May 11, 2018). Heringer, which was founded in 1968, in 2018 was one of Brazil’s largest companies engaged in the production, sale, and distribution of basic and specialty fertilizers, with a production capacity put at 4.7 million mt/y.

India to Close STC, Cut Stake in MMTC

Featured, India, News

This week the Indian government announced that it would start closing its state-owned trading companies, State Trading Corp. (STC) and Metals and Minerals Trading Corp. (MMTC).

The announcement said the closing would take place one at a time, without a specified timetable.

The first to go is expected to be STC, which showed losses in the 2018/19 fiscal year exceeding US$124 million. The government will also exit Project and Equipment Corp. of India (PEC), which does not trade fertilizer.

The closing of MMTC as a state-owned enterprise will come in steps, according to Indian media reports. The plan announced so far will reduce the government’s stake in MMTC from 90 percent to 75 percent. Other reports indicated that the government may move to completely divest itself of MMTC.

International urea traders called the announcement significant. Currently, all urea for agriculture use is imported by MMTC, STC, and Indian Potash Ltd. (IPL). So far this year, only MMTC has been importing urea.

Urea, unlike the phosphate and potassium fertilizers, is heavily subsidized and remains a politically volatile commodity. Efforts to lower subsidies or to move urea sales to a market-based system have been met with opposition from farmers and agriculture groups in the country.

One source told Green Markets that the move to close or divest from the state-owned trading houses could open a window of opportunity for private-sector companies to import urea. However, given the political nature of urea imports, the government will most likely remain involved in the urea market.

International traders said the departure of MMTC from the urea importing business may take longer than the government wants. One trader said the original plan of the government was for India to be self-sufficient in urea by the end of next year. Sources said while the country has made strides toward that goal, it will not reach it as planned.

Five older urea plants are being upgraded and restarted to add another 6.3 million mt to the country’s production (GM June 21, p. 26). The last of those revamps is slated to be up in September 2023. The company hopes these initiatives will make it self-sufficient in urea.

Anuvia to Reopen Mosaic Plant City Facility; Mosaic Takes Equity Position

Featured, Florida, News, Specialty

Anuvia Plant Nutrients, Zellwood, Fla., announced on Sept. 24 that it has entered into a long-term strategic relationship with The Mosaic Co., Plymouth, Minn., to help meet the increased demand for its bio-based sustainable and environmentally friendly plant nutrients. Anuvia will utilize a portion of Mosaic’s shuttered Plant City phosphate production facility (GM June 21, p. 1) and repurpose existing infrastructure to increase its production capacity to up to 1.2 million st/y. The company’s Zellwood facility, which produces 80,000 st/y, opened in 2016 (GM May 13, 2016).

As production increases, the company plans to add approximately 135 new employees with an average salary of $70,000 at Plant City. It will be Anuvia’s second Florida location, and is expected to be operational by second-quarter 2020.

“In the three years since the Zellwood plant went online, the market has been receptive to our products and their unique benefits,” said Anuvia CEO Amy Yoder. “And now in response to the increased demand, we are increasing our production capacity. It is gratifying that farmers are realizing the performance and environmental benefits Anuvia products bring to crop production.”

“Mosaic has been looking to partner with successful, innovative companies, and this arrangement, which includes an equity position, is an excellent fit for us,” said Walt Precourt, Mosaic Senior Vice President, Strategy and Growth. “Both companies are committed to operating safely and sustainably while providing customers with high-quality crop nutrient solutions. We look forward to exploring opportunities to further expand our relationship.”

The companies did not divulge the percentage of Mosaic’s equity stake in Anuvia.

Mosaic indicated in its second-quarter earnings call that it was in negotiations for an alternative use of the Plant City plant (GM Aug. 9, p. 1), while Anuvia has been surveying sites for a second plant (GM April 6, 2018).

Anuvia told Green Markets that it would be focusing Plant City production on its agricultural-grade product and will be ratcheting up production over time. Anuvia’s products include SymTRX™ for the ag sector, GreenTRX™ for the turf industry, and Anugreen for the consumer residential lawn market.

All of Anuvia’s products include organic matter, which contributes to the products’ slow-release capabilities. Content is approximately 16 percent. While the company has a major contract to source organic material from Smithfield Foods Inc., Smithfield, Va. (GM April 6, 2018), the company said the Plant City plant will source product from Smithfield and multiple organic sources and suppliers, including food waste and peanut hulls. The end products also include nitrogen, phosphate, and sulfur, and these, too, will be sourced from multiple suppliers.

Anuvia has the ability to vary the nutrient content of its fertilizers. In the ag category, two combinations currently marketed are 16-20-0-12S and 16-1-0-20S. It is a dry fertilizer that the company said can easily be blended. With both nitrogen and sulfur content, some see the product as a competitor with ammonium sulfate, which also provides the two nutrients nitrogen and sulfur, though Anuvia also adds phosphates.

According to its website, Anuvia is already supplying ag grade product to Nutrien Ag Solutions (select locations); Tennessee Farmers Cooperative; Southern States Cooperative; MFA Inc.; B&B Farm Service, Ohio; Barrett Farm Supply, Minnesota; CFG Ag Services; Greenpoint Ag (select locations); Meherrin Ag; Tri County Farmers; and Wedgworth Inc.

Western Potash Inks Offtake with ADM

News, News Briefs, Potash, Saskatchewan, Vancouver

Junior producer Western Potash Corp., Vancouver, said on Sept. 26 it has entered into a binding offtake agreement with Archer Daniels Midland Co. (ADM) for 100 percent of the potash production (146,000 mt/y) from the Milestone Phase I plant in Saskatchewan. Western Potash, a unit of Western Resources Corp., Vancouver, began drilling on the project in July (GM July 19, p. 1), and expects production to begin in late 2020.

“We are very pleased with the progress achieved on the Milestone Project to-date,” said Western Potash President and CEO Fritz Venter. “The offtake agreement for the purchase of our Phase I Project potash with a reputable partner such as ADM gives us great confidence in the final sale of our potash. The recent successful construction, drilling, and start of operations to fill the crystal pond proves the project is on track to start production by late 2020. We look forward to the continued safe, on-budget and schedule completion of the project.”

Key terms of the offtake agreement include:

  • Binding commitment to take 100 percent of the produced potash from the Phase I project;
  • Free-on-board (FOB) mine site and transport from the site by truck to the nearby Port Lajord Terminal in Saskatchewan, only 13 kilometers from the project site;
  • A structure to incentivize the best final sale price for both parties.

ADM has been expanding its fertilizer presence in Canada in recent years, most recently inking a fertilizer handling and storage agreement (5,000 mt warehouse) at Yorkton, Sask. (GM June 22, 2018). In 2017 it signed a long-term agreement at Port Lajord to lease a 20,000 mt warehouse (GM June 23, 2017).

In the meantime, Western Potash said it has successfully completed drilling of three vertical production wells that intersected high grade potash in all wells, according to the downhole logs. The project has also drilled and connected first injection wells, having achieved on-target intersection of the potash bed. It said this is the first intentionally connected potash well drilled in Saskatchewan, and is a major achievement in the development of the horizontal selective solution mining technique.

Construction continues to advance in line with the project schedule. Extensive progress has been achieved, including construction of building foundations, arrival of equipment and materials, and planning for building construction before the end of the year. The project goal remains to complete Phase I construction in mid-2020 with potash production to commence later next year.

Operation of the Western Potash water well commenced on Aug. 30 and began filling the crystallization pond. This water well utilizes brackish ground water from approximately 850m below the surface that is not suitable for either potable or agricultural use. The pond will be gradually filled over the next three months. The cold mining to saturate the crystallization pond with salt will commence by October 2019, followed by hot mining of potash in early 2020.

Meeting Scheduled on Mosaic Permit Renewal

Florida, News, News Briefs

The Florida Department of Environmental Protection (DEP) will host a public meeting at the Mulberry Civic Center in Mulberry, Fla., on Sept. 30 from 4-7 p.m. regarding the National Pollutant Discharge Elimination System (NPDES) draft renewal permit for the Mosaic Fertilizer LLC’s Bartow Chemical Plant. DEP and Mosaic representatives will be available to answer questions and provide information.

DEP said the purpose of the meeting is to receive oral and written comments on the permit renewal. DEP noted that the Florida Administrative Code provides an opportunity for an extended public comment period and a public meeting whenever there is a significant degree of public interest in the draft NPDES permit.

Concerned citizens Norma Killibrew and Luz Elena Bueno said on Sept. 25 that three dozen Florida residents joined forces with them last spring to request the public hearing. They said another request was made regarding Mosaic’s Lonesome Mine, but it was dismissed for a technical reason, while another regarding Mosaic’s Four Corners Mine has remained in limbo since January.

“Before flowing into the Gulf, both the Peace and Alafia rivers and the aquifer are the main sources of drinking water for 10 counties and multiple cities, including North Port, Anna Maria, and Tampa,” said Ms. Bueno. “Every single public water provider in the region pulls drinking water from those sources. There is no independent water monitoring in place at the discharges to protect the public drinking water supply. Mosaic performs its own testing, self-reports, and even the company’s own monitoring wells show levels above compliance for multiple highly toxic and cancer-causing contaminants in the aquifer, including alpha radiation, radium, sulfate, fluoride, sodium, arsenic, and more.”

“In the Peace River, Mosaic is not even complying with its self-reporting requirement,” alleged Ms. Killibrew. “The company claims lack of access doesn’t allow it to test the waste dumped into the river. In addition, the waste discharged into the NP Alafia River exceeds the levels the DEP established in 2013 for chlorophyll a, which represents cyanobacteria in the water. So, while the beaches suffer the consequences of cyanobacteria infested water, the DEP is allowing Mosaic to dump cyanobacteria into the rivers before they flow into the Gulf.”

The permit opponents said the counties most affected are Charlotte, Sarasota, Manatee, Hillsborough, Pinellas, Pasco, Desoto, Hardee, and Polk, with people living in central and southwest Florida potentially affected.

Mosaic had not responded to inquiries for comment at press time.

Written comments may also be sent to DEP’s Gordon D’Abreau at DWRMIW.PM@dep.state.fl.us, or mailed to his attention at 13051 N. Telecom Parkway, Ste. 101, Temple Terrace, Fla. 33637-0926.

 

PhosAgro to Invest $3 B to Expand Output by 2025

Featured, News, News Briefs, Russia

PhosAgro, Moscow, plans to further expand its fertilizer and feed phosphates production capacity, targeting around a 25 percent increase in capacity by 2025 to 11.7 million mt, the group said in a statement on its Capital Markets Day in London on Sept. 25, as it outlined its new development strategy to 2025.

The building of a new plant in Russia’s Leningrad region with a capacity of 630,000 mt/y, as well as the modernization of production facilities in the Saratov region, will form an important component of these expansion plans, the group said.

It is also targeting to increase its fertilizer sales to European markets to 3.1 million mt/y by 2025, up from 1.9 million mt in 2018. This target will be helped through the competitive advantages afforded the company by the new E.U. regulations limiting the cadmium content in phosphate-based fertilizers.

The new E.U. regulations set a maximum limit of 60 mg/kg P2O5 for cadmium in fertilizers from the date of application of the regulation (i.e., three years after its entry into force), as part of an effort to limit the presence of the hazardous substance in soil and its potential uptake by crops (GM May 24, p. 1; March 29, p. 25; Dec. 14 & Nov. 21, 2018). A review clause requires the European Commission to review the limit values, with a view to assessing the feasibility of reducing them, four years after the date of application of the new rules (i.e., seven years after entry into force).

Starting this year, in accordance with E.U. legislation, PhosAgro said its fertilizers will be sold with green labeling.

It also aims to increase fertilizer sales to its priority domestic market, Russia, to 3.7 million mt (including third-party products) from an expected 2.5 million tons this year.

“The strategy to 2025 aims to further expand PhosAgro’s presence in its priority domestic market, as well as in premium export markets that offer the best netback prices,” said PhosAgro CEO Andrey Guryev.

Compared to 2018 levels, the group plans to grow its fertilizer sales volumes by 50 percent in Russia and by 60 percent in Europe by 2025. It said the share of direct export sales will be maintained at a level of at least 90 percent with the help of the group’s 10 existing foreign trading offices located in its key sales regions.

“We hope that foreign regulators will remove trade restrictions – such as import duties and customs ratios – for the cleanest fertilizers from Russia,” said the CEO. “Farmers will benefit from this in terms of both price and the absence of a risk of soil contamination, and the group could potentially earn up to an additional $100 million, depending on market conditions.”

Guryev highlighted that the authorities in Argentina and Brazil recently abolished import duties on “environmentally-friendly” phosphate fertilizers from Russia.

The group also plans to expand its range of fertilizer grades from 39 in 2018 to 50 by 2025, including new high-performance grades with bio-additives.

It also aims to expand the capacity of its own railway and port infrastructure, as well as increasing and upgrading its fleet of railcars, to reduce transportation costs.

Altogether, PhosAgro will invest around $3 billion in growth and modernization by 2025. Once completed, the investments are expected to provide an EBITDA uplift of $450 million, increase cash flow, and further increase the group’s self-sufficiency in feedstocks, it said.

It plans to maintain its net debt/EBITDA ratio at 1.0x-1.5x, it said.

PhosAgro’s board has also approved a new dividend policy linked to free cash flow instead of net profit, with the amount varying depending on the company’s debt levels. Under this new dividend policy, it said payouts may exceed 75 percent of free cash flow.

Aramco Moves Full-Bore Toward IPO, Ratchets Up Oil Production After Attack

Aramco, News, News Briefs, Saudi Arabia

Saudi Aramco is wasting no time pushing ahead with its initial public offering (IPO) (GM July 26, p. 16), leaving legions of analysts scrambling to prepare research that will help investors decide whether to buy into one of the world’s biggest-ever share sales, according to Bloomberg, which reported that investment banks’ research teams started meeting on Wednesday, Sept. 25, in the desert city of Dhahran for two packed days of briefings by Aramco top officials.

They will then have barely three weeks to prepare their pre-IPO reports on Aramco, according to an internal schedule seen by Bloomberg. That compares to the six to eight weeks they are normally given for some of the biggest global listings.

Each bank’s research team will need to finish a first draft of their analysis by the end of the day on Oct. 9, with second drafts due on Oct. 15. The reports need to be finalized and printed by Oct. 18 so that they can be ready to distribute to fund managers once Aramco announces its intention to float on Oct. 20, the schedule shows. However, Bloomberg noted that analysts have some leeway, as they can lean on work done earlier this year when Aramco raised $12 billion through its debut bond sale.

Aramco is speeding up preparations for the IPO with an aim of listing on the Saudi bourse as soon as November. The IPO could make Aramco the world’s biggest listed company if it hits its target market capitalization of $2 trillion.

Also on Sept. 25, Aramco told analysts that production capacity has been restored to 11.3 million b/d, and that the damaged plants at Abqaiq and Khurais were back to their output levels prior to the recent drone attacks.

Elders Chief Sees Potential in IPL Fertilizer Sale, Eyes Blending Assets

Australia, News, News Briefs

Australian agribusiness group Elders Ltd. sees the potential for a national fertilizer business to emerge from the possible sale of Incitec Pivot Ltd.’s (IPL) fertilizer assets, Bloomberg reported, citing Elders Managing Director and CEO Mark Allison.

IPL announced on Sept. 2 that it is starting a strategic review of its Fertilisers Asia Pacific business segment (Incitec Pivot Fertilisers), and would evaluate various options, including a potential sale or de-merger, or retaining the business and continuing to invest for growth (GM Sept. 6, p. 1).

Allison said Elders was interested in IPL’s fertilizer blending facilities if they were included in the sale, as they would fill a gap in the agribusiness group’s ability to service tropical horticulture and sugar-cane growers on Australia’s East Coast, according to Bloomberg. Elders is said to have discussed buying IPL’s fertilizer blending assets around 18 months ago.

However, Allison emphasized that Elders was not interested in IPL’s Gibson Island, Queensland, nitrogen manufacturing facilities, or its Duchess phosphate mine and ammonia and DAP/MAP manufacturing facilities at Phosphate Hill in Western Queensland.

The Elders CEO believes that Wesfarmers’ fertilizer arm, CSBP Ltd., the dominant Western Australian fertilizer business, could be a potential new owner of IPL’s fertilizers assets, should they be offered for sale. IPL’s fertilizer business has long been seen as an ideal fit for Perth-based Wesfarmers’ CSBP, according to analysts (GM Sept. 6, p. 1).

Bloomberg reported Allison as saying that CSBP – where he was first Deputy Managing Director and then Managing Director in the early 2000s, as well as being General Manager of Fertilizer at Incitec in the mid-1990s – has always been interested in geographical expansion at the right price.

Wesfarmers has not commented publicly on whether it has interest in IPL’s fertilizer assets.

Allison also sees interest coming from Nutrien Ltd., Saskatoon, and from Yara International ASA, Oslo. Nutrien, which operates in Australia through its wholly-owned subsidiary, Landmark, is currently further strengthening its presence in the country by the expected formal completion at the end of this month of its US$469 million takeover of rural services company Ruralco Holdings Ltd. (GM March 1, p. 1; Aug. 23, p. 1).

Incitec Pivot Fertilisers is Australia’s largest distributor of fertilizers by volume, supplying 2.2 million mt of fertilizers to the domestic market in 2018. It is the country’s sole manufacturer of phosphate fertilizers, and the only producer of nitrogen fertilizers on Australia’s East Coast.

E.U. Commission Starts Sunset Review of AD Duties on Russian AN, Prolonging Tariffs

Ammonium Nitrate, Europe, News, News Briefs, Russia

The European Commission (EC) has begun a sunset expiry review of the antidumping measures in place on imports of ammonium nitrate (AN) originating from Russia following a request for a review by Brussels-based Fertilizers Europe. Fertilizers Europe represents the majority of Europe’s major fertilizer manufacturers.

According to the announcement of the review in the E.U.’s Official Journal on Sept. 23, the request for a review by Fertilizers Europe is on behalf of over 73 percent of the integrated E.U. AN industry production using calendar year 2018 as a base reference. Fertilizers Europe’s request is based on the grounds that “the expiry of the measures would be likely to result in continuation of dumping and recurrence of injury to the E.U. industry.” The request by Fertilizers Europe was lodged with the Commission on June 21.

The antidumping measures currently in place on imports of Russian AN into the E.U. were due to expire on Sept. 25, but will now remain in place during the EC investigation, which could take as long as 15 months.

The E.U. ruled last November on two partial interim reviews of the antidumping measures in place on Russian AN imports into the E.U. (GM Nov. 16, 2018); the reviews were initiated in August 2017.  One interim review was limited to injury on behalf of eight national farmers’ organizations, who had called for the removal of the duties. as users of the product.

The EC had found “certain changed circumstances,” but also found that the profound threat of injury presented by the Russian AN industry in terms of massive expert capacity, price undercutting, and cost underselling “truly remained” (GM Nov. 16, 2018). The net result was a reduction in the E.U. antidumping specific duty from a rate of €47/mt to a rate applied typically currently of €32.7/mt.

Under the other interim review, which had been prompted by a request by Russia’s Acron Group, Moscow, the E.U. found there were “no changed circumstances” with regard to the domestic gas situation in Russia (GM Nov. 16, 2018).

The Fertilizers Europe application for a review claims there to have been “regular high structural dumping rates over the year 2018 which arise from Russian exporter/producers’ exploitation of artificially low state fixed gas costs in Russia,” according to an EC executive summary of the application.

The manufacturing industry body argues that the very likely recurrence of dumping arises “from the very definite and permanent continuation of distorted artificially low state fixed gas prices in Russia – probably even up to the year 2035, according to a Gazprom Capital Markets Day in February 2019. It claims the expiry of the measures would result “in a permanent triple threat of injury” for the E.U. industry.

It explained that this triple threat of injury arising as:

(i) there is actual dumping or “the permanent menace of dumping campaigns” by Russia on the E.U. market;

(ii) Russia’s domestic gas pricing policy is allied with “a deliberate gas dual pricing policy,” whereby gas is sold on an artificially low state fixed basis in Russia to local UAN industry – $2.4 mmBtu in 2018, while selling at “very high export prices” to the E.U. ($6.8 mmBtu). “Thus, the E.U. nitrogen fertilizer industry is injured by Russia/Gazprom’s sale of “high export monopolistic gas prices” to Europe under “a Russian government-run export pipeline monopoly;” and

(iii) The low Russian gas pricing provides the Russian exporters/producers with “a menacing and dangerous” ability to conduct “very serious high levels” of both price undercutting and underselling, according to the Fertilizers Europe application.

Evidence on price cutting and underselling, as well as evidence on the likely recurrence of volume injury, was also submitted.

Antidumping measures have been in place on imports of Russian AN since 1995

Incitec Pivot Fertilisers Wins Fertilizer Australia Environmental Award

Australia, News, News Briefs

Incitec Pivot Fertilisers Ltd. (IPL) and two Queensland-based pineapple growers have shared this year’s Fertilizer Australia environmental awards. IPL took the 2019 “Platypus Environmental Award” for increasing efficiency, reducing waste, and improving the environmental performance of its manufacturing and distribution sites around the country in the past two years.

The two pineapple growers from southeast Queensland’s Glass Mountains region won the Fertilizer Australia “Snapper Award” for their eight-year search to achieve better ways to improve fertilizer use efficiency and reduce nutrient losses from their farms.

Barton, Canberra-based Fertilizer Australia, which represents manufacturers, importers, and distributors of fertilizer in Australia, and associated service industries began the awards in 2004 to recognize individuals and companies involved in the fertilizer industry who are making the most significant improvements in environmental performance. Its members supply over 95 percent of the fertilizers used in Australia.

 

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