All Posts from April 28, 2016

IPL eyes increase in Indian K imports

Indian Potash Ltd., India’s largest potash buyer, citing forecasts for the an improved 2016 monsoon, indicated today that potash imports may jump 29 percent this year to 4.2 million mt. IPL Managing Director P.S. Gahlaut had the upbeat news in an interview today, according to Bloomberg.

Gahlaut said Indian buyers, however, will be looking for a price cut, as a strong dollar makes imports more expensive. He said buyers will likely begin talks with suppliers in June, and he expects China to finalize its contracts by the end of May.

PotashCorp 1Q income off 80 percent

Potash Corp. of Saskatchewan Inc. reported an 80 percent drop in net income from year-ago levels. First-quarter earnings were $75 million ($0.09 per diluted share), which included notable charges of $52 million, of which $0.03 was for non-cash charges in the Phosphate segment and $0.03 related to New Brunswick severance charges. Year-ago income was $370 million ($0.45 per share).

First-quarter revenues were $1.21 billion, down from the year-ago $1.66 billion.

PotashCorp missed its first-quarter guidance of $0.10-$0.20 per share and has lowered its guidance for the year from $0.90-$1.00 to $0.60-$0.80 per share. Second-quarter guidance is $0.15-$0.20 per share.

“Lower prices for all nutrients weighed on our performance for the quarter and contributed to a more subdued outlook for the year,” said PotashCorp President and CEO Jochen Tilk. “In potash, the deferral of new contracts in China led to cautious buying patterns in other regions, resulting in a weaker demand environment and lower prices.”

“Amidst this backdrop, we took meaningful steps during the quarter that align with our potash strategy, including the suspension of operations in New Brunswick and production curtailments in Saskatchewan. While these steps impacted our first-quarter results, we are confident they best support medium to long-term performance. Our approach to markets – like our approach to the balance sheet – will continue to be proactive and prudent,” said Tilk.

“Importantly, we believe this approach – coupled with supportive economics and recognition of improved nutrient value by farmers – is already making a difference. In recent weeks, spot markets have begun to stabilize and customer sentiment is improving. We see better conditions for the remainder of 2016, but recognize that the timing and strength of a recovery is still unfolding.”

Anglo sells phosphate business

Anglo American plc earlier today announced it has reached an agreement with China Molybdenum Co. Ltd. (CMOC) to sell its niobium and phosphates businesses in Brazil for $1.5 billion in cash. Analysts said the sale was at around $500 million above expectations. Other companies that were interested in the Anglo assets are reported to have included The Mosaic Co., Vale SA in partnership with U.S private equity firm Apollo Global Management (GM April 15, p.14) as well as EuroChem Group AG.

“The proceeds from this transaction … will enable us to continue to reduce our net debt towards our targeted level of less than $10 billion at the end of 2016,” said Anglo’s CEO, Mark Cutifani. Anglo put up the niobium and phosphates businesses for sale in December as part of an accelerated and more radical restructuring to redefine the focus of the group’s asset portfolio and cut debt (GM Dec. 14, 2015). Anglo said in mid-February it already had received expressions of interest from 16 bidders for the businesses and CEO Mark Cutifani had said a sale could happen “within two-to-three months.”

Anglo’s phosphates business includes the Chapadao phosphate mine and a beneficiation plant at Ouvidor in Goiás state and two downstream phosphates complexes located at Catalão, also in Goiás state, and at Cubatão in São Paulo state (GM Oct. 26, p. 14). The business also includes the Coqueiros and Morro Preto phosphate deposits. The niobium and phosphates businesses in 2015 reported a combined EBIT of $119 million on revenues of $544 million ($433 million from phosphates and $111 million from niobium) and posted a pre-tax profit of $69 million. The business contributed 5 percent of Anglo’s total EBIT of $2.22 billion last year.