All Posts from May 28, 2007

Agrium picks up 32 ADM outlets for $15 M

Featured, News

Agrium Inc. said May 22 that it is expanding its retail operations into the Southern U.S. Plains through the acquisition of 32 retail outlets (18 farm centers and 14 satellites) from Archer Daniels Midland (ADM). Agrium said it paid about $15 million for the outlets, excluding working capital. The outlets are located in Kansas and Oklahoma, with annual crop input revenues of approximately $60 million. Agrium retail sales are approximately $2 billion.

“We believe that with margin improvements and working capital reductions this acquisition will be immediately accretive to earnings,” said Mike Wilson, Agrium president and CEO. “We expect this acquisition to provide a platform for further expansion in the Southern U.S. Plains as we continue to deliver on our strategic growth objectives.”

Under the agreement, Agrium will acquire the fixed retail storage and distribution assets and enter into an agreement for associated long-term leases for land. ADM will continue to own and manage the grain assets at these locations.

Kansas locations include Brewster, Copeland (three), Sublette, Pratt, Greensburg, Belpre, Garden City (two), Goodland (two), Jetmore, Kinsley (three), Leoit (two), Sharon Springs, Little River, Lyons, Cimarron (two), Montezuma (two), Dodge City, Monument, Oakley, Collano, Plains (two), Scott City, Shallow Water, and Sublette (two).

Oklahoma locations include Guymon (three), Hooker, and Tyrone. Some forty locations are listed here; however, Agrium says some of these are simply leased ammonia bullets.

Agrium already had approximately 500 retail locations in the U.S. and South America.

CNR sells Rosemount aqua ammonia facility to Airgas

Aqua Ammonia, Featured, News

Airgas Inc., a U.S. distributor of industrial, medical, and specialty gases, announced on May 21 that it had acquired the aqua ammonia operations of Continental Nitrogen & Resources (CNR) in Rosemount, Minn. The business will be integrated into Airgas Specialty Products (ASP), a national distributor of ammonia products and services, various process chemicals, and refrigerants. Other operations of CNR were not included in the deal.

“This acquisition is in line with our strategy to expand our aqua ammonia business and capabilities and serve our growing customer base across the U.S.,” said Chuck Broadus, ASP president. ASP is based in Duluth, Ga., and has 24 locations nationwide for distribution of anhydrous ammonia and aqua ammonia products and services, and seven locations for distribution of refrigerants.

“We are very pleased with Airgas as the buyer of our aqua ammonia business in Rosemont, given its demonstrated commitment and capabilities to continue providing our customers with superior service,” said Ken Tummel, CNR vice president and general manager. CNR’s aqua ammonia facility at Rosemount had more than $2 million in revenues in 2006.

ASP was formed in 2005 when Airgas acquired the ammonia business of LaRoche Industries. The company added process chemicals and enhanced refrigeration capabilities with its January 2007 acquisition of CFC Refimax. Today, ASP is a leading supplier of ammonia products and services in the U.S. for nitrogen oxide abatement (DeNOx), metal finishing, water treatment, chemical processing, and refrigeration. Company-wide, more than 11,000 employees work in approximately 900 Airgas locations, including branches, retail stores, gas fill plants, specialty gas labs, production facilities, and distribution centers.

CNR, which was founded in 1986 and is owned by DHB Holdings Inc., is currently under negotiations with another buyer for the rest of the Rosemount operations. As reported in the May 14 issue of Green Markets, the entire site comprises 103 acres, which contain CNR’s anhydrous ammonia (25,000 st) and UAN (25,000 st) terminal and a 25,000 st dry bulk warehouse that is currently leased to Honeywell for the storage of ammonium sulfate. According to Risk Management Plan data from 2005, the company uses anhydrous piped from the terminal to create aqua ammonia blends ranging from 19-29 percent.

If the deal for the remaining Rosemount assets goes through as planned, the transaction will close in early June and CNR will effectively exit the fertilizer market. The prospective buyer, rumored to be a startup bio-fuels company, would continue the lease with Honeywell, but anhydrous and UAN would no longer be offered from that location.

Another strike, this time at Canada’s second largest railroad

Canada, News

Another strike is on at a major Canadian railroad. Members of the Teamsters Canada Rail Conference walked off the job at Canadian Pacific Railway on May 16 when the railroad refused to give in to contract demands for a 13 percent wage increase over three years. CP is sticking to its offer of a 10 percent wage hike.

The walkout came less than a month after the Canadian government approved back-to-work legislation that forced a tentative truce in an earlier labor dispute between Canadian National Railway and the United Transportation Union. (GM April 23, p. 1).

The CP strike affects approximately 1,200 of the 3,200 workers who maintain track and bridges for the railroad. CP has replaced the striking workers with trained management for the duration of the strike, and has applied for injunctions in several Canadian cities to restrict protesters from blocking or impeding traffic. Injunctions prohibiting picketers from stopping truck traffic into and out of rail yards for longer than two minutes were granted last week at some intermodal terminals, including Winnipeg, Edmonton, and Vaughn, Ontario, and were under review in Calgary, Vancouver, and Etobicoke, Ontario.

CP maintained last week that the strike has not derailed train schedules, but truck delays ranging from a half-hour to six hours were reported at numerous intermodal terminals. Some customers expressed concerns that the strike will add to the backlog of product shipments created by the February walkout of United Transportation Union workers at the Canadian National Railway.

The Canadian Fertilizer Institute had voiced strong support for government intervention in the earlier CN strike, claiming that shipping delays caused by the walkout of conductors and yard personnel could have a profound impact on the timely movement of fertilizer products in advance of the spring season. The CP strike, however, is not as critical due to the workers involved and to its timing at the end of the busy planting season, CFI said.

“We’re always concerned about anything that might impact the shipment of fertilizer, but the reality in this case is that the timing is not as much of an issue,” said CFI Spokesperson Susan Sykes. While noting that CFI is “keeping on eye” on the strike process, Sykes said the “high season is over” for the fertilizer industry, and the workers that are striking “are not as critical to the movement of our product.”

TFI voices opposition to BNSF tariffs, asks for changes to rail TIH policies

News

In a May 18 letter to BNSF Railway President Matt Rose, The Fertilizer Institute joined The Chlorine Institute (CI) and the American Chemistry Council (ACC) in opposing BNSF’s recently announced decision to impose new tariffs on certain anhydrous ammonia and chlorine rail shipments (GM April 16, p. 13).

The organizations said several member companies had received letters from BNSF informing them of a policy change that would impose tariffs on anhydrous and chlorine shipments in cars that meet current federal standards but do not comply with a controversial list of tank car specifications endorsed by the Association of American Railroads (AAR) for new car construction after Jan. 1, 2008.

“ACC, CI and TFI consider this action to be unreasonable,” the letter said. “Given the ongoing federal rulemaking on a new tank car standard, BNSF’s move to a new car standard is wholly unwarranted.” The organizations said they supported federal tank car rulemaking based on “scientifically sound,” performance-based standards, and noted that they are currently conducting additional research in conjunction with the Department of Transportation.

BNSF informed customers in April that it would dramatically increase its demurrage and private car storage policy for TIH shipments beginning May 1. The move came in response to new supplemental security actions issued by the Transportation Security Administration regarding the rail transportation of Toxic Inhalation Hazard (TIH) commodities such as anhydrous ammonia and chlorine (GM Feb. 5, p. 1).

“Our members who ship toxic inhalation hazards like anhydrous ammonia and chlorine are committed to working through that rulemaking process to materially improve rail safety by adopting a new performance specification,” the TFI letter said. “In the meantime, even if there were consensus that the disputed AAR construction specification was the best way to improve safety performance, shippers could not purchase the cars by the BNSF tariff implementation date due to backlogs at tank car manufacturing facilities.”

The letter further charges that BNSF’s policy would force shippers to pay the higher rate “even in light of the impossibility of complying with the disputed AAR standard.” Claiming the policy would have “no effect on safety,” the organizations urged BNSF “to reverse this notice and instead to participate in the ongoing government and industry efforts at developing new car specifications based on performance requirements currently being defined.” The letter asks for a response by June 8.

Yara seeks to acquire Kemira GrowHow

News Briefs

Oslo-Yara International ASA said May 24 that it has acquired 30.05 percent of all shares and votes in Kemira GrowHow Oyj from the State of Finland. The purchase price paid for the shares is EUR 12.12 per share (US$16.29). Since Yara will own three-tenths of Kemira, it must launch a mandatory tender offer for the remaining shares in the company at the same price of EUR 12.12 per share in accordance with the Finnish Securities Markets Act. “I am very excited about the opportunities this transaction will create and pleased that two Nordic companies with a strong history can combine their strengths in meeting the global competition. Kemira GrowHow’s phosphate mining, processing and commercialization complements Yara’s existing business extremely well,” said Thorleif Enger, Yara president and CEO. Kemira GrowHow owns a major phosphate mine at Siilinjärvi, Finland, and has access to additional phosphate rock through mining rights at Sokhli. Yara says Kemira’s phosphate rock mining, phosphoric acid, and finished products at Siilinjärvi and Uusikaupunki in Finland will be important additions to Yara’s phosphate-related capabilities, and represent new capacity within Yara. Yara is interested in opening the Sokli mine in Finnish Lapland to explore the commercial utilization of the phosphate raw material extracted from the mine, if a commercially sustainable means of implementation can be found. Yara sees very little overlap between the two companies. Kemira is one of the leading producers of fertilizers and feed phosphates in Europe, with production facilities in 8 countries, sales to over 100 countries, and approximately 2,500 employees. Kemira focuses on providing customized fertilizers and related services for crop cultivation, feed phosphates for use in animal feed, and process chemicals for selected industrial segments. During the first quarter of 2007 net sales were EUR 350 (US$470.4 million) and operating profit EUR 21.4 million (US$28.8 million). The tender offer will value Kemira at EUR 671.8 million, or US$903 million, on an equity value basis.

MOU signed for new Jordanian project

News Briefs

White Valley, Jordan-A Memorandum of Understanding has been signed between Venture Capital Bank, an Islamic investment bank based in Bahrain; Jordon Arab Fertilizers and Chemicals Co. (JAFCCO); and Jordan Phosphates Mines Co. (JPMC) to establish a chemical fertilizer complex at the White Valley in southern Jordan. The facility would produce sulfate of potassium (80,000 mt/y), sulfuric acid (75,000 mt/y), technical and food grade phosphoric acid (22,000 mt/y), and calcium chloride (50,000 mt/y). Completion is expected to take two years; the products would be marketed to neighboring and international markets. Raw materials would be provided by JPMC and Arab Potash Co.

Bunge and OCP form joint venture

News Briefs, Northeast

White Plains, N.Y.-Bunge Ltd. and Office Cherifien des Phosphates (OCP), Morocco, on May 22 announced the formation of a 50/50 joint venture to produce fertilizers in Morocco. The jv, Bunge Maroc Phosphore S/A, will expand overall production capacity in Morocco and serve as an additional source of phosphate-based raw materials and intermediate products for Bunge’s fertilizer businesses in Brazil and Argentina. The companies will finance the venture with an estimated $350 million in debt and equity over the next three years. Bunge’s equity investment will total an estimated $54 million. The Brazilian retail fertilizer market has grown by 50 percent since 1997, as production of soy, corn, sugar, and other crops in the nation has increased. Today, Brazil imports roughly 50 percent of the phosphate fertilizers it consumes, while Argentina imports 100 percent. When fully operational in 2010, Bunge Maroc Phosphore is expected to have 375,000 mt/y of capacity, from which it will manufacture phosphoric acid, TSP, MAP, and DAP for shipment to Brazil, Argentina, and other markets in Latin America. Bunge is South America’s largest manufacturer of fertilizer and a leading producer of related animal nutrition products. The company currently operates four major phosphate mines in Brazil. Bunge Maroc Phosphore’s production facilities will be located in an existing industrial complex in the port city of Jorf Lasfar. Bunge will utilize its ocean freight logistics network to backhaul fertilizer shipments from Morocco to Latin America in the same vessels it uses to ship grains and agricultural products to Europe. OCP produces over 25 million mt/y of phosphate rock and owns a significant portion of the world’s phosphate reserves.

Yara to spend $50 M for Brazilian upgrade

News Briefs

Oslo-Yara International ASA confirmed last week that it plans to invest US$50 million to expand NPK blend capacity at plants in Rio Grande, Brazil, from 700,000 mt/y to 1 million mt/y. Since 2004, new Yara plants in Brazil include mixing units in Rondonopolis (Mato Grosso State), Uberaba (Minas Gerais State), and Vitoria (Espirito Santo State), with a new one in Paranagua (Parana State) expected to be up by the end of the year. Yara estimates its share of the Brazilian market at 14 percent, second to Bunge’s 30 percent. Yara continues to oppose Bunge’s takeover of Fosfertil.

Safety school launches website

Eastern Cornbelt, News Briefs

Collinsville, Ill.-The National Agronomic Environmental Health & Safety School has introduced a new website – www.naehss.org – designed to reinforce the organization’s identity and unique offering. Online visitors have immediate access to current and past school agendas, online registration, regulatory agencies, and other compliance information. In addition, a new publication, Safety Matters, has been developed. It is designed to help reinforce a “culture of safety,” whereby awareness of unsafe situations can be recognized and remedied before a death or injury occurs. It is a free service and available by registering online. For more information, see www.naehss.org. In other news, NAEHSS will be conducting a Safety School in Bloomington, Ill., Aug. 21-22.

Train runs into fertilizer truck stalled on track

News Briefs, Western Cornbelt

Overton, Neb.-Authorities say a tractor/truck collision with a Union Pacific train on a downtown crossing could have been prevented with a telephone call. They are still investigating the May 16 incident involving a 1980 Kenworth truck pulling a trailer with 4,500 gallons of liquid fertilizer in two tanks that became high-centered on the only in-town rail crossing. There were no injuries because the driver got out of the way before the 49-car eastbound auto train crashed into the truck, sending one of the tanks to the north side of the tracks and carrying the other a half mile away attached to the front of the engine. Dawson County Emergency Management Director Brian Woldt told Green Markets it would have been a simple thing for the driver to call 911 or the Union Pacific number posted on a nearby sign to get help halting the train. As a result, approximately 3,000 gallons of the 10-34-0 fertilizer were spread over the accident scene, on the engine and the train, and down the track as an aftermath of the collision. Union Pacific spokesman James said this type of accident is rare, but that anyone involved like this “should get off the tracks and call the local authorities so we can alert the trains.” He said UP sent an environmental team to the scene to monitor the situation and cleanup the fertilizer.

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