All Posts from July 3, 2019

Fertoz Continues Growth, 2019 Prospects Impacted by Wet Weather

Australia, Featured, News, Specialty

Australian-based organic phosphate supplier Fertoz Ltd., Brisbane, continues to expand volumes and distribution in North America, though like conventional fertilizer companies, it was also impacted by the wet 2019 spring season.

Fertoz has been selling its fertilizer for only about a year and a half, with first-year North American sales exceeding 10,000 mt. Fertoz North American Executive Director Pat Avery told Green Markets that the excessive flooding inundating tens of thousands of acres in the U.S. Midwest has prevented the company from reaching its goal of selling 30,000 mt this year. Still, sales this year are expected to hit 20,000 mt, exceeding the first year by double, he noted.

“We have the ore supply and infrastructure to do well more than 100,000 mt/y a year,” said Avery, a former J.R. Simplot Co. and Intrepid Potash Inc. executive now based in Denver. He has been with Fertoz for three years, sitting on its board. “Our goal is to be cash positive … and sell several hundred thousand tons a year. We want to be the largest organic input supplier in North America. … It’s a pretty ambitious goal, but we’re optimistic.”

Fertoz has established a network of brand name distributors – wholesalers and retailers – including Nutrien Ltd. and Scotts Miracle-Gro Co. (GM Nov. 30, 2018), as well as The Andersons Inc., Providence Grain Group, Limoges Seed Farms, and Seven Springs Farm. Fertoz recently booked Canadian firms Federated Co-operatives Ltd. to serve Western Canada, Blair Ag to serve Saskatchewan, and Thompsons Ltd. to serve Ontario and Eastern Canada.

The company is particularly eyeing areas with a large number of organic farmers or warm climates that allow more than one growing season. As a result, it is targeting California and the South. It said it only has one distributor in California – Ag Unlimited, now a part of the GrowWest brand, a Lyman Ag company with three farm centers in the state.

Company-wide, Fertoz said it has distribution agreements covering 219 distributor branches across Australia, New Zealand, Canada, and the U.S.

Avery told shareholders in May that the company underestimated the lack of market awareness of organic inputs and the challenges of building a supply chain from scratch. One of its problems is that many organic farmers, according to the company, are not aware of Fertoz – or any other organic fertilizer suppliers, for that matter. Another factor is that organic farmers want a product that contains all three major nutrients.

As a result, Fertoz is working toward an NPK product, not just one that contains phosphate. The company is seeking to be a premium organic inputs compan,y building a suite of organic fertilizers and a logistics chain to service organic farmers. The company estimates that over 80 percent of organic growers are using little to no inputs, making the scope for growth with education significant.

Avery said one of Fertoz’s greatest accomplishments has been to get its mining, marketing, and distribution operations to mesh efficiently, building whole supply chains. It also is ensuring that the organic origins of products can be traced for retail customers like Whole Foods and Sprouts by using an innovative bar coding system. Orders can be taken from partners, labels made, and products directly shipped.

“This is a very big deal in organic foods, ensuring traceability on every load scooped out of the ground,” he said. “As a young company, we can put all those best practices in place.”

It is also looking to increase awareness in the cannabis market. Its recent connection with Scotts’ unit, The Hawthorne Group, moves it in that direction.

The company is also looking at co-locating processed fertilizer at distributor sites to ensure same-day or next-day delivery, which is critical due to weather events impacting planting. It has developed rail and truck logistic networks, storage facilities, and a full end-to-end supply chain operation servicing all major organic agricultural hubs.

“We’ve established a good network of low cost processors,” Avery said, mentioning that Fertoz has a sales force of about five professionals who have made thousands of contacts. Like him, they are considered independent contractors.

As for adding to its product portfolio, Fertoz recently signed an agreement with Pacific Recycling, Surrey, B.C., to supply its powdered and granulated gypsum. In late 2018, it inked a ten-year sales and supply agreement with Humic Growth Solutions (HGS) (GM Nov. 30, 2018), with the two looking to develop humate/phosphate fertilizers.

As a relatively small company operating for five years, Fertoz, a certified organic phosphate fertilizer company, contracts out its mining, crushing, screening, and granulation projects to other businesses as it develops a low-cost marketing strategy throughout the U.S. and Canada.

In July 2017, Fertoz signed a marketing agreement with Solvay USA Inc. for up to 10,000 mt of rock phosphate from Solvay’s operation in Montana (GM July 14, 2017), giving Solvay responsibility for loading the ore and Fertoz responsibility for marketing it. The ore is mined and stockpiled above ground ready for distribution, giving Fertoz an advantage.

The Solvay ore allows Fertoz to access orders across North America that are not as easily accessible from its own phosphate production locations in Wapiti and Fernie in British Columbia. Fertoz said it has extensively tested the Solvay ore and has received organic registration. Both California and Washington State have given Fertoz organic input certification, in addition to USDA and Canadian officials.

Fertoz also has stockpiles in Monterrey, Mexico, where it can source product from a local mine and crushing/screening plant that has annual capacity of 50,000 mt/y.

Fertoz’s mining criteria are high-quality phosphate low in metals, shallow resources, available infrastructure, and proximity to known organic markets, with a relatively quick pathway for permitting. Fertoz also has phosphate projects in B.C. (Fernie, Wapiti, Crow’s Nest, Barnes Lake, and Marten) and Coleman, Alberta.

In September 2016, Fertoz decided against developing the Dry Ridge Phosphate Project in the Caribou/Targhee National Forest in southeastern Idaho. Company officials said the property’s ore was not ideal for organic farming and permitting proved more difficult than expected.

The company expects to begin mining Alberta and B.C. Marten leases this year.

In the meantime, the company’s FertAg product, which has been sold in Eastern Australia, this year has had its first sales in Western Australia and New Zealand. Distributors include E.E. Muirs & Sons, Ruralco, Norco Coop, and Vasili Gardens, as well as independent distributors.

India Moves Ahead on Urea Self-Sufficiency

Featured, India, News, Urea

The Indian government recently told the parliament it would continue to make the country self-sufficient in urea as quickly as possible.

Currently, Indian urea production stands at about 24.1 million mt/y. With demand at 30.5 million mt/y, the balance is made up with imports from the joint venture operation in Oman, and from tenders, such as the recently closed one by MMTC.

This year India is expected to import about 7 million mt of urea. The cost of subsidizing the imported urea is a major drain on the Indian treasury. Farmers pay just under $78/mt. The difference between the imported price – currently $292-$295/mt CFR, based on the most recent tender – and the price paid by the farmers is the subsidy offered by the government. Previous attempts to raise the urea price or to reduce subsidies has met with fierce opposition from farmers and their representatives in government.

To reduce the cost of subsidizing urea, the government has encouraged farmers to use less and to reduce the country’s dependency on imported urea.

In a written statement to the parliament, Minister for Chemicals and Fertilizers Shri D.V. Sadananda Gowda said more domestic production is on its way. He said new capacity of 3.14 million mt/year has been added since 2017, with three more plants soon to be online, covering another 1.3 million mt.

Gowda also said five older plants are being upgraded and restarted to add another 6.3 million mt to the country’s production (GM June 21, p. 26), reiterating an announcement he made earlier. The last of those revamps is slated to be up in September 2023.

Once all these plants are online, Gowda said, India’s urea needs will be covered by Indian production, with only a few tons coming in from offshore joint ventures.

“India is currently the world’s largest urea importer, a role they earned after the U.S. doubled its urea capacity and stepped back from the import market,” said Green Markets Research Director Alexis Maxwell. “Global urea prices rise when India tenders and fall when India is out of the market. When India increases its domestic production in the [next] 2-5 years, the world will lose a major demand center which supports the market with frequent, large purchases, and there’s no candidate to take their place on the global stage except perhaps Brazil.”

Whistleblower Still Waiting after 10-Year Old Complaint to IRS about Oxbow Carbon, Walmart

News, News Briefs

The U.S. International Revenue Service is still weighing whistleblower complaints filed in 2009 that alleged that William (Bill) Koch’s Oxbow Carbon LLC, West Palm Beach, Fla., and Walmart Inc., Bentonville, Ark., dodged taxes to the tune of $350 million and $250 million, respectively, according to Bloomberg Tax, which recently obtained hundreds of pages of documents in the case. Charles Middleton, the whistleblower, was a former tax executive with both companies. They both vehemently deny the allegations.

Up until recently, Oxbow Carbon was involved in the sulfur, sulfuric acid (see page 1), and fertilizer businesses (GM Nov. 3, 2017).

As far as Middleton knows, the claims have not been resolved, and he has been kept mainly in the dark regarding their progress, according to the documents. If the IRS uses information provided by a whistleblower, it can award the whistleblower up to 30 percent of the additional taxes, penalties, and other amounts it collects.

Middleton’s cases reflect a level of secrecy particular to the IRS’s whistleblower program. Tax code Section 6103 prohibits IRS employees from disclosing tax information about an individual or company – which the IRS, according to reports from its whistleblower office, interprets as a need to limit interaction after claims are filed. However, a recently-enacted IRS reform bill (H.R. 3151), which alters some agency operations and lays groundwork for more restructuring, allows for more open communication with whistleblowers. The legislation, which President Donald Trump signed into law July 1, also protects whistleblowers from retaliation by their employers.

Oxbow called Middleton’s allegations in the whistleblower claim “false and defamatory,” saying its tax structure was lawful while tax efficient. It said IRS audits cleared the company’s returns for 2011 and 2012, two of the years Middleton covered in his claim. “Oxbow cooperated in the process, and the audit concluded that no material changes to the returns were necessary,” the company said in an email.

In the case of Oxbow, where Middleton was senior vice president of tax from 2010 to 2016, his claim is that the company transferred its profitable petroleum coke contracts from the U.S. to the Bahamas in 2010. He said Oxbow failed to recognize the profits from those contracts and pay the appropriate taxes, while continuing to manage the Bahamas-based company from the U.S.

Middleton contended in the documents that he was ultimately fired after discovering Oxbow had kept documents from IRS auditors and suggesting corrective action. Oxbow, in its statement, said Middleton left “for reasons unrelated to these matters.” Documents indicate Middleton received monthly severance payments at the rate of $200,000 a year for some period of time.

Walmart also denies Middleton’s claims. The retail giant, in an email, said it has signed letters from the IRS confirming the agency concluded audits for 2009 and 2010, two years covered in Middleton’s claims.

Middleton declined to be interviewed, citing nondisclosure agreements with his former employers. In a May 2018 letter to the IRS, obtained by Bloomberg Tax, he expressed frustration over lack of communication with the agency since filing his claims – suggesting that by not engaging more with him, the IRS had lost out on hundreds of millions of dollars.

Tips from whistleblowers are an important tool for helping the IRS focus resources on examinations that are most likely to result in big returns. In fiscal year 2018 the office collected about $1.4 billion, according to its latest annual report.

In criminal cases, the IRS and the Justice Department can use a whistleblower as a confidential informant, which allows for freer exchange of information. William Cohan, a tax attorney representing Middleton in the Oxbow claim, said he had email correspondence with an IRS special agent from criminal investigations in early 2017 about the case. Still, he said, there has been “dead silence” since he last spoke to the IRS that spring.

Oxbow, in an email, said that no one from the Justice Department, Treasury Department, or IRS Criminal Investigation Division has contacted the company or any of its representatives in connection to an audit, which it said was closed in 2015. The company said it has never seen Cohan’s emails and therefore cannot verify whether they are authentic.

As for Middleton, he is now 55 and said he is unemployable in the tax field because of his whistle-blowing history. “I provided the IRS information at great personal cost,” Middleton pleaded in an April 28, 2018, letter to the Whistleblower Office. “I respectfully request to be treated fairly.

“The reality is: whistleblowing can severely damage a person’s ability to provide for his or her family,” he added in another letter to the office a month later. “The whistleblower reward program is designed to compensate for that reality. If the whistleblower program doesn’t listen to whistleblowers, and it doesn’t process awards without litigation, the program is failing the whistleblowers.”

H.J. Baker Acquires Oxbow Sulphur

Featured, News, Sulfur, Sulfuric Acid

H.J. Baker & Bro. LLC, Shelton, Conn., acquired Oxbow Sulphur and its international affiliates effective June 21, 2019. H.J. Baker will take ownership of operations facilities in Canada and the U.K., and will maintain Oxbow Sulphur sales offices in the U.S., Canada, Kazakhstan, China, Singapore, and the Netherlands.

H.J. Baker said Oxbow Sulphur is the largest independent marketer of sulfur and sulfur-based products in the world. It owns and operates a wide array of assets and provides a variety of services to oil refineries and natural gas producers, as well as customers producing fertilizer and mining precious metals using sulfuric acid in the production of steel, paper, sugar, and gasoline around the globe. It delivers molten, bulk solid, and bagged sulfur, as well as sulfuric acid and a variety of fertilizer products.

“The combination of Oxbow Sulphur and H.J. Baker will expand our total reach in the expanding global sulfur market,” said H.J. Baker CEO Christopher Smith. “The team and products from Oxbow Sulphur are complementary to our company, and through the combined entity, give us the opportunity to increase the value delivered to our customers.”

“Oxbow Sulphur is thrilled to be joining the H.J. Baker organization,” said Mark Whittemore, Oxbow Sulphur President. “We believe that, together, we have a great opportunity to increase product offerings, service levels, and fuel future growth.”

Additional details regarding the terms of the acquisition were not announced. de Visscher & Co. LLC, New Canaan, Conn., acted as exclusive financial advisor to H.J. Baker on the transaction, while Seale & Associates Inc., Arlington, Va., served as financial advisor to Oxbow.

Oxbow Sulphur was owned by William (Bill) Koch’s Oxbow Carbon LLC, West Palm Beach, Fla., which acquired it along with fertilizer assets from International Commodities Export Corp. (ICEC) in 2011 (GM Feb. 7, 2011; Nov. 29, 2010). At the time, ICEC said it managed 6-7 million mt of sulfur, sulfuric acid, and fertilizer. Oxbow Carbon sold its Oxbow Fertilizer LLC unit’s U.S. fertilizer assets to Oakley Fertilizer Inc., North Little Rock, Ark., in late 2017 (GM Nov. 3, 2017).

Bill Koch was recently in danger of being required to sell all of his Oxbow Carbon assets in a hotly contested lawsuit with major investors. However, the Delaware Supreme Court ruled in his favor earlier this year (GM Feb. 8, p. 24), saying he did not have to sell the company. According to the Oxbow website, the company is still involved in activated carbon and coal, as well as metallurgical and petroleum coke.

AdvanSix Commits to Invest in Hopewell; Nearly 100 Jobs Added Since 2016

News, News Briefs

AdvanSix, Parsippany, N.J., recently told the Economic Development Authority of the City of Hopewell, Va., that it will be investing in growth and optimization initiatives at its Hopewell facility. In connection with the company’s continued investment and recent job creation at the facility, the City of Hopewell and its Economic Development Authority have granted certain property tax incentives to the company.

“AdvanSix is committed to long-term, proactive citizenship in our communities,” said Fred Harry, Hopewell Plant Manager. “Since 2016 when AdvanSix was formed, we have created nearly 100 new technical and operations jobs at our Hopewell site. Our team is also excited about the robust pipeline of growth projects and investments at Hopewell that will increase efficiency and output at our facility, optimize quality for our customers and help us provide ongoing opportunity for local employees and partners.”

One major project at Hopewell has been converting coal boilers to natural gas boilers. The company said its operations rely heavily on steam, and this move should significantly reduce energy costs at the site.

Another is a caprolactam quality project, with the company investing in equipment and debottlenecking, expecting about a 2 percent increase in capacity. That project is expected to be completed by the end of 2019, with full-year benefits in 2020.

AdvanSix said the boiler and caprolactam projects should cost about $55-$60 million, with an internal rate of return of 20 percent. Since 2016, the company said it developed a company-wide pipeline of efficiency projects in the range of $150-$200 million that have had similar returns.

For 2019, the company is projecting capital expenditures of $140-$150 million, up from 2018’s $109 million. Much of that increase is for turnarounds, with maintenance up $20 million due to the scope and timing of planned plant turnarounds. The pre-tax income impact of third-quarter turnarounds is $5 million, with fourth-quarter at $25-$30 million.

“This significant investment and increased jobs are huge for our community,” said Hopewell’s Assistant City Manager Charles Dane. “AdvanSix and its employees have been active members in the Hopewell community for decades, giving back through participation in a wide range of organizations. This project helps sustain a continued presence in Hopewell of this great corporate citizen. We look forward to the many benefits of this agreement for our local community.”

“This is an exciting win for the City of Hopewell and the Gateway Region. It is a true testament to Hopewell’s ability to attract and retain high caliber companies,” said Keith Boswell, President and CEO of Virginia’s Gateway Region. “Manufacturing, and specifically chemical manufacturing, is the heart of the region’s industry sector. Virginia’s Gateway Region is proud to have AdvanSix on its corporate roster, and we look forward to their many years of continued growth.”

More than 750 people currently work at AdvanSix’s Hopewell facility, which has been operating since the 1920s. The facility is one of the world’s largest single-site producers of caprolactam and ammonium sulfate. Caprolactam is the building block for Nylon 6 resin, which is used in carpets, automotive components, food and industrial packaging, and other products.

USDA to Resurvey Growers in July; Analysts Predict Sizable Drop in Final Planted Corn Acreage

Featured, News

The USDA on June 28 announced that it plans to resurvey growers in 14 states in July to get a better assessment of planted acreage totals for corn, soybeans, cotton, and sorghum. The announcement came swiftly on the heels of USDA’s June 28 Acreage report, which estimated this year’s planted corn crop at a doubtful 91.7 million acres and soybeans at 80 million acres (GM June 27, p. 1).

Those acreage assessments were greeted with skepticism by analysts and traders, as they were based on grower surveys conducted in early June, when many areas remained unplanted and intentions were unclear due to extremely wet weather that plagued much of the central and eastern U.S. Trade expectations in late June had centered on an estimate of 87 million acres of corn (GM June 27, p. 32).

USDA acknowledged that “excessive rainfall had prevented planting at the time of the survey,” and said the updated acreage estimates collected in July will be published in the agency’s Aug. 12 Crop Production report “if the newly collected data justify any changes.” Lance Honig, branch chief for crops at USDA’s National Agricultural Statistics Service (NASS), said in a tweet that almost 17 percent of the U.S. corn crop was not yet planted at the time of USDA’s grower survey in early June.

Analysts were not surprised by USDA’s plan to resurvey growers in July, with some saying that the June 28 acreage report should never have been published given this year’s extraordinary planting delays and the absence of reliable data.

“Either there’s a real story here that explains why all the anecdotal evidence is wrong, or we’re in for a slow but meaningful downward adjustment on corn acres over time,” said Jason Miner, Senior Chemicals Analyst with Bloomberg Intelligence.

The size and scope of the resurvey was described by some as a rare move for the agency. USDA said it planned to contact growers of corn in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio, South Dakota, and Wisconsin; cotton in Arkansas; sorghum in Kansas; and soybeans in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio, South Dakota, and Wisconsin.

The June 28 acreage totals, which actually showed an increase for planted corn and a decrease for soybeans from USDA’s June 11 World Agricultural Supply and Demand Estimates (WASDE) report (GM June 14, p. 1), sent corn futures prices tumbling. Soy prices, however, experienced gains, particularly after President Trump announced on June 29 that the U.S. and China had declared a truce in their trade war, and Trump would delay imposing an additional $300 billion in tariffs as the world’s two largest economies agreed to resume negotiations.

The Trump administration also announced on July 1 that growers who were prevented from planting crops this year will still be eligible to collect Market Facilitation Program (MFP) payments if they plant cover crops on those acres. The move was signaled earlier by USDA Secretary Sonny Perdue, who said the agency was “exploring legal flexibilities” to aid growers who were forced to file unprecedented prevented planting claims this year.

ICL Marks First “Pure Poly” Year at Boulby

England, News, News Briefs, Polyhalite, Specialty

ICL UK on July 1 marked the first year of “pure poly” operations at its Boulby potash mine in northeast England. General Manager and Vice President of ICL Boulby Andrew Fulton highlighted the progress made in the past 12 months, including moving towards its production target of 700,000 mt of polyhalite – marketed as Polysulfate – by the end of this year (GM May 10, p. 27).

“Matching production to demand,” he said, the company continues to target production of 1 million mt/y by the end of 2020, and 1.3 million mt/y by 2023.

Boulby Polyhalite Output (mt)

Q1 2019 140,000
Full year 2018 348,7811
Full-year 2017 428,724

 1 ICL attributed the lower output in 2018 compared with 2017 as reflecting the efforts focused on the final mining of potash at the mine (GM Feb. 8, p. 13).

Fulton noted that in addition to Boulby Polysulfate being sold in the local U.K. market and in growing markets in China and South America, it is moving into new markets, including India, Malaysia, Indonesia, Kenya, Poland, and Romania.

He said ICL Boulby “has and will continue to be able to invest in significant improvements in its infrastructure, including upgrading conveyance and ventilation systems, along with purchasing and installing new equipment both underground and within the processing area, thanks to backing from its parent company, ICL.”

Bleyhl Co-op Expands Blending Capacity

News, News Briefs

Bleyhl Co-op, Grandview, Wash., is constructing a new plant in Grandview, which is expected to be complete in January, according to the Sunnyside News. The new blending plant, which will be next to a current agronomy location, will be able to blend 200 st of fertilizer per hour, compared to the existing Sunnyside plant’s 24 st/h. While personnel from Sunnyside will relocate to Grandview, Sunnyside will remain as a retail location.

Poland’s Anwil, Tecnimont Ink Contract for Nitrogen Granulation Plant

News, News Briefs, Nitrogen, Poland, Specialty

Polish fertilizers and chemicals company Anwil SA has signed an Engineering, Procurement, and Construction (EPC) contract with Milan-based Maire Tecnimont SpA subsidiary Technimont SpA for the construction of a mechanical granulation plant for new nitrogen fertilizer production facilities under development at its existing chemical and fertilizer complex at Wloclawek, some 200 km northwest of Warsaw.

The contract is the second of the three most important contracts to be concluded within the framework of the project. Anwil, a subsidiary of Poland’s oil refiner and petrol retailer PKN Orlen SA, signed the first contract at the end of April this year with Essen, Germany-based Thyssenkrupp AG’s Industrial Solutions business for the construction of nitric acid units with a production capacity of 1,265 mt/d and neutralization with a capacity of 1,200 mt/d (GM May 17, p. 30). The third key contract will concern the construction of ancillary installations, Anwil said, adding that its total investment in the three contracts is approximately $350 million.

The foundation stone for the expansion project was laid on May 22.

The granulation plant will have an average capacity of about 1,500 mt/d, depending on the type of fertilizer. The new unit will allow the simultaneous production of a wide range of products, such as ammonium nitrate (AN), calcium ammonium nitrate (CAN), and ammonium sulfate/ammonium nitrate (ASN) mixtures.

Anwil said the new granulation unit will enable it to expand its product portfolio to include coarse nitrate, AN, nitro-chalk with sulfur, and nitro-chalk with magnesium with improved granule properties. Completion of the unit is planned by mid-2022. Anwil currently produces fertilizer grade AN and CAN under two trademarks, Canwill with magnesium and Canwill S with sulfur, both of which are understood to contain less than 28 percent nitrogen.

The commissioning of Anwil’s third nitrogen fertilizer plant at Wloclawek will boost the company’s production capacity from 966,000 mt/y to 1.461 million mt/y. Completion is targeted for mid-2022.

The company estimates its EBITDA may increase by about €57 million (approximately $65million at current exchange rates) annually after the realization of the project. Anwil secured parent company approval to proceed with the expansion project in December 2018 (GM Jan. 4, p. 23).

Anwil last month defended its plans to increase its nitrogen capacity after rival Polish state-owned fertilizer and chemicals producer Tarnów-based Grupa Azoty SA warned that such additional capacity could lead to oversupply in the Polish market (GM May 31, p. 28).

Anwil said its additional fertilizer production capacity would enable it to utilize the surplus ammonia it is producing and would help reduce the country’s fertilizer imports. It said Polish farmers would also benefit from the expanded range of high-quality fertilizers on offer on the Polish market.

The company’s other business activities include plastics and other chemicals, including polyvinyl (PVC) production.

Sirius Minerals Confirms US$3.8 B Stage 2 Financing on Track

England, Featured, News, Polyhalite, Specialty

Sirius Minerals Plc, Scarborough, England, reported this week that it is on track to complete the US$3.8 billion stage 2 financing launched on April 30 to fund its North Yorkshire polyhalite mine and processing plant project to completion before the end of September this year (GM May 3, p. 1).

The company already has raised US$825 million from investors via a firm placing and open offer of ordinary shares for US$425 million and through an offering of guaranteed convertible bonds due 2027 for new gross proceeds of US$400 million.

Sirius said the rest of the funding, comprising a US$500 million bond that would unlock a US$2.5 billion revolving credit facility from JP Morgan Securities LLC, remains on track to complete before the end of September this year.

That credit facility is contingent upon the completion of the full US$500 million bond issue before Oct. 30, 2019 (GM May 3, p. 1). While J.P. Morgan would endeavor to procure purchasers for the full US$500 million of these initial bonds, it would not be under any obligation to acquire any for which it cannot procure purchasers. As a result, Sirius said earlier it does not have any certainty that it will receive the full US$500 million of gross proceeds of the initial bonds.

The three main elements that need to be in place ahead of the launching of the bond are finalizing the bond offering document, completion of the revolving credit facility paperwork, and the receipt of a public rating from the rating agencies. But Sirius said it is making “good progress” on all the necessary workstreams connected with the proposed bond issuance and entry into the proposed revolving credit facility.

Meanwhile, the company confirmed that construction is advancing well at its North Yorkshire polyhalite project and remains on track to produce its first polyhalite in 2021 and commercial production on time and in line with its cost schedule.

Sirius now has offtake deals in place with total peak aggregate volumes under contract at 11.7 million mt/y – or 13.4 million mt/y when customer volume options are included. Its most recent deal was a take-or-pay supply agreement with Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) for the supply of Poly4 in India, signed last month (GM June 14, p. 1). Volumes under the agreement with IFFCO will ramp up to 1 million mt/y in year eight of the 11-year term, with an option, subject to mutual agreement of the parties, to increase this by an additional 250,000 mt/y to 1.25 million.

 

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