All Posts from January 31, 2020

Mosaic Idles Colonsay Mine for Foreseeable Future; $1.1 B Impairments in P&K Recorded

Featured, News, Potash, Tampa

The Mosaic Co., Tampa, announced on Jan. 28 that it intends to keep its Colonsay potash mine idled for the foreseeable future. The mine will be placed in care and maintenance mode, employing minimal staff and allowing for resumption of operations when needed to meet customers’ needs.

“The ramping up of our Esterhazy K3 production, combined with continued weak demand in North America, has left Mosaic’s potash business with excess inventory and production capacity,” said President and CEO Joc O’Rourke. “This decision will regrettably impact employees, but allows us to optimize our Canadian production assets and improve our cost position in a competitive market. In 2020, we continue to expect robust global fertilizer demand and strong business conditions.”

Mosaic curtailed the Colonsay mine in August (GM Aug. 9, 2019), with the outage impacting approximately 350 employees. Soon after, the United Steelworkers Union told workers they should find other work and that the closure was indefinite, even though O’Rourke had told analysts at the time that company thinking was the mine would likely come back up toward the end of the year (GM Aug. 16, 2019).

After the Jan. 28 announcement, Mosaic spokeswoman Sarah Fedorchuk was quoted as telling The Canadian Press that another 80 employees would be impacted by the indefinite layoff.

Mosaic said the idling will result in a fourth-quarter 2019 pretax charge of approximately $530 million, primarily non-cash charges for asset write-offs, and inclusive of cash severance charges of $15 million to $20 million. The write-off is principally the carrying value of the 2013 expansion project, which increased Colonsay’s operating capacity to 2.1 million mt. Colonsay has been operating with a modified 1.5 million mt capacity since 2016, and the company does not expect to use the expansion capacity for the foreseeable future.

Nutrien Ltd., Saskatoon, had just announced about a week earlier that it would be continuing the shutdown of the Vanscoy mine in Saskatoon until at least the end of February (GM Jan. 24, p. 1).

These same market conditions that impacted potash – primarily a third consecutive weak application season in North America – also impacted Phosphates. Average realized phosphate prices continued to decline in the fourth quarter of 2019, impacting the annual goodwill impairment analysis and leading the company to expect a write-off of up to $590 million of Phosphates segment goodwill. The company plans to treat charges related to the idling or changes in goodwill balances as notable items.

Mosaic’s Jan. 28 announcement came after market close, and by the Jan. 29 close, shares had only dropped from $19.35 from $19.31. Shares actually closed up on Jan. 30 at $20.17 after news that the coronavirus would idle some phosphate production in China for another two weeks (see Markets).

Smaller potash producer K+S Group, Kassel, Germany, which had seen its shares fall after weakness in Brazil potash prices, rebounded after news that Mosaic and Nutrien had opted to keep potash production offline.

Danakali – Management Brief

Australia, Management Briefs, Specialty, Sulfate of Potash

Junior sulfate of potash (SOP) producer Danakali, Perth, Western Australia, reports that it hired Todd Romaine as its first Chief Sustainability Officer, effective Jan. 1, 2020, as part of its efforts to advance the continued development of its Environmental, Social, and Governance (ESG) agenda. He will oversee the execution of ESG programs both corporately and at Colluli Mining Share Co. (CMSC) in Eritrea.

The company said he is a highly experienced ESG executive with direct Eritrean mining and government relations experience. Previously, he served as Vice President of CSR and GR for the Bisha Mine, operated by Nevsun Resources in Eritrea. He holds a Master’s Degree of International Relations; Master’s Degree of Leadership; Bachelor’s Degree of Science, Environmental Planning; and Bachelor’s Degree of Arts, Environmental Studies, and is a Registered Professional Planner.

Wilbur-Ellis – Management Brief

Management Briefs

Wilbur-Ellis, San Francisco, Calif., announced that Molly Hemmeter has joined the company’s board of directors. Hemmeter most recently served as CEO, President, and Board Director of Landec Corporation, a publicly traded company in the health and wellness space, where she led a turnaround of the company’s food business and also the acquisition of Lifecore Biomedical, a manufacturer and supplier of pharmaceutical grade sodium hyaluronate.

Prior to Landec, Hemmeter served as Vice President of Global Marketing and Business Development at Ashland Chemical. She also held previous positions with software companies and a number of chemical, pharmaceutical, and consumer product companies. She holds bachelor’s and master’s degrees in chemical engineering from the University of Louisville, and an MBA from Harvard Business School.

“I’m delighted to welcome Molly Hemmeter to the Wilbur-Ellis board of directors,” said John P. Thacher, Executive Chairman of the Wilbur-Ellis board. “Molly is a visionary leader, with a focus on translating market insights into value creation. That fits perfectly with Wilbur-Ellis, which for nearly a century has been dedicated to helping our customers create value in their businesses.”

The Andersons Cited for Grain Bin Deaths

News, News Briefs

The Andersons Inc., Maumee, Ohio, has been cited by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) for violations related to the July 19, 2019, deaths of two employees at the company’s Toledo, Ohio, grain facility.

OSHA has proposed $291,716 in penalties for grain handling and walking and working surfaces violations. According to multiple news reports, the two employees – 29-year-old Josh Stone and 56-year-old James Heilman – became trapped and suffocated after falling into a grain bin while attempting to clear a clogged floor hole of compacted grain.

OSHA reportedly cited The Andersons for two willful and two serious violations for failing to develop an emergency action plan that included procedures for grain rescue and coordination with local rescue services, and for not powering down nor disconnecting grain equipment before employees entered the bin. OSHA also cited the company for failing to prohibit employees from entering grain storage bins on foot with engulfment and avalanche hazards present, and for exposing employees to fall hazards from uncovered floor holes.

“The Andersons has cooperated with OSHA throughout its investigation of this incident and will continue to take steps necessary to assure compliance with OSHA’s safety standards,” the Andersons said in a statement. “We have just received the OSHA citation and cannot comment any further on it at this time. Our team is still deeply shaken by this tragedy as our thoughts and prayers remain with the families of these employees.”

Helm Ag – Management Brief

Germany, Management Briefs

Hans-Christian Sievers, Chairman of the Executive Board of Helm Ag, Hamburg, Germany, will hand over the position and retire on April 1. He has held the position since 2012 and has been with the Helm Group for some 34 years.

Sievers will be replaced by Stephan Schnabel, who has been with Helm for over 20 years. He will be the third generation of the Schnabel family so serve as Chairman of the Executive Board of Helm Ag.

Frontier Ag to Pay $71K for NH3 Violations

Ammonia, News, News Briefs

The U.S. Environmental Protection Agency (EPA) has reached a settlement with Frontier Ag Inc., Goodland, Kan., to resolve alleged violations of federal Clean Air Act regulations at three ammonia fertilizer facilities owned by the company in Kansas. Two of the facilities are in Bird City, and one in Menlo.

In a Jan. 27 statement, EPA said it conducted inspections in June and October 2018 and determined that Frontier Ag “failed to submit, implement, and update risk management plans for the release of anhydrous ammonia; failed to ensure that the facilities’ processes for handling anhydrous ammonia were designed in compliance with good engineering practices; failed to perform required tests and inspect processing equipment at the facilities; and failed to update required documentation.”

In response to the findings, EPA said Frontier Ag took the necessary steps to return all three facilities to compliance. At the time of the inspections, each facility contained more than 10,000 pounds of anhydrous ammonia, making them subject to Risk Management Program regulations.

Under the terms of the settlement, EPA said Frontier Ag has agreed to pay a civil penalty of $71,652. In addition to achieving regulatory compliance, the company also agreed to complete a project designed to enhance safety at six of its ammonia fertilizer facilities by installing emergency shutoff valves and emergency stop buttons. Frontier Ag estimates the project will cost at least $55,000.

Frontier Ag is a full-service, member-owned cooperative offering grain, feed, agronomy, petroleum, shop, and transportation products and services. The company is one of the largest agribusiness co-ops in Kansas, with more than 300 employees and nearly 30 locations across 11 counties in northwestern Kansas.

Wilbur-Ellis Launches ROMEO Fungicide

News, News Briefs

Wilbur-Ellis Company, Denver, Colo., on Jan. 13 announced the launch of ROMEO®, a new biofungicide that the company said enables plants to develop pathogen-fighting compounds to prevent disease. Wilbur-Ellis said ROMEO is an all-natural product suitable for organic farming, and can be used as a foundational component with other products.

“We have been evaluating many biofungicide candidates in field trials over the past few years, and this product clearly stands out in its level of consistency and efficacy in powdery and downy mildew management programs,” said Wilbur-Ellis Key Actives and Biopesticides Portfolio Manager Jesse Rosales.

“I see this product becoming a disease-management foundation not only in organic systems, but also in conventional tree fruit, tree nut, vine, and vegetable cropping systems,” Rosales added. “Its host-plant-inducing mode of action makes it a great complement to pathogen-attacking biofungicides like SONATA® from Wilbur-Ellis.”

FBN Launches HedgeCommand Grain Marketing

News, News Briefs

Farmers Business Network (FBN), the independent farmer network and e-commerce platform for crop inputs and analytics, on Jan. 13 announced the launch of HedgeCommand, a grain marketing system that uses data science and economic analysis to generate pricing recommendations for members.

FBN said HedgeCommand pulls together cash sales, futures and options, and crop insurance to give users a comprehensive picture of profitability and risk. It then generates personalized recommendations for when and how much grain to sell, and with what type of contract. The service is available only to members of the FBN Market Advisory program, which is accessible inside the FBN mobile app.

“When we started in the grain marketing space, we were surprised to realize that despite the tremendous amount of technology that’s transformed nearly every other aspect of farming, most growers were still rolling the dice with their marketing,” said Satish Nandapurkar, Vice President of Product Strategy at FBN. “We built HedgeCommand to bring the same level of scientific rigor to grain marketing that producers already apply to their agronomy.”

FBN said its network has grown to cover more than 35 million acres of member farms in the U.S. and Canada, with employees serving in 44 states and six Canadian provinces. The company has offices in San Carlos, Calif., Chicago, Ill., a National Operations Center in Sioux Falls, S.D., and a Canadian Headquarters in High River, Alta.

Idaho House Committee Seeks Expedited Permitting for Itafos Mine

News, News Briefs

The Idaho House Resources and Conservation Committee voted unanimously and with little debate on Monday, Jan. 28, to send a joint memorial to the full House asking the federal government to expedite the permitting process for Itafos Conda’s new Husky 1/North Dry Ridge project near Soda Springs.

Committee Chairman Marc Gibbs, R-Grace, is sponsoring the proposal in the House, while Sen. Mark Harris, R-Soda Springs, who represents the same legislative district, is sponsoring it in the Senate. Gibbs noted that the phosphate industry and agriculture are the two driving forces in their district, where the open pit phosphate mine would be located.

Itafos Conda General Manager Tim Vedder testified before the committee that there is only enough ore left in an existing mine to last for up to six years. Vedder said Itafos Conda employs 286 people and another 220 contractors in the area. Their annual salaries average $70,000, in addition to full health benefits, a 401(k) retirement program, and four weeks of vacation.

Ostara Closes on Financing, Credit Facility; Bayer Joins Board

News, News Briefs, Specialty

Ostara Nutrient Recovery Technologies Inc., Vancouver, B.C., said on Jan. 28 that on Dec. 17 it closed the second tranche of its previously announced equity financing for an additional US$5 million in financing, which is being co-led by longstanding Ostara investors Wheatsheaf Group Ltd., London, and VantagePoint Capital Partners, San Bruno, Calif., with follow-on participation by other existing Ostara shareholders, including key Ostara fertilizer distribution partner Taurus Agricultural Marketing Inc.

In addition, on Dec. 23 Ostara closed a new $5 million credit facility with a Canadian based lender. It is intended to provide working capital for the company’s ongoing fertilizer production scale-up and augments the company’s existing credit facility with Comerica Bank.

Effective Jan. 1, Monty Bayer joined the Ostara’s Board of Directors.  He currently serves as Executive Director at Wheatsheaf Group, an Ostara investor, which is also a leading investor in food and agriculture. Bayer recently joined Wheatsheaf as Executive Director, joining its Board and opening a San Francisco office for the firm.

Bayer has spent more than 20 years in leadership roles globally within the agriculture science unit of Dow Chemical Co. (North America and Asia). He was also appointed President and CEO of Actagro LLC in 2013 and led the growth of Actagro culminating in its purchase by Nutrien Ltd. in March 2019.  He holds a B.S. from the University of Alberta and an MBA from Queen’s University in Canada.  

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