Dead Sea, potash industry play role in Israeli elections

Saving the Dead Sea and the implications on the potash industry are issues due to come up in Israel’s election campaign. A leading environmental group that has been spearheading the fight for the rapidly disappearing inland body of water is planning to call on all political parties in Israel to support efforts to stabilize the Dead Sea.

The Friends of the Earth Middle East is due to hold a conference at the beginning of January to call on all parties to back the effort. Knesset elections are scheduled for January 22. The shrinking of the Dead Sea has been going on for decades, ever since Israel, Jordan, and Syria began diverting water from the Sea of Galilee in northern Israel and the various tributaries of the Jordan River. “Half of the drop in the level of the Dead Sea is due to diversion by the three countries, but the other half is a result of the Dead Sea Works and the Arab Potash Corp.,” charges Gidon Bromberg, Israeli director for Friends of the Earth Middle East. Bromberg is demanding that the potash extraction process change in order to save the sea.

Israel’s Geological Survey estimated the annual shortfall at 700 million cubic meters of water as a result of the diversion and the use by the potash producers. The aim of the campaign is to reach a steady state situation whereby the level of the inland sea does not continue to drop. The water level has dropped by about 27 meters since 1960. The decline has accelerated in recent years, and in the past 12 months the sea fell by a record 1.5 meters. The northern and southern parts of the sea are actually no longer connected.

“We need to get an additional 400 mcm of water a year flowing in the Jordan River into the Dead Sea,” said Bromberg. In recent years, Israel, Jordan, and the Palestinians were pushing for a project to bring water from the Red Sea to the Dead Sea to replenish the latter. The ambitious project would have involved desalination plants and power stations. In November Jordan said that the high cost of the project and the lack of international funding led it to drop the option. In any event, environmental groups and the industries based at the Dead Sea feared that the mixing of the waters would have a negative impact. In addition, the project would not have had any impact on the fate of the Jordan River.

In recent years Israel has been drawing less water from the Sea of Galilee due to the increased use of desalinated water. Israel’s Water Authority is predicting that in the coming years as much as 210 million cubic meters of water will be flowing into the Jordan River as Israel diverts less water from the Sea of Galilee. Friends of the Earth Middle East is hoping that Jordan will invest more funds in sewage treatment and reduce its need to divert fresh water from the Yarmouk, a tributary of the river.

But the environmentalists say that the Dead Sea Works (DSW) and Arab Potash Corp. should be held accountable for the damage they have caused to the water level over the years. “These are private companies that are exploiting the waters of the Dead Sea in the worst possible manner,” said Bromberg. He added that DSW is the only industrial company in Israel that is not charged for the water it uses, and that there is no independent verification of how much is actually pumped out of the northern end of the sea.

DSW said that it pumps 150 to 170 million cubic meters of water annually, and that volume has remained stable. The company views the diversion of water by the countries in the region as the main culprit. It also rejects the demand to pay for water, saying that it does so through the payment of royalties.

The environmentalists counter by saying that their campaign is not aimed at putting DSW and Arab Potash Corp out of business, but to encourage the companies to become more efficient. At present they argue there is no incentive for industry to

Growmark acquires Illinois fuel/transport businesses

Bloomington, Ill. — Growmark Inc. has reached an agreement to acquire Meier Oil Products. Inc., and Manito Transit. Both have been family owned since 1936, with business consisting of a trucking company, a fuel terminal facility in Ashkum, and bulk fuel facilities at Kankakee, Pontiac, Sheldon, and Champaign, all in Illinois. Growmark said the deal strengthens its system through collaboration between Evergreen FS, Heritage FS, and Illini FS and Growmark Energy. Growmark is a regional cooperative with annual sales of $10.1 billion (FY 2012 data) providing agriculture-related products and services and grain marketing in the Midwest and Ontario, Canada. FS-brand farm supplies and related services are also marketed to farmers in the northeastern U.S. and by Growmark subsidiaries.

More smoke than fire at Lebanon Seaboard site

Lebanon, Penn.—It was a case of more smoke than fire Thursday, Dec. 13, at one of the facilities located on the Lebanon Seaboard campus in South Lebanon Township, but fire companies turned out in strong numbers just to be on the safe side, according to a spokesman for the company. “It was more of a scare because of the smoke coming out in this one area,” he said. “We called the fire department just in case, and as it usually happens they responded in numbers just in case.” He added that the damage was minimal and will have no effect on the business. The facility, where fertilizer is packaged for the turf and garden market, is probably the largest part of Lebanon Seaboard, which of the company’s presence here includes the corporate headquarters, a manufacturing facility, and a state-of-the-art distribution center.

Vale to sell nitrogen plant

Rio de Janeiro — Vale S.A. (Vale) reports that it has signed an agreement with Petróleo Brasileiro S.A. (Petrobras) to sell a nitrogen complex in Araucária, in the Brazilian state of Paraná, for US$234 million. The sale is subject to the fulfillment of precedent conditions, including the approval by the Conselho Administrativo de Defesa Econômica (CADE), the Brazilian anti-trust authority. Araucária has annual production capacity of approximately 1.1 million mt of ammonia and urea. Vale said the divestment of assets, which do not have synergies with the rest of its portfolio, is consistent with the company’s efforts to improve capital allocation and resources to generate additional funding for investments in priority projects with high potential for value creation. The sale of Araucária also contributes to an annual reduction of investments in sustaining operations of approximately $50 million. The purchase price will be paid by Petrobras through installments accrued quarterly, adjusted by 100 percent of the Brazilian interbank interest rate (CDI), in amounts equivalent to the royalties due by Vale related to the leasing of potash assets and mining rights of Taquari-Vassouras and of the Carnalita project. In February, Vale signed a leasing contract of potash assets and mining rights with Petróleo Brasileiro for a period of 30 years, allowing for the continuation of potash mining in Taquari-Vassouras and the development of the Carnalita project, in the state of Sergipe, Brazil. Vale said the leasing contract will ensure the extension of operations at Taquari-Vassouras – the sole potash producer in Brazil, and one of only two producers in South America – finalizing the development of the Carnalita potash project and the study and development of other areas within the concession.

Mosaic changes fiscal year, declares dividend

Plymouth, Minn. — The Mosaic Co. said Dec. 17 that its board of directors has approved a change in the company’s fiscal year end – to Dec. 31 from May 31. Mosaic will complete its current fiscal year on May 31, 2013, and will then begin reporting quarterly results on a calendar-year basis with the quarter ending on Sept. 30, 2013. Mosaic will report results for a transition period of June 1 to Dec. 31, 2013. The company’s first full calendar reporting year will be 2014. "The change in our fiscal year better aligns our financial reporting cycle with our business activity and budgeting process," said Larry Stranghoener, CFO. "In addition, our financial reporting will be aligned with other companies in our industry, allowing investors and securities analysts to make more direct comparisons between our results and our peers’." In other news, on Dec. 13 the board declared a quarterly dividend of $0.25 per share on the company’s common stock. The dividend will be paid Feb. 21, 2013, to stockholders of record as of the close of business on Feb. 7, 2013.

Mosaic moves into DeSoto County, Fla.

Arcadia, Fla. — The Mosaic Co. has opened offices in the newly restored Hollingsworth House here in a move that is considered a first step toward gaining approvals for phosphate mining of some of the thousands of acres the company owns in DeSoto County. Mosaic says the location, which overlooks the county administration building in downtown Arcadia, will serve as the company’s base of operations and will provide office space for community relations and permitting staff members. At the same time, Mosaic is renovating a second building behind the Hollingsworth House, which is one of the area’s historic homes, to serve as a community room to host the company’s DeSoto County Citizens Advisory Panel meetings and other community events. Since its formation in 2004, Mosaic has owned more than 18,000 acres of future phosphate mine land in DeSoto County. Within the next 10 years, the company is poised to invest more than $1 billion in construction and infrastructure costs to develop a world-class phosphate mine in the county, which will eventually provide nearly half of the company’s Florida phosphate rock production. The facility is expected to employ approximately 400 full-time employees, with wages and benefits averaging significantly higher than the currently reported average median income in DeSoto County. The mine will also provide employment for hundreds of full-time contractors. According to a recent study, economic activity resulting from the mine’s operation will produce thousands of jobs in DeSoto County and beyond. But the situation may not remain so upbeat much longer. Environmentalists, including the Sierra Club, are expected to press their opposition to the mining.

Keytrade signs marketing MoU with Sinochem

Zurich — Keytrade AG reports that it has signed a Memorandum of Understanding (MoU) with Sinochem Fertilizer Co. Ltd., China’s largest fertilizer supplier and distributor, to market Sinochem’s fertilizer products in Latin America and Africa. “Sinochem Fertilizer has a well-deserved international reputation for the high standard quality of their products, and this agreement reinforces Keytrade AG’s commitment to supply our customers the finest fertilizer available,” said Melih Keyman, Keytrade president and CEO. “We are very proud to be associated with Sinochem Fertilizer Co. Ltd. to embark on such an important mission. This marks a new high point in our long established relationship with Sinochem.” Keytrade is a global fertilizer trading company headquartered in Switzerland. CF Industries Holdings Inc. acquired 50 percent of Keytrade in 2007; since then, Keytrade and its subsidiaries have been exclusively exporting CF’s phosphate fertilizer in the international markets. Keytrade has also been responsible for exclusive imports of UAN into North American markets. In 2011, Keytrade diversified and expanded its global trading activities by adding grains, meals and proteins, and other related agricultural commodities to its portfolio.

Koch acquires Farmers Plant Food

Wichita — Koch FPF Holdings LLC, a subsidiary of Koch Fertilizer LLC, has acquired Farmers Plant Food Inc., a leading privately-held fertilizer manufacturer and distributor of value-added fertilizer products and services. The company is based in Garretson, S.D., with production and distribution facilities in Garretson, Wolsey, and Corson, S.D. and Verdi, Minn. Kevin Baum, president of Farmers Plant Food, will remain with the business on a consulting basis to assist in the transition. Terms of the transaction were not disclosed. “With the addition of new products and growth of our storage and distribution networks, this move supports our overall expansion efforts while providing value for our customers and suppliers,” said Steve Packebush, Koch Fertilizer president. “In today’s evolving fertilizer marketplace, customers are demanding greater performance and higher overall service responsiveness. This move will help us better meet both of those objectives.” Farmers Plant Food was founded in 1980 by Baum in Garretson as a regional fertilizer distributor of UAN and manufacturer of ammonium polyphosphate (APP). The business has expanded into other value-added liquid fertilizer products in recent years, and has approximately 90,000 st of liquid storage capacity serviceable by both rail and truck. In addition to its liquid fertilizer business, Farmers Plant Food also markets dry fertilizer in the Upper Midwest. “Farmers Plant Food’s liquid phosphorus and specialty plant food products are an excellent fit for Koch Fertilizer’s portfolio,” said Scott McGinn, Koch Nitrogen’s North America senior vice president. “The addition of these top-quality products, established customer base, and solid distribution network should significantly enhance our presence in this growing market.”

The Week in Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 98.41 98.42 68.06
CF Industries CF 201.41 204.28 145.81
CVR Partners UAN 24.54 25.43 21.70
Intrepid Potash IPI 20.87 21.34 23.50
Mosaic MOS 56.15 55.83 52.33
PotashCorp* POT 40.14> 40.23 42.10
Rentech Nitrogen RNF 37.57 38.12 16.97
Terra Nitrogen TNH 212.84 212.40 153.92
Distribution/Retail
Andersons Inc. ANDE 43.44 44.72 45.49
Deere & Co. DE 85.94 86.75 78.44
Scotts SMG 43.86 43.73 46.16
* represents three-for-one stock split

PHI reports 3Q loss, extends rock deal

Madison, Miss. — Phosphate Holdings Inc., which owns Pascagoula phosphate producer Mississippi Phosphates Corp., reported a third-quarter net loss of $4.8 million ($0.57 per diluted share of common stock), compared to the year-ago net income of $1.5 million ($0.18 per share). Third-quarter net sales were $70.3 million, a 26 percent decrease from the year-ago $94.7 million. The average sales price of DAP was $496/st FOB, a 14 percent decrease from the year-ago $578/st. During the third quarter, PHI sold 140,258 st of DAP, with 31,335 st moving into export markets and 108,923 st into domestic. This compares with 162,761 st of DAP sold in the third quarter of 2011. PHI had an operating loss of $7.6 million for the third quarter versus year-ago operating income of $2.7 million, while EBITDA was a negative $3.7 million, down from the year-ago positive $6.6 million. PHI reported a nine-month loss of $5 million on sales of $244.3 million, versus the year-ago loss of $232,000 on sales of $246.5 million. PHI had a nine-month operating loss of $7.5 million, versus a year-ago positive income of $144,000. Nine-month EBITDA was a positive $4 million, down from the year $12.4 million. As of Sept. 30, 2012, PHI had a cash balance of approximately $2.9 million and borrowings under its credit agreement of $14.4 million. During the third quarter, the company expended $2.8 million on capital expenditures. On Nov. 30, 2012, PHI and OCP S.A. agreed to extend the term of their Agreement for the Purchase and Sale of Phosphate Rock dated Aug. 27, 2009, through June 30, 2013. The agreement was scheduled to expire on Dec. 31, 2012.

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