All Posts from October 4, 2019

WTO Backs U.S. in Airbus Trade Dispute; Tariffs Coming on E.U. Goods, but not Fertilizer

Europe, Featured, News, U.S.

The World Trade Organization (WTO) on Oct. 2 backed a U.S. request to impose $7.5 billion in tariffs on European imports in response to charges that illegal subsidies were granted to European airplane manufacturer Airbus by numerous E.U. governments. The U.S. first lodged its complaint back in 2004.

The U.S. Trade Representative (USTR) late on Oct. 2 published a final list of E.U. products that will be subject to U.S. tariffs, but nitrogen fertilizers were not mentioned. An initial list was published by the USTR last April, but a supplemental list released in July included some fertilizer products, including anhydrous ammonia, urea, UAN, ammonium sulfate, and ammonium nitrate (GM July 12, p. 1)

The ruling is the largest arbitration award in WTO history, and represents a significant development in the 15-year long Airbus-Boeing battle in that it is the first time the U.S. has been cleared under international trade law to impose countermeasures on E.U. imports. In response to the ruling, the E.U. threatened retaliation to any U.S.-imposed tariffs.

“If the U.S. decides to impose WTO authorized countermeasures, it will be pushing the E.U. into a situation where we will have no other option than do the same,” Brussels said in a statement.

The planned tariffs and duties that are scheduled to take effect on Oct. 18 include a 10 percent tariff on large civil aircraft from Frances, Germany, Spain, and the U.K., and 25 percent levies on a wide range of other items, including Irish and Scotch whiskeys, wine, olives and cheese, certain pork products, butter, and yogurt from various European nations. In addition to fertilizer, leather goods were also omitted from the final list after being included in earlier versions.

The USTR has asked the WTO to schedule an Oct. 14 meeting to formally authorize the tariffs. Citing a senior U.S. trade official who briefed reporters on Oct. 2, Bloomberg reported that the goal of the Trump administration in imposing retaliatory duties is to persuade the E.U. to reach a negotiated settlement.

EuroChem Inks MoI for Possible New N Plant in Northwest Russia

Ammonia, Europe, Featured, Methanol, News, Russia, Urea

EuroChem Group AG, Zug, Switzerland, announced on Oct.1 that it has signed an early works contract with Italy’s Maire Tecnimont for a potential new ammonia and urea production facility at Kingisepp in northwest Russia, subject to further investment plan approval.

Under the terms of the agreement, Tecnimont SpA and Tecnimont Russia LLC – both subsidiaries of Maire Tecnimont – will perform preliminary engineering and site surveying work at the brownfield site adjacent to EuroChem’s existing production facilities at Kingisepp.

The Memorandum of Intent (MoI) includes an extension into Engineering Procurement and Construction (EPC) activities should EuroChem’s investment plan in the project go forward. According to Marie Tecnimont, the proposed €1 billion project would have capacity for 3,000 mt/day of ammonia and 4,000 mt/day of urea once fully ramped up.

“Expansion of production facilities is a strategic goal for us and part of the next chapter of our growth story,” said EuroChem CEO Petter Østbø. “We are pleased to take the next step toward considering building this world-scale plant with Maire Tecnimont, a company that we have worked with closely for many years.”

Østbø said in London last month that EuroChem was keen to build new nitrogen production facilities, but the location remained open. In June, EuroChem confirmed that it was assessing further production capacity at Kingisepp, reporting that it had signed a letter of intent with Russia’s Industry and Trade Ministry and Leningrad region authorities to build further production facilities for ammonia, urea, and methanol (GM June 14, p. 1; Aug. 9, p. 29).

At the time, there was talk that the proposed new plants would be capable of producing about 1 million mt/y of ammonia, 1.2 million mt/y of urea, and up to 1.7 million mt/y of methanol, although the addition of methanol capacity at Kingisepp was seen as a potential later-stage project. EuroChem cautioned, however, that no final investment decision had been taken.

EuroChem started up a new 1 million mt/y ammonia plant at Kingisepp in early June, which, according to the producer, has the largest single train ammonia production capacity in Europe (GM June 7, p. 1). Maire Tecnimont was the general designer and contractor for the construction of that facility, known as “EuroChem Northwest.” The plant reached the half-million mt milestone on Sept. 16 (GM Sept. 20, p. 3), and has enabled EuroChem to become self-sufficient in ammonia.

Output from EuroChem Northwest goes to the group’s fertilizer production plants in Antwerp, Belgium; Lifosa in Lithuania; and Phosphorit, the group’s adjacent phosphates facility in Kingisepp (GM Aug. 2, p. 30). Ultimately, around 25-30 percent of the output is earmarked for sale to third parties, with some merchant sales already completed.

OCI, ADNOC Close Agreement, Establish Fertiglobe

ADNOC - Abu Dhabi, Ammonia, Europe, Featured, News, Urea

Netherlands-based OCI NV and Abu Dhabi National Oil Co. (ADNOC) on Sept. 30 announced the completion of their transaction to combine ADNOC’s fertilizer business into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform, creating a world-leading joint venture operating under the name Fertiglobe.

Fertiglobe will be the largest export-focused nitrogen fertilizer platform globally, and the largest producer in the MENA region, with a production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia, the two companies said. The combined saleable capacity represents approximately 10 percent of 2018’s combined ammonia and urea global seaborne exports, according to OCI.

“The new combined company is underpinned by a young asset base and a robust storage and distribution infrastructure with access to key ports on the Mediterranean, Red Sea, and Arabian Gulf,” OCI and ADNOC said in their combined media statement. “Fertiglobe’s complementary production and distribution locations bring geographical diversity and enhanced market access, benefiting both existing and new customers.”

The two companies first revealed their plans in June to combine their Middle East and North African fertilizer assets in a new joint venture (GM June 21, p. 1). The transaction will place the OCI companies EBIC, EFC, and Sorfert, and the former ADNOC Fertilizers (Fertil) under the ownership of the new Fertiglobe joint venture. The new company will have more than $1.7 billion of annual revenues based on 2018 pro-forma figures.

Fertiglobe started trading on Oct.1 and is headquartered in the international financial center Abu Dhabi Global Market. OCI owns a 58 percent stake in Fertiglobe, and ADNOC a 42 percent stake. The new entity will be headed by OCI NV CEO Nassef Sawiris. OCI will fully consolidate the combined business, which is expected to generate $60-$75 million in annual synergies, predominately through commercial synergies, the companies said.

Ostara to Increase Crystal Green Production Through Tolling Agreement

Featured, News, Specialty, Vancouver

Ostara Nutrient Recovery Technologies Inc., Vancouver, B.C., announced on Oct. 2 that it has entered into a long-term granulation tolling agreement to ramp up production of its Crystal Green sustainable phosphorus-based fertilizer products at a facility in the southeastern U.S.

First production at the commercial tolling facility is expected to start on Oct. 15, and will scale up with the completion of necessary equipment upgrades and the receipt of pending regulatory approvals. While the specific location of the facility was not revealed due to confidentiality agreements, Ostara confirmed that it is in Florida. The company expects to reach full production capacity at the facility in early 2020.

“Market demand for our products significantly exceeds our existing production capabilities, and this partnership allows us to put some recently-acquired patented production technologies to work at an established facility with significant storage capacity, rail and truck access and other accretive infrastructures,” said Ryan DeBerry, Ostara’s Chief Operating Officer.

Ostara is a privately held company and does not disclose operational or financial metrics, but DeBerry said the new tolling agreement effectively triples the company’s existing production volumes. He said Ostara continues to seek new sources of production, and intends to add significant further capacity in the near-term.

“Over the past 12 months we have experienced significant uptick in market interest for Crystal Green and Crystal Green Synchro™, our co-granulated Crystal Green/MAP product,” said Dan Parmar, Ostara President and CEO. Parmar told Green Markets that Ostara’s early season orders have significantly exceeded total sales from the company’s last fiscal year.

“This new production will help meet the volumes demanded by Ostara’s ever-expanding customer base that includes North America’s largest and most well-established ag retailers and farmers, who demand our Crystal Green products for their proven ability to significantly increase crop yields and substantially reduce nutrient run-off,” he said.

Ostara’s Pearl technology recovers phosphorus and nitrogen from industrial, agricultural, and municipal water streams, and converts it into the company’s slow-release Crystal Green fertilizers, which are sold into the agriculture and turf markets through a network of distributors in North America and Europe.

Ostara currently has 22 nutrient recovery facilities located around the world, including four nutrient recovery facilities in Europe and the Middle East. “We are currently working with select companies in Europe to expand our local production capabilities, as this year’s agronomic results continue to show significant crop yield enhancement on European farms,” Parmar said.

Nutrien Announces Close of Ruralco Acquisition

Australia, Canada, Featured, News

Nutrien Ltd., Saskatoon, Sask., on Sept. 30 announced the close of its acquisition of Ruralco Holdings Limited in Hobart, Tasmania. Nutrien said the combination of Ruralco’s business with its Landmark operations is expected to provide significant benefits for stakeholders and enhance the delivery of products and services to Australian farmers.

Ruralco is one of Australia’s leading agribusinesses, with 216 farm centers and more than 500 locations company-wide. The company supplies approximately 244 independent member retailers through its 157 rural merchandise locations, and employs more than 2,000 staff under a variety of brands. Ruralco is also a leading distributor of water products, provider of water infrastructure services, and broker of water entitlements to the Australian agricultural sector.

Nutrien announced in February 2019 that it had entered into a binding agreement to acquire all the shares of Ruralco at a price of A$4.40 per share, for a total purchase price of $469 million (GM March 1, p. 1).

The Australian Competition and Consumer Commission (ACCC) raised some competitive concerns about the transaction in June (GM June 14, p. 25), but ultimately gave its approval in August (GM Aug. 23, p. 1) after saying it would require Nutrien to divest three rural merchandise stores located in Broome, Western Australia, Alice Springs, Northern Territory, and Hughenden, Queensland, to a purchaser approved by the ACCC (GM Aug. 2, p. 30).

Nutrien said it has steadily grown its retail business and earnings in Australia, with annual EBITDA expected to surpass US$230 million in 2020, of which approximately US$70 million is anticipated to come from the Ruralco acquisition, after accounting for expected synergies.

Nutrien’s Landmark subsidiary has more than 200 locations serving 100,000 clients in Australia. In addition to ag inputs, Landmark is also involved in livestock, wool, real estate, insurance, and finance. Nutrien’s predecessor, Agrium Inc., bought Landmark in 2010, and the company said it has tripled its EBITDA.

Company-wide, Ruralco reported net profit after tax (NPAT) of $25.2 million on revenues of $1.91 billion for the year ending Sept. 30, 2018, up from 2017’s $22.4 million and $1.83 billion.

Compass Minerals – Management Brief

Management Briefs, Specialty

Compass Minerals, Overland Park, Kan., announced on Oct. 1 that Luis Montiel has been named as the company’s new Vice President, Finance and Treasurer. In this position, Montiel will be responsible for leading the development of the organization’s strategic and annual operating plans, as well as ongoing financial planning and analysis. Additionally, he will manage the company’s capital structure and enterprise risk management, as well as provide strategic leadership and support for external strategic opportunities and investor relations activities.

Montiel brings 20 years of finance and accounting experience with both public and private companies ranging in size from $60 million to $25 billion in annual revenue. Before joining Compass, he served as Global Head of Financial Planning and Analysis for Jabil, a manufacturing services company with more than 200,000 employees and facilities in 29 countries.

Montiel holds a B.A. in finance from Flagler College and a Bachelor of Business Administration in Accounting from the University of North Florida, as well as an MBA from the University of Virginia. He is also a Certified Public Accountant and a Certified Treasury Professional.

Intrepid Potash – Management Brief

Management Briefs

Intrepid Potash, Denver, Colo., announced on Sept. 30 that it has hired Dr. Libby Rens as an Agronomist and Technical Sales Manager. Rens will work with Intrepid’s sales and marketing group to provide agronomic support for domestic and international potash and Trio customers, and will also support the group on key organic crop nutrient initiatives that Intrepid is undertaking related to its OMRI-listed product offerings.

Rens comes to Intrepid with more than 13 years of agriculture and research experience, particularly related to soil fertility and diverse crop profiles. She served as a Senior Field Research Scientist with The Climate Corporation, Bayer Crop Science’s digital agriculture platform. Prior to that she directed field testing of fresh market vegetable varieties with Monsanto Vegetable Seeds. Rens holds a PhD from the University of Florida, where she worked with commercial potato growers on improving nitrogen and irrigation efficiency.

Saudi Arabian Mining Co. – Management Brief

Management Briefs, Saudi Arabia

Saudi Arabian Mining Co. (Ma’aden), Riyadh, announced on Sept. 29 that it has appointed Public Investment Fund (PIF) Governor Yasir al-Rumayyan as its Chairman. The PIF is Ma’aden’s largest shareholder, holding a 65.43 percent stake.

Al-Rumayyan has been appointed as the PIF’s representative on the Ma’aden board, replacing Saudi Energy Minister Khalid al-Falih, who resigned from the role. Al-Falih was also Chairman of Saudi Aramco until recently.

 

Groundbreaking Held for U.S. Valagro Plant

Europe, News, News Briefs, Southeast, Specialty

Valagro, a biostimulants and nutritional specialties producer based in Atessa, Italy, held a groundbreaking ceremony on Oct. 1 for a new production facility in Orangeburg, S.C., its first in the U.S. The company said the new plant will introduce “cutting-edge technologies” for the production of plant biostimulants and chelated micronutrients in the U.S., and will provide nearly 50 advanced manufacturing jobs when open.

Valagro CEO Giuseppe Natale said the company is also launching its Valagro for Future Farming initiative to advance the use of biological products in agriculture and provide innovative sustainable agriculture solutions for North American customers.

“The new American plant is a fundamental part of Valagro’s global production strategy and is further evidence of the company’s continued and solid global growth,” said Natale. “The Orangeburg plant will be a facility for innovation, where science is applied to agriculture to produce solutions that can help growers obtain more abundant and better quality harvests more efficiently. And this is our commitment.”

Valagro said the groundbreaking ceremony was attended by nearly 70 guests, including local and state officials and a number of federal agency representatives, among them South Carolina Governor Henry McMaster and Secretary of Commerce Bobby Hitt.

“Today, we celebrate yet another international firm choosing to do business in South Carolina, a further testament to our business-friendly climate and well-trained workforce,” said McMaster. “I congratulate Valagro and Orangeburg County on this terrific new partnership and look forward to watching it thrive for years to come.”

Founded in 1980 in Abruzzo, Italy, Valagro currently operates biostimulant and fertilizer production facilities in Atessa, two in Norway, two in India, and one in Brazil. The company has 12 subsidiaries located throughout the world. In July, the company announced a strategic partnership to collaborate on research and development efforts with Marrone Bio Innovations Inc. in Davis, Calif. (GM July 12, p. 28)

“We’re delighted that Valagro has selected Orangeburg County for its next facility,” said Mike Brenan, Chairman of the Central South Carolina Alliance. “The company’s expansion into Orangeburg County is a boon for the local economy and workforce, and further confirms South Carolina’s position as a strong competitor in attracting international companies looking to grow their business in the U.S.”

Prospects Dimming for Sirius Polyhalite Project

England, News, News Briefs, Polyhalite, Specialty

Sirius Minerals plc’s North Yorkshire polyhalite mine and processing plant under development in northeast England now has only a 25 percent probability of completion, analysts at the London branch of Germany’s Berenberg believe, according to a Bloomberg report. They had earlier assumed a 50 percent probability of project completion.

In a note to clients, Berenberg analysts Rikin Patel and Edward Wales said they still hold the view that polyhalite would be a marketable product and that the North Yorkshire project fundamentals are positive. Following Sirius’ failed bond issue last month, however, they said the risks of securing financing are seen as outweighing the potential returns. Even in a best-case scenario, further delays to start-up are likely. Up until recent events, Sirius had been touting first polyhalite output in 2021.

Sirius reported last month that it had cancelled plans to raise US$500 million through a bond issue (GM Sept. 20, p. 1). The bond raising had been a critical part of the US$3.8 billion Stage 2 financing needed to complete the project, and its successful completion was key to unlocking a US$2.5 billion revolving credit facility (RCF) from JP Morgan Securities LLC (GM May 3, p. 1). Sirius blamed market conditions, including Brexit and a lack of U.K. government support, for its decision to cancel the bond raising.

Patel believes a strategic investor could be the only lifeline left for the company, given that there now appears to be little prospect in the foreseeable future of a financial package provided by the U.K. government, according to Bloomberg, citing the investor note.

Following the decision to abandon the bond issue, Sirius last month began slowing construction at the project site in order to conserve funds as it began a six-month strategic review to assess and incorporate optimizations to the project development plan that could reduce overall capital costs and reduce risk to debt holders. The company also said it is looking for financing alternatives, including the potential to bring in a partner for the acquisition of “a significant part” of the project.

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