All Posts from March 4, 2013

Rentech makes R&D cuts

News, News Briefs

Los Angeles — Rentech Inc. on Feb. 28 announced major cuts in its energy research and development business, as the company continues to focus on other energy businesses as well as its profitable nitrogen business. Rentech plans to cease operations at, reduce staffing at, and mothball its research and development (R&D) Product Demonstration Unit (PDU) in Commerce City, Colo., and eliminate all related R&D activities. The company’s strategy is focused on more immediate growth opportunities within the energy industry that do not rely on new technologies. “Our success in growing Rentech Nitrogen and generating attractive returns from that business is the best example to date of the disciplined investment approach that we will follow as we consider additional investment,” said D. Hunt Ramsbottom, Rentech president and CEO. Rentech will eliminate 65 employee and contractor positions in the company’s alternative energy segment during the first half of 2013. It will attempt to sell the PDU, as well as approximately 450 acres of land in Natchez, Miss., it acquired for the development of an alternative energy facility. Rentech expects to incur a one-time non-cash impairment charge to intangible assets related to its technology of approximately $16 million in its financial statements for the period ended Dec. 31, 2012.

Agrium releases proxy circular

Breaking Industry News

Agrium Inc. said today that it has commenced mailing its Proxy Circular in advance of the Annual General Meeting of Shareholders that will take place in Calgary, Alberta on April 9, 2013.

The proxy circular includes a letter to Agrium shareholders from Board Chair Victor Zaleschuk, as well as detailed reasons why Agrium shareholders should vote for Agrium’s board slate.

"This is a simple choice between Agrium’s highly successful strategy that has delivered two consecutive years of record financial results and generated a 467 percent shareholder return since 2005, versus Jana Partners’ ill-conceived scheme to break up the company and take other actions that will destroy shareholder value," said Zaleschuk. "Agrium shareholders need to act today to protect the value of their investment by voting for Agrium’s board nominees."

Agrium said Jana’s vision is to abandon Agrium’s current strategy, break itself into three small pieces, and take other actions that will destroy shareholder value.

Agrium also suggests that Jana’s five board nominees are bought and paid for. “It is important to note that Jana’s dissident nominees have agreed to accept special incentive payments from Jana for serving on Agrium’s board,” Agrium said. “These payments are structured to incentivize short-term actions, even if they are taken at the expense of greater long-term value. This kind of "golden leash" arrangement is unheard of in Canada and raises serious questions about the independence of Jana’s nominees, and their ability to act in the best interests of all shareholders.”

“Jana’s campaign isn’t about corporate governance, operating performance, or board experience,” said Agrium. “It is a Trojan Horse tactic aimed at securing board seats that Jana can then use to further its agenda of breaking up Agrium.”

Correction regarding JDC Phosphate

News, News Briefs

Ft. Meade, Fla. — JDC Phosphate’s new phosphate production technology does use water for cooling, contrary to last week’s news item (GM Feb. 25, p. 10). However, the process does not discharge water, according to the company. Also, going forward, the company is envisioning a production plant for commercial applications of 200,000 tons of P205, not phosphate rock.

Atlantic plans specialty fertilizer plant

News, News Briefs

Saint John, NB — Atlantic Potash Corp. said Feb. 25 that it plans to construct a specialty fertilizer production facility in Saint John. The facility would be developed on approximately 100 acres of land in McAllister Industrial Park and is expected to cost C$350 million, creating over 1,200 jobs during construction. It is anticipated that once operational, the facility would generate over 1,300 jobs, more than $40 million in wages and salaries, approximately $344 million in expenditures, and $4 million in municipal taxes annually. “Global demand for fertilizer is growing quickly,” said Keith Attoe, Atlantic Potash Corp. director. “Our plan with this new facility is to produce and export 380,000 tons annually of the highest quality fertilizers from Saint John to buyers in markets including Europe and South America.” The proposed facility would produce three potash-based specialty fertilizers, which include urea, potassium nitrate, and ammonium chloride. Potash would be supplied locally and imported to the fertilizer production facility. The next 24 months will see Atlantic Potash undertaking mandatory regulatory approval processes. Construction is anticipated to be completed approximately two years thereafter. Production is expected in 2017. In the meantime, the company is in the midst of exploration and development of the Millstream potash project near Sussex. However, the new facility at Saint John is not contingent on this project being developed, as the company believes it can source potash elsewhere.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 103.45 106.84 85.53
CF Industries CF 200.83 203.93 191.56
CVR Partners UAN 26.55 25.33 24.73
Intrepid Potash IPI 19.71 19.48 25.97
Mosaic MOS 58.54 57.73 59.26
PotashCorp* POT 40.09 39.60 47.13
Rentech Nitrogen RNF 41.00 39.79 22.69
Terra Nitrogen TNH 234.50 230.06 215.70
Distribution/Retail
Andersons Inc. ANDE 49.08 48.68 42.77
Deere & Co. DE 87.83 87.06 83.33
Scotts SMG 44.31 43.48 45.99
* represents three-for-one stock split

FNA lines up help for N project

News, News Briefs

Saskatoon — Farmers of North America Fertilizer LP said Feb. 28 that it has designated the corporate consulting and accounting firm MNP LLP to study and assist in the design of the sales and distribution structure for the ProjectN nitrogen fertilizer plant. MNP LLP has an active presence in agriculture with many farm clients, as well as being a major player in corporate research and business systems design. MNP LLP will also assist in the development of the supply agreements that will be provided to farmer-owners of the plant. Previously, BMO Capital Markets was appointed as the capital development and business advisor, while Stantec Inc. was appointed as the lead for financial modeling, engineering, and creation of the Bankable Feasibility Study. Bob Friesen, FNA FLP spokesperson, called the MNP engagement a reaffirmation of the confidence farmers can have in the process of building a fertilizer facility. "At every turn we have been able to bring the best talent in the world to this project," Friesen said. "We are well along the project plan, exercising care, but moving at pace, so we not only get the plant built, but we get it built with the best minds, best designs, and best economics for all business partners." ProjectN is currently offering a Series 2 Seed Capital program that will provide an additional opportunity for farmers not yet part of the FNA membership to participate in FNA FLP and allow ProjectN to maximize plant capacity and create greater potential for returns to farmers. FNA is a farmers’ business alliance with the mission of "Improving Farm Profitability."

Bonds proposed for five BioNitrogen plants

Breaking Industry News

The Louisiana Community Development Authority (LCDA) has granted preliminary approval of the issuance of up to $1.25 billion in tax-exempt bonds to BioNitrogen Louisiana Holdings LLC, a unit of BioNitrogen Corp., Doral, Fla., for the acquisition, development, and construction of five biomass-to-urea plants in Pointe Coupee Parish, La. The LCDA’s action clears the way for the company to proceed to the Louisiana State Bond Commission for approval.

BioNitrogen also signed a letter of intent to purchase approximately 250 acres of land in Pointe Coupee Parish for the construction of the plants. The land, which is adjacent to the Lettsworth Port owned by the Pointe Coupee Port Commission, is located 65 miles north of Baton Rouge on the Lower Old River, a tributary connecting the Red River and the Mississippi River west of the Old River Lock.

BioNitrogen intends to contract KBR to engineer and construct the five plants on the land, which will be built in parallel with the Hardee County facilities in Florida. The proposed five plants are projected to produce up to 621,000 st/y of urea.

More details will come in the Green Markets Web Edition March 1.

County finalizes OCI/IFCo fertilizer deal

News, News Briefs

Fort Madison, Iowa — Lee County has finalized the deal for the $1.4 billion nitrogen fertilizer plant to be built by Orascom Construction Industries/Iowa Fertilizer Co. in the county. That came at a special meeting Friday, Feb. 22, when the County Board of Supervisors gave its enthusiastic final approval to all of the terms of the financial assistance that will be provided by federal, state, and county governments. “It will be a big economic boost,” Lee County Auditor Denise Fraise declared. “Everybody is very excited about the prospect of a total of 3,500 workers over a period of three years on the construction alone. It was a team effort with our supervisors and the economic development, and also the Southeast Iowa Regional Planning Commission.” Terms of the contract include that assistance from Lee County is coming as “in kind” contributions through tax incentives. $1.61 million would come from the Grow Iowa Values Fund. The bulk of the award is coming from the federal government in the form of Midwest Disaster bonds, which will give the company more than a billion dollars to use to construct the plant south of Wever. The OCI deal also was in the legislative spotlight Feb. 26, when Iowa Economic Development Authority (IEDA) Director Debi Durham appeared before the Senate Ways and Means Committee and received tough questioning over the incentives given for the new plant and the scope of the due diligence that was used in investigating OCI. At one point Durham admitted that she didn’t know that an OCI subsidiary was involved in a federal lawsuit even though the information had been uncovered by members of her staff. Authority spokeswoman Tina Hoffman told Green Markets that while Durham wasn’t personally aware of the lawsuit, the IEDA finance team came across it and noted it in the file. Senate critics were happy to get the jobs, but were concerned over the incentives.

LSB 4Q Chem income off 52 percent

News, News Briefs

Oklahoma City — Unplanned production problems at three of its nitrogen plants, two of which occurred in the fourth quarter, helped spur a 52 percent drop in LSB Industries Inc.’s Chemical segment operating income in the fourth quarter ending Dec. 31, 2012. Income dropped to $15.1 million on sales of $105.3 million, compared to the year-ago $37.6 million on sales of $142 million. Fourth-quarter income was reduced by $29 million due to the problems at the three plants. LSB said it lost $12 million due to the mid-November outage at its Pryor, Okla., facility. It is in the process of putting a new ammonia converter in at Pryor, and expects the facility to resume and sustain production in March. A mid-November pipe rupture that damaged an ammonia heat exchanger resulted in problems at the Cherokee, Ala., plant and LSB said the incident cost it $13 million during the quarter due to lost production and the higher cost of purchased ammonia. LSB expects Cherokee repairs to be completed in May. An explosion at the El Dorado plant cost LSB some $4 million during the quarter, and will cost $1-$2 million per month until a new nitric acid plant is built. Its completion is expected in first quarter 2015. The cumulative effect of the incidents for the year was $83 million. LSB said it has begun a concerted program to attempt to improve the reliability and mechanical integrity of its chemical facilities. Full-year Chemical income was $82.1 million on sales of $477.8 million, compared to 2011’s $116.6 million on sales of $511.8 million. Company-wide, LSB reported fourth-quarter net income applicable to common stock of $11.6 million ($0.49 per diluted share) on sales of $117.1 million, versus the year-ago $28 million ($1.19 per share) on sales of $215.4 million. Full-year net income was $58.3 million ($2.49 per share) on sales of $759 million, versus 2011’s $83.5 million ($3.58 per share) on sales of $805.2 million.

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