All Posts from January 5, 2024

Anglo Reportedly Seeking Investors for UK Polyhalite Project

Brazil, Europe, Featured, Polyhalite

Anglo American plc is reportedly looking for a potential investment partner or partners to share the costs of its giant Woodsmith polyhalite mine project in northeast England, according to a report in The Times, and has already begun to identify potential investors before starting a formal sales process for a stake in Woodsmith.

Anglo has long indicated it would consider partnering or syndication for the polyhalite project “at the right time, for the right value, and with the right partner” as part of the company’s longer-term strategy. At a company presentation on Dec. 8, CEO Duncan Wanblad told analysts and investors that Anglo “continues at pace” to find a partner for the project, which is under development near Whitby in North Yorkshire.

Recent media reports speculated that Anglo is looking to line up one or more investors to buy into the project by early 2025, seemingly before Woodsmith is put to the company’s Board for final approval. A 49% stake is reportedly expected to be offered with Anglo maintaining control.

However, a spokesperson for Anglothis week said the company does not comment on media speculation and had no information to add to Wanblad’s Dec. 8 statement.

These developments come at a time when Anglo itself could become a takeover target after it warned last month of a weaker-than-expected production outlook. Analysts noted that £30 billion (approximately $37.9 billion at current exchange rates) had been lost from the value of Anglo since Wanblad took over from longstanding CEO Mark Cutifani in April 2022.

Anglo reported in February 2023 that it had taken a $1.7 billion write-down on the Woodsmith project, saying the recognition of the impairment was due to the extension of the development schedule and the capital budget from what was previously anticipated (GM Feb. 24, 2023).

Anglo in December 2023 said it still expects the capex for the Woodsmith project to be around $1 billion for the next few years, which is a step-up from the budgeted capex of about $0.7 billion for 2023. Some media outlets recently put the total capex for Woodsmith at some $9 billion, but the Anglo spokesperson said the company has not provided a total capital cost for the polyhalite project.

Anglo is targeting potential Board approval for Woodsmith in 2025 for an expected 5 million mt/y operation by 2030, including a clear pathway to 13 million mt/y. First production is still expected to be in 2027, which is also when the company plans to sell the first product to the market and to start the mine ramp-up. The processed polyhalite will be marketed as Poly4.

However, Anglo Crop Nutrients CEO Tom McCulley made clear to analysts and investors on Oct. 3 that everything is subject to studies and ongoing capex approvals. A spokesperson for Anglo this week declined to comment on whether the company would initially sell raw ore or seek to secure a tolling/processing arrangement, depending on the nature of any potential investor partnership for the project, or via one of its offtake partners.

In addition to building the polyhalite mine near Whitby, the project includes the development of a 37-kilometer underground conveyor, or mineral transport system, to take the mined ore to a materials handling and processing facility on the North Yorkshire coast at Wilton, Teeside, and the development of a terminal at Redcar, Teeside, to handle export shipments.

Anglo acquired the polyhalite project in March 2020 via its acquisition of the financially collapsing Sirius Minerals plc, the project’s initiator (GM March 20, 2020). Anglo paid £404.9 million (approximately $481 million at March 2020 exchange rates) for Sirius, angering some investors who considered the price “low ball” and “bargain basement.” Anglo at the time defended its offer, however, saying it was “fair and reasonable” given the outstanding capex requirements of the polyhalite project.

In terms of potential partnerships, Anglo owns a 30% stake in Brazil’s Cibra Group Companies through it takeover of Sirius. The original deal completed by Sirius was linked to an agreement with Cibra for the supply and resale of Poly4 into Brazil and other South American countries. Through the acquisition of Sirius, Anglo also has offtake deals in place with Europe’s BayWa, ADM for North America, IFFCO, and Wilmar in Southeast Asia.

Petrobras, Unigel Sign Tolling Agreement; Unigel Updates on Plants, Sale, Finances

Ammonia, Brazil, Featured, Green Hydrogen, Mexico, Natural Gas, Nitrogen

Brazil’s state-owned oil and gas company Petróleo Brasileiro SA (Petrobras) on Dec. 29 reported that it signed a contract with financially troubled fertilizer and chemical producer Unigel Participações SA for industrialization on order (tolling agreement) for the production of fertilizers at the Sergipe and Bahia plants. No further details were provided.

Unigel has been leasing the two nitrogen plants from Petrobras (GM Aug. 14, 2020) but struggled in 2023 due to high natural gas prices and low fertilizer prices. Petrobras said the partnership is in line with its Strategic Plan 2024-2028+ for fertilizer production.

Petrobras said last June that it had started talks with Unigel to analyze joint projects in fertilizers, green hydrogen, and low carbon initiatives (GM June 9, 2023). It said studies with Unigel as to the production of low-carbon projects will continue.

Unigel gave an update on the status of its Agro (Fertilizer) and Chemical plants as of Dec. 22, saying it halted production at both fertilizer plants in June and August to control inventories. It said currently that only the Sergipe plant is in production and is focusing on urea and ammonia.

As for its Chemicals division, styrenics production was temporarily halted at Camaçari for only a few days during the year and at Cubatão from June to August. The polystyrene plant at Sao Jose dos Campos was down from June through mid-November. Currently, it said all plants are operational.

In acrylics, the acrylonitrile plant remains idled, and methacrylates have been running at only half capacity since June. The acrylic sheet plant in Mexico and the sodium cyanide plant in Brazil have continued to operate normally.

Unigel said it could not reveal the value of the recently announced sale of its Mexican acrylic sheets plant until the deal actually closes, and noted that the most significant precondition to closing is approval by Mexican antitrust authorities. However, Unigel said the sale involves a substantial capital infusion that will be used to strengthen the company’s cash position.

Unigel’s losses piled up in the third quarter as sustained lower global prices of urea and ammonia pressured the cash-strained fertilizer maker’s operations. The release of third-quarter figures on Dec. 22 came a day after second-quarter results, which were also overdue.

The company, which filed for temporary protection from creditors in December (GM Dec. 8, 2023), had a third-quarter loss of R$524 million ($108 million) compared with a year-ago loss of R$19 million. Revenues shrank to R$972 million from R$2.43 billion, while adjusted EBITDA was a negative R$149 million versus the year-ago positive R$433 million.   

Unigel’s net debt rose to R$4.24 billion ($847 million) from December 2022’s R$2.23 billion ($465 million).

Unigel reported a nine-month net loss of R$1.06 billion on revenues of R$4.1 billion, versus the year-ago net income of R$491 million and R$7.52 billion, respectively. Adjusted EBITDA was a loss of R$276 million ($58 million), down from the year-ago positive R$1.65 billion ($332 million). Unigel attributed the nine-month loss primarily to the performance of its Agro segment, which posted a negative result of R$266 million.  

Results were partially affected by measures to shore up liquidity such as offering discounts to reduce stockpiles, the firm said. It also lost income by shuttering some of its plants. 

Unigel breached lending agreements for local bonds that require it to keep the ratio below or at 3.5 times. Its dollar bonds, which last changed hands at 30 cents, already trade at distressed levels.

The company entered a mediation process with creditors over its debt restructuring, and executions on its debt were suspended temporarily (GM Dec. 15, 2023). 

Chile’s SQM Inks Long-Term Mining Agreement

Chile, Featured, Lithium

SQM, the world’s second-largest lithium producer, has reached a framework agreement to hand over a majority stake in its prized Chilean brine assets to state-owned Codelco in exchange for extending operations for three more decades.

If ratified, the deal would allow the new public-private partnership to increase output at one of the world’s richest sources of lithium. It is also a critical first step in the government’s model for opening up new areas for producing the key component in electric-vehicle batteries as demand accelerates in the energy transition.

After several months of talks, the two negotiating teams led by SQM CEO Ricardo Ramos and Codelco Chairman Maximo Pacheco reached the initial agreement for the development of the Atacama operations for 2025-2060, the two firms said in a Dec. 27 statement. US-listed shares of SQM rose as high as 6% on Dec. 28, the highest intraday since August, according to Bloomberg.

Under terms of the Memorandum of Understanding, a new operating company will take over the assets from 2025, with Codelco owning 50% +1 and SQM 50% -1.

Through 2030, SQM will retain control over operations with equal board representation, although Codelco will have some veto rights. Then from 2031 through 2060, the operation would switch to a new mining lease to be signed by Codelco, with the state copper behemoth getting both boardroom and operational control, though SQM will have some veto rights.

In terms of sales, the deal supports more than 275,000 mt/y through 2031, though the way it is structured would encourage SQM to target 300,000 mt/y, BMO Capital Markets analyst Joel Jackson wrote.

While the agreement favors Codelco, SQM investors are being offered some relief given the private operator’s current contracts expire in 2030. American Depositary Receipts in the company had dropped more than 20% this year.

“The deal is complicated, but value enhancing for shareholders, which were potentially facing harsher post-2030 scenarios,” Jackson wrote in a note to clients.

A finalized agreement would also give Chilean President Gabriel Boric’s government a much-needed victory in its new public-private model for lithium development. Chile has the world’s largest lithium reserves, but it has been losing market share as output remains restricted to two operations on a single salt flat.

Boric unveiled a new model to develop lithium in April, saying the state will take a controlling stake in future public-private partnerships deposits considered strategically important.

His administration left Codelco in charge of negotiating terms on a case-by-case basis, including with the two incumbent producers, SQM and Albemarle Corp. Albemarle has contracts that run until 2043. Separately, another state firm, Enami, has been tasked with finding partners for smaller salt flats.

MDL Taps Reserve Fund to Pay Bondholders

Featured, Florida, Phosphate Rock, U.S., Vancouver

Secondary recovery phosphate rock producer Mineral Development LLC, Bartow, Fla., tapped into a reserve fund to pay bondholders, according to a regulatory filing by the trustee, UMB Bank NA, on Jan. 3. The trustee used $5.1 million from a debt service reserve fund to make a Jan. 1 debt service payment, the filing said, with about $3.9 million remaining in the fund.

The borrower sold $90 million of debt through the Polk County Industrial Development Authority in 2020. About $85 million of that is still outstanding, according to data compiled by Bloomberg.

MDL broke ground on its $70 million secondary recovery phosphate rock production facility in Polk County, Fla., in 2021 (GM April 2, 2021). The plant is designed to produce 1.2 million st/y of high-quality phosphate rock. MDL’s facility is the first independent phosphate beneficiation plant built in the US in more than 30 years.

The MDL plant started full production in May 2023 and began shipping product to The Mosaic Co. in Tampa, Fla., under a long-term offtake agreement.

While some of the rock is committed domestically, significant volumes will also be available for export. MDL in June 2023 inked a deal with Houston-based Sesco Cement Inc., which will build a dedicated 40,000 st storage building on its 15-acre site at its Red Wing facility at the Port of Tampa. It has committed to handle up to 450,000 st/y of export rock. In addition, MDL will install its 200 tph dryer at the facility to dry rock to 2% moisture to meet customer needs.

MDL has a long-term, exclusive agreement to extract phosphate rock from land owned by Clear Springs Land Co., Winter Haven, Fla. Clear Springs bought the previously mined land from IMC-Agrico, a predecessor of Mosaic, in 1999 for $8.2 million (GM Sept. 13, 1999). Clear Springs has approximately 18,000 acres in Bartow, midway between Tampa and Orlando and within 100 miles of Port Canaveral.

An initial 4,400 acres will supply 18.5 million st to the 30-acre plant site. More Clear Springs and neighboring acreage is expected to supply up to 10 million st for the project and expand the reserve life 20 years or more. MDL said in 2021 that it was exploring additional Clear Springs and neighboring acreage to accommodate a possible second plant.

Secondary recovery reprocesses old mine tailings into high-quality feedstock for fertilizer production. MDL estimates that the process can recover up to 12% of the rock that was missed during the initial mining.

The project only extracts material from land that has been previously mined, the vast majority of which was disturbed before mandatory reclamation regulations. MDL’s operations will primarily use surface water from existing ponds, employ state-of-the-art water recycling methods, and restore the old mining land to current DEP reclamation standards. The process helps restore the land to its original state with native vegetation and natural surface water flow while providing high-grade product.

The company said since the project is on previously mined land and is not a greenfield, it has been well received by regulatory agencies, activist groups, local authorities, neighbors, and landowners.

In October 2020, MDL closed on $118 million in financing that funded the construction of its first plant and provided the working capital necessary to start up operations. It was raised via the $90 million tax-exempt bond issued through the Polk County Industrial Development Authority and $28.5 million of new equity. The tax-free bonds were purchased by large institutional investors. The new equity came from Plenary Capital, an infrastructure investment fund based in Vancouver, B.C.

LSB Merges Six Entities Under LSB Chemical

Ammonia, Featured, Nitrogen

LSB Industries Inc. confirmed that as of Dec. 31, 2023, its previously announced plan (GM Nov. 17,2023) to merge six entities under the LSB Chemical LLC name was implemented, with all purchase orders, invoices, and correspondence from those subsidiaries now issued from LSB Chemical.

The LSB entities that have been consolidated under LSB Chemical include Cherokee Nitrogen LLC, El Dorado Chemical Co., EDC Ag Products Company LLC, El Dorado Ammonia LLC, El Dorado Nitrogen LLC, and Pryor Chemical Co.

Oklahoma City-based LSB said the merger was undertaken “to create a more cohesive and streamlined operation,” and will enable the company “to leverage our combined expertise and resources and enhance our overall efficiency and effectiveness in serving the needs of our customers.”

“Your contacts with the company will not change and you will still be able to reach your contacts at the existing telephone, e-mail, and physical addresses for the immediate future, LSB said in a Dec. 28 letter to customers and suppliers. “This consolidation will not result in any disruption to the supply chain or the continued operation of our facilities as we work to support our customers.”

LSB said any questions about the consolidation should be directed to the company’s Accounts Payable group at AP@lsbindustries.com. If applicable, all questions related to contracts should be directed to notice@lsbindustries.com.

Bion Environmental Technologies Inc. -Management Brief

Management Briefs, U.S.

Bion Environmental Technologies Inc., New York City, announced that Chris Cook and Steve Sands have joined the company’s Advisory Board.

Cook brings almost 30 years of experience in production agronomy, with the last decade in leadership roles with Syngenta, focused on business strategy, profitable sales growth, stakeholder relations, and business development. He currently serves as Head of Business Development for Syngenta Seeds, North America.

Sands most recently served as President of Protein Brands for Performance Foodservice, one of the largest food service distributors in the US. He has more than 40 years of experience in all phases of the meat business. Bion, in addition to its advanced livestock waste treatment technology, is also involved in premium sustainable beef.

Bion also recently announced the passing of Dominic Bassani, the company’s former CEO, after an extended illness. He was also co-inventor of Bion’s third generation technology platform, Gen3Tech, and patented Ammonia Recovery System.

Syngenta Group – Management Brief

Management Briefs

Syngenta Group’s CEO Erik Fyrwald retired on Jan. 1, 2024, after serving as CEO of the company for seven and a half years. Replacing Frywald is Jeff Rowe, former President of Syngenta Crop Protection, the company’s largest business unit. Frywald will continue as Advisor to Chairman and remain on the Board of Directors.

“Erik has provided outstanding leadership for Syngenta Group, steering it with steady hands through global pandemic, conflicts, and challenging geopolitics while substantially transforming and growing the company,” said Li Fanrong, Chairman of Syngenta Group.

“With the strong foundation established by Erik, Jeff is the right CEO to lead Syngenta Group,” Fanrong continued. “The Board is pleased with the world-class, orderly, and planned succession process and has found in Jeff a strong leader with the business acumen, operational skills, and strategic vision needed to guide Syngenta Group in this critical industry.”

Coromandel Operations Suspended After NH3 Leak

Ammonia, India, News Briefs

Operations at Coromandel International Ltd.’s Ennore site near Chennai in India’s southern Tamil Nadu state remain suspended following an ammonia gas leak late on Dec. 26, which resulted in at least 57 people being hospitalized. The leak occurred in the ammonia unloading subsea pipeline, which is used to transport liquid ammonia from ships to the plant premises.

The Hindu Business Line newspaper, citing a company statement, reported that Coromandel noticed the abnormality just before midnight on Dec. 26, and “the gas leak was plugged within 20 minutes by specialists.” Tamil Nadu state officials ordered all manufacturing activities at the site to be suspended with the exception of the sulfuric acid unit, which couldn’t be immediately shut down.

As of Dec. 31, the Tamil Nadu Pollution Control Board had yet to provide permission to Coromandel to resume operations after ordering the company to ensure all ammonia pipelines inside the plant are “intact and safe.” The company is also required to obtain all necessary approvals from the Directorate of Industrial Safety and Health (DISH), Tamil Nadu Maritime Board, and the Indian Register of Shipping before restarting operations at the Ennore site.

Coromandel also operates fertilizer production facilities in Kakinada and Visakhapatnam in the bordering Andhra Pradesh state.

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