All Posts from March 5, 2021

SQM 4Q Income Flat; MOP/SOP, Lithium Volumes Surge

Chile, Earnings, News, Potash Muriate, Specialty, Sulfate of Potash

SQM Inc., Santiago, reported flat fourth-quarter net income of $67 million ($0.25 per share) on revenues of $513.8 million, nearly flat with the year-ago $66.9 million ($0.25 per share) and $472.2 million, respectively. Gross profit was off at $132.5 million from $137.8 million.

Despite the flat income, fourth-quarter volumes were up 134 percent for lithium, 71 percent for MOP/SOP, and 28 percent for industrial nitrates. Specialty plant nutrition volumes were up just 4 percent, while iodine was off 30 percent.

SQM said the quarter set a quarterly record for lithium sales volumes. The company said it sold 25,800 mt, up 50 percent from the third quarter; year-ago sales volumes were 11,000 mt. SQM said volumes grew 43 percent for the year, despite the market only growing 6 percent. The company said 2020 lithium production surpassed 70,000 mt in 2020 and they expect more than 80,000 mt in 2021. SQM expansion plans target 180,000 mt/y of production by the end of 2023.  

SQM said fourth-quarter lithium prices were stable around $5,300/mt, and it believes this could be the bottom of the decreasing pricing trend and that prices could be higher in first-half 2021.

Fourth-quarter MOP/SOP volumes were 244,600 mt, up 71 percent from the year-ago 143,000 mt. Revenues were up 33 percent, to $66.3 million from $49.9 million.

Specialty Plant Nutrition (SPN) segment volumes were up 4 percent in the fourth quarter, to 265,200 mt from 254,100 mt, with specialty blends seeing an 18 percent uptick to 77,800 mt from 65,800 mt. Potassium nitrate-based volumes were up 1 percent, to 136,700 mt from 135,900 mt. Total SPN revenues were up 4 percent, to $179.1 million from the year-ago $172.8 million.

Full-year SPN volumes were off 1 percent, to 1.036 million mt from 2019’s 1.042 million mt. While specialty blends were up 14 percent to 271,300 mt from 238,900 mt, potassium nitrate-based volumes were down 7 percent, to 575,200 mt from 617,400 mt.

SQM said it believes overall SPN market growth was 5 percent in 2020, and it expects to see the same rate in 2021. It said fourth-quarter pricing was up 4 percent over the third quarter.

Full-year net income was down at $164.5 million ($0.63 per share) on revenues of $1.82 billion from the year-ago $278.1 million ($1.06 per share) and $1.94 billion, respectively. The company said net income was affected by a settlement fee related to a class action lawsuit against the company in the U.S. which had a one-time before tax effect of $62.5 million (GM Nov. 13, 2020).

Full-year gross profit was $482.9 million, down from 2019’s $560.1 million. For the year, segment contribution to consolidated gross profit included: Lithium 18 percent, SPN 34 percent, Iodine 34 percent, MOP/SOP 5 percent and Industrial Chemicals 9 percent.

Illinois Fertilizer and Chemical Association – Management Brief

Eastern Cornbelt, Management Briefs

Jean Payne will be retiring from her position as President of the Illinois Fertilizer and Chemical Association (IFCA) on March 31, 2021. Payne has served 23 years with IFCA, 17 as President.

The organization highlighted her achievements in securing the Hours of Service Exemption; battling ammonia theft for methamphetamine production; eliminating license plate requirements for fertilizer wagons and floaters; creating the Nutrient Research and Education Council to address water quality issues in the state; and facilitating training and safety through the Asmark Institute.

The IFCA Board of Directors voted unanimously on Feb. 3 to make Kevin “KJ” Johnson Interim President for 12 months beginning on April 1, 2021. Johnson has served as IFCA’s Director of Government and Industry Relations for the last eight years.

Agrellus Adds Three Retail Businesses to Platform

News, News Briefs, Southwest

Agrellus Inc., the Lubbock-based e-commerce business and online marketplace for crop inputs, has reported the addition of several ag retail companies to its sales platform. These include Crescent Star Ag, Spearman, Texas; Horton Seed Services, Leoti, Kan.; and Wells Ag Supply, Fonda, Iowa.

Crescent Star Ag is a farm inputs retailer serving grower in the Texas Panhandle, Oklahoma, and Kansas. Horton Seed Services is a wheat seed sales, treating, and cleaning business, and Wells Ag Supply is a full-line farm inputs retailer offering fertilizer, ag chemicals, seed treatment, and biologicals to Iowa growers.

“2021 has already become an active year for certifying dealers on the Agrellus Platform,” said Agrellus CEO Chris Johnson. “We are truly excited that they understand that Agrellus is not another retail competitor and actually works directly for them.”

Agrellus offers seed, fertilizer, chemicals, irrigation parts, fuel additives, and custom application services from its online platform, which was launched in early 2017. Agrellus utilizes existing ag retailers and retail locations on its online and mobile platform, and charges no membership fee for participating retailers or grower members.

“Agrellus never competes with any retailer,” said Rusty Andrews, Agrellus Chairman. “We simply provide a mobile and web platform where a grower is confident they can get the best value from high quality retailers they already trust, and work with, in the current distribution channel.”

Landmark Services, Countryside Complete Merger

Featured, News

Landmark Services Cooperative and Countryside Cooperative, two regional co-ops based in Wisconsin, announced on March 1 that they have officially merged. Countryside members voted to support the merger last August after the boards of directors of both organizations agreed in March 2020 to pursue unification (GM March 6, 2020). The boards and CEOs had earlier signed an official Letter of Intent on Oct. 24, 2019, to explore a merger.

“Landmark and Countryside are committed to proactively facing the challenges in the marketplace and helping our members and employees thrive,” said Jim Dell, Landmark CEO and President, who will hold the same positions with the new cooperative. “The board and employees of the new cooperative will live the mission of ‘advancing our customers through innovative and responsible solutions’ while focusing on our vision ‘customer success powered by engaged employees,’ and all while adhering to our values of safety, integrity, passion, accountability, and financial responsibility.”

The new cooperative is headquartered in Cottage Grove, Wisc., and will continue to maintain operations and staff at more than 50 locations, serving over 26,000 members across southern and west-central Wisconsin, northern Illinois, eastern Iowa, and eastern Minnesota. The combined business will employ more than 800 full-, part-time, and seasonal workers, and will generate annual sales in excess of $600 million.

The boards highlighted numerous advantages for the merged business, including increased size and scale for greater purchase volumes and negotiation opportunities; efficiencies gained through lower operational and production costs and the sharing of agronomy assets; improved logistics to reduce delivery issues; backup feed mill options and increased grain marketing opportunities; expanded input financing options for members; enhanced product and service offerings; and the ability to attract and retain employees by offering competitive salaries and benefits.

“As we focused on the benefits the merger would bring, we quickly realized that growing together would only make us stronger,” said Landmark Board Chairman Jim Lange. “The board is excited for what the weeks, months, and years to come will look like for the new co-op.”

The new cooperative is working with an external marketing agency to develop new branding and a new trademark name and logo, which will be announced later this year. For now, the business will be co-branding digital platforms and documents such as statements.

“The boards of directors feel positive about this decision to merge two strong organizations,” said Countryside Board Chairman John Creaser. “This decision allows the new cooperative to compete within the ag industry while being profitable and protecting our members’ equities.

Landmark operates grain, agronomy, animal nutrition, energy, and retail divisions from more than 20 locations in south-central Wisconsin and northern Illinois. The company also provides agricultural financing and ag insurance products and services through its Verity Business Solutions LLC. Countryside, which was formed in 1998 through the merger of Durand Cooperative and Mondovi Co-op Equity Association, operates agronomy, feed, grain, energy, retail, and convenience store divisions from some 30 locations in west-central Wisconsin.

A comparison chart provided by the two co-ops earlier in the merger process said the combined organization would have budgeted 2020 volumes of 167,800 tons of dry fertilizer, 69,547 tons of liquid fertilizer, 3,793 tons of ammonia, 172,080 tons of feed, 29.2 million bushels of corn, 7.7 million bushels of soybeans, and 965,000 bushels of oats, wheat, and barley. In the energy division, combined 2020 budgeted volumes were identified at 5.6 million gallons of gasoline, 28.4 million gallons of fuel oil, and 27.7 million gallons of liquid propane.

Uralkali Moves to Red on Forex, Derivative Losses; Exports Up 36 Percent

Earnings, News, Potash, Russia

Uralkali, Moscow, moved into the red in FY2020, reporting a IFRS net loss of $43 million, versus a prior-year net profit of $1.22 billion. In its earnings statement, the company cited mainly foreign exchange losses and losses on revaluation of derivatives totaling $733 million as behind the profitability downturn.

The company saw EBITDA fall 23 percent, to $1.22 billion, down from the year-ago $1.58 billion, while revenue dipped 3 percent, to $2.7 billion from $2.78 billion.

Potassium chloride production increased 2 percent to 11.3 million mt last year, up from the previous year’s 11.1 million mt, while sales volumes were up by close to 30 percent on the year, to 12.7 million mt from 9.8 million mt.

The biggest increase was in export sales volumes, which rose 36 percent to 10.1 million mt, up from 7.4 million mt, which the company attributed mainly to the recovery of demand and “the favorable environment” in the global potash market.

While Uralkali did not provide regional sales volumes figures, revenue from sales to China, India, and Southeast Asia in aggregate were up 38 percent year-over-year to $1.01 billion, while revenue from sales to Latin America and the U.S. was down 26 percent, according to the company’s consolidated financial statements for FY 2020. Revenue from sales to Europe and other countries increased 5 percent over the prior year.

Proportion of revenue by region (percent)

  FY2020 FY2019 % year-on-year change in sales revenues
Russia 17 21 (19)
China, India, and Southeast Asia 37 26 +38
Latin America and the U.S. 30 38 (26)
Europe, other countries 16 15 +5
Total revenues 100 100 (3)

Sales to the domestic market increased 8 percent over last year, to 2.6 million mt, up from 2.4 mt, with the company citing increased supplies to agricultural producers.

However, the average export price per mt of potassium chloride on FCA terms declined 29 percent year-over-year to $166/mt, down from $235/mt in 2019, reflecting the price changes in international markets.

“In general, 2020 saw a gradual recovery of demand for potash in most key markets, which in turn had a positive impact on last year’s pricing,” said Uralkali CEO Vitaly Lauk. “We are optimistic about the potash industry’s dynamics in 2021 and believe that both short-term and mid-term positive market conditions will be preserved.”

The potash producer estimates that global potash deliveries last year increased to 67 million mt, up from 64 million mt in 2019.

For 2021, Uralkali said it expects global potash demand to remain at a high level amid supply availability, favorable weather, and major crop expectations, and estimates global potash sales increasing to 68-69 million mt this year.

Uralkali’s net debt stood at $4.195 billion as of Dec. 31, 2020, and its net debt/EBITDA ratio increased to 3.43x (End 2019: 3.07x).

Since early December last year, Uralkali has been majority owned by Dmitry Mazepin’s Uralchem, when Mazepin/Uralchem increased its stake to 81.47 percent from 46.4 percent (GM Dec. 4, 2020). Just the week before, Uralkali named Vitaly Lauk as the potash company’s new CEO, replacing Dmitry Osipov, who had been in the position since December 2013 (GM Nov. 27, 2020).

Ma’aden to Reach 85 Percent of Capacity by Year-End, Report Clarifies

News, News Briefs, Phosphate, Saudi Arabia

Saudi Arabian Mining Co. expects its majority owned Ma’aden Wa’ad Al Shamal Phosphate Co. (MWSPC) facilities to reach 85 percent of capacity by the end of this year, up from the current 70 percent, and hit its full capacity of 3 million mt/y of fertilizer by the first quarter of 2022, according to Saudi Arabian financial news portal Argaam, citing Ma’aden CEO Mosaed Al-Ohali in a Reuters report.

Al-Ohali told analysts at a company earnings call last month that MWSPC is currently operating at around 60 to 70 percent of capacity, and said remediation work continues at the facilities (GM Feb. 12, p. 37). The CEO confirmed the technical issues at the operations are not in one specific location.

He said the company expected to see most of the increased capacity benefits coming in 2021 and next year, and expected MWSPC to be exceeding its 3 million mt/y phosphate fertilizer design capacity by 2025.

MWSPC commenced “commercial” production of DAP in December 2018. The Mosaic Co. and SABIC own 25 and 15 percent stakes, respectively, in the company.

OCP, Nigeria Ink Agreements to Advance Ammonia and Fertilizer Projects

Africa, Featured, News, Nigeria

OCP Africa, a wholly owned subsidiary of the OCP Group, and the Nigeria Sovereign Investment Authority (NSIA) on March 2 inked a Shareholders Agreement for the creation of a joint venture company (JVC) that will oversee the development of an industrial platform to produce ammonia and fertilizers in Nigeria.

The OCP subsidiary also signed a Framework Agreement with Mobil Producing Nigeria (MPN), the Nigerian National Petroleum Corporation (NNPC), the Gas Aggregation Company Nigeria (GACN), and the NSIA on gas supply for the industrial platform.

The agreements were signed during a top-level Nigerian delegation to Morocco, chaired by Nigeria’s Minister of Petroleum Resources Timipre Marlin Sylva. The business visit ran March 1 to March 6, as part of the partnership between OCP Group and the Nigerian Government to support and develop Nigeria’s agriculture industry, OCP said in a statement.

A further Memorandum of Understanding (MOU) was inked on March 2 between OCP Africa and NSIA and the NNPC to evaluate the opportunity of an equity investment by NNPC in the JVC and for its support on gas. Additionally, an MOU Understanding was signed between OCP Africa, Nigeria’s Akwa Ibom State, and the NSIA on land acquisition for the new production facilities, administrative facilitation, and common agricultural development projects in Akwa Ibom State.

The goal of the project, which has been under discussion for some while, is to develop a multipurpose industrial platform in Nigeria, which will utilize Nigerian gas and Moroccan phosphate to produce 750,000 mt of ammonia under a first phase development and 1 million mt of phosphate fertilizers annually from 2025, said OCP in its statement.

The Moroccan group and NSIA back in June 2018 inked an MOU to develop an industrial platform in Nigeria for the production of ammonia and related products (GM June 15, 2018).

The NSIA, OCP, and NNPC will fund the $1.4 billion first phase of the project, according to an NSIA statement. The Nigerian investment body said the ammonia plant will have production capacity of 1.5 million mt/y to be built in two phases, with 70 percent of the output allocated for export to Morocco. The balance will be used in the production of 1 million mt/y of DAP and NPK fertilizers for supply to Nigeria’s domestic market.

OCP previously had said some of the ammonia output from the proposed plant would be exported to Morocco for the group’s own use (GM Jan. 18, 2019). OCP currently imports all its ammonia requirements, last year, importing just under 1.9 million mt, according to Trade Data Monitor.

A dedicated jetty to facilitate imports of raw materials from Morocco and other suppliers and to export excess ammonia and fertilizer to Morocco and potentially other regional markets will be built as part of the project, NSIA said.

According to the investment authority, project construction is expected to start no later than the third quarter of 2021, with a 2025 operations start date target.

The project “is structured to commercialize Nigeria’s vast natural gas resources and satisfy Morocco’s demand for cost-competitive ammonia,” said NSIA.

Morocco and Nigeria at the end of January this year renewed their commitment to joint efforts towards the realization of strategic development projects that included building an ammonia and fertilizer plant in Nigeria and a Nigeria-Morocco natural gas pipeline (GM Feb. 5, p. 1). Morocco’s King Mohammed VI and Nigerian President Muhammadu Buhari had agreed to speed up efforts to launch a fertilizers complex.

The newly signed agreements this week form part of the next steps following the success of the first phase of the Presidential Fertilizer Initiative (PFI) signed between Morocco and Nigeria in December 2016 and the progress of the fertilizer production plant project launched in June 2018 by OCP and the NSIA (GM June 15, 2018), OCP said in this week’s statement.

As part of these next steps, OCP Africa, the Fertilizer Producers & Suppliers Association of Nigeria (FEPSAN), and the NSIA have signed an MOU in order to commit to the second phase of the Nigerian PFI.

Back in 2016, OCP Group first partnered with the Fertilizer Producers & Suppliers Association of Nigeria (FESPAN) under the Presidential Fertilizer Initiative (PFI), supported by the NSIA (GM Dec. 6, 2016; May 19, 2017). This collaboration stretched across the entire agricultural value chain, from the introduction of customized fertilizers adapted to local soils and crops to improving the availability of fertilizers in the local market at competitive prices.

These investments have increased the local production capacity to more than 5 million mt/y, allowing Nigerian farmers better access to quality fertilizers, according to OCP.

In line with this, three blending facilities are currently under construction by the OCP group in Nigeria’s Kaduna, Ogun, and Sokoto states, due to start this year (GM March 18, 2019). Together, they will have total production capacity of 500,000 mt/y of fertilizers.

Russian Ministry Sees No Reason to Restrict Fertilizer Exports

News, News Briefs, Russia

Russia’s Industry and Trade Ministry does not see any need to restrict exports of fertilizers, according to an Interfax report late last week, citing the ministry.

Any restrictions on export shipments of mineral fertilizers mean the loss of competitiveness of Russian products, and consequently risks Russian producers reducing their production, said the ministry.

According to the report, the comments follow recent criticism from the country’s Agriculture Ministry and Russian farmers. Russian farmers are threatening to push for export duties on mineral fertilizers if prices on the domestic market start to increase dramatically.

The Agriculture Ministry also has said it might get involved on deciding the issue of whether to introduce price regulation for mineral fertilizers.

Russia’s Federal Antimonopoly Service (FAS) last week announced that it is investigating the grounds for pricing of mineral fertilizers to the domestic market, and would take “adequate response measures” if there are signs of overpricing (GM Feb. 26, p. 37). The results of the FAS probe are expected in the first 10 days of March.

However, according to the Industry and Trade Ministry, as cited by the Interfax report, Russia’s fertilizer producers are currently fulfilling the conditions of product supplies to the domestic market, which includes provision for preventing dramatic seasonal price fluctuations and keeping domestic prices lower than export prices.

These conditions are regulated by an agreement on cooperation signed in 2012 to meet the requirements of Russian farmers and the country’s agribusiness sector.

The price of potassium chloride for Russian NPK producers, for instance, since 2012 has been based on the minimum export price as per an agreement with the FAS, which was later amended and extended to 2022, according to Uralkali’s 2019 annual report. Since October 2013, potassium chloride prices for Russia’s NPK producers have been calculated on a monthly basis, enabling Uralkali to respond promptly to changes in market conditions, according to the potash producer’s report.

According to the ministry, the difference between the export price and the price on the domestic market is reaching 20 percent and even more.

Uralchem has decided to fix prices for the main groups of mineral fertilizers it supplies to Russian agricultural producers for the entire spring sowing campaign, the company said in a Feb. 26 statement.

“Prices for the company’s product line in the domestic market are already 25-30 percent behind the world average. Despite this, Uralchem has decided to freeze the selling price of ammonium nitrate and other fertilizers produced in March-April 2021 in order to support Russian farmers,” said Uralchem.

In addition, the producer said it would completely fulfil all requirements (orders) of the agro-industrial complex in the regions where it is present, according to an Interfax report, citing the company.

Anglo American Reports Solid Progress on Polyhalite Project

England, Featured, News, Polyhalite, Specialty

Anglo American Plc reported this week progress at the Woodsmith polyhalite project in the northeast of England “is solid.” The group acquired the project and its developer, Sirius Minerals Plc, in March 2020 for a cash consideration of US$0.5 billion (GM March 20, 2020). Anglo also took on borrowing and lease liabilities, which took the total impact of the acquisition on the group’s net debt to US$0.7 billion on the date of acquisition.

The tunnel to house the underground conveyor belt to transport the polyhalite ore from the mine to a materials handling facility at the port of Teeside has now been driven almost 13 km of its 37 km target, the group reported. The materials handling facility will granulate the polyhalite to produce the fertilizer product known as Poly4 before it is exported from a dedicated port.

At the mine head, some 5 km south of Whitby, the first shaft-boring machine has been assembled within the service shaft and is being commissioned, while good progress is being made on the production shaft, Anglo said.

It said the impact of COVID-19 on the project’s development has been limited to date due to the successful implementation of appropriate health measures.

The detailed technical review of Woodsmith’s development plan initiated following the acquisition, with the objectives of optimizing the project timeline and design and aligning it with Anglo’s technical and other standards, is nearing completion. The group said the review confirms the quality of the overall project design and the development approach within the parameters the group set.

Anglo’s schedule for a mid-2021 board update to the market on Woodsmith, when it will present final capital and project schedule estimates, remains on track (GM Dec. 18, 2020).

Ahead of that update, it said it is refining two aspects of the project that it had allowed for in its investment case.

“We will likely bring forward the investment in additional ventilation to increase early production flexibility and we are working through the detailed scheduling of the two shaft installations,” Anglo American CEO Mark Cutifani told analysts at the group’s FY2020 earnings call.

Anglo spent $0.3 billion at the Woodsmith project in 2020, and – as per the group’s guidance to investors in December – has committed to spend around US$0.5 billion this year (GM Dec.18, 2020). The 2021 figure is some US$0.2 billion higher than originally planned at the completion of the takeover.

The group said this investment reflects the good progress made in 2020 since the acquisition and the focus on “certain critical-path items” in 2021, including the continuation of the conveyor tunnel and site preparation for the processing facility, in addition to the ongoing shaft-sinking program.

Woodsmith had an approved project capex of US$3.3 billion prior to the Anglo takeover, subject to optimization of development timeline and design post acquisition.

Like Sirius, Anglo is targeting to ultimately produce 10 million mt/y of Poly4 – its potential marketed polyhalite product – at Woodsmith, which it said would add around 5 percent of copper equivalent production to Anglo’s production when the operation is fully ramped up to that 10 million mt production level.

The group said it has offtake arrangements in place – many of them secured by the former owner of the project – that accommodate production at Woodsmith “in excess of 10 million mt.”

“Many of these agreements have price levels benchmarked against the market prices of the underlying four key nutrients within Poly4, and have been set up on a take-or-pay basis,” said Anglo.

The group’s ongoing focus of the market development activities is now around developing and implementing detailed sales and marketing strategies for each region and supporting customers with their own market development activities in order to promote Poly4 to end-users of the product, the group said.

The Woodsmith project is part of Anglo American’s Crop Nutrition business division.

Emmerson Proposes Move to Trade on London’s AIM

Europe, Morocco, News, News Briefs, Potash, Specialty

Potash junior Emmerson Plc, Isle of Man, proposes to apply for admission to list on the AIM market of the London Stock Exchange (LSE) and cancel its listing on the LSE’s main market, the company said in a March 2 filing.

The company, which is focused on developing the Khemisset potash project in northern Morocco, said the AIM is more suited to the company’s current size and strategy, and will offer greater flexibility for corporate transactions.

A general meeting of shareholders has been called for March 25 to approve the move, and if approved, the trading on AIM should start on April 26.

Emmerson said the decision follows its recent £5.5 million (approximately $7.7 million at current exchange rates) raise and as it moves to start mine construction at Khemisset before the end of this year (GM February 19, p. 36).

The company recently received the mining license for the project from the Moroccan Ministry of Energy, Mines, and the Environment (GM Feb. 12, p. 37), and last month reported that it is assessing a conceptual, staged, development for the project, aimed at reducing upfront capital costs and incorporating expansion options into the project development plan, including incorporating potassium sulfate production.

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