U.S. Gulf:
The Gulf sulfuric acid vessel import market was heard steady at $65-$70/mt CFR. Sources called Brazil imports $5/mt higher at $70-$75/mt CFR, also unchanged from the prior report.
Sulfuric acid contracts for material delivered by rail to the Midwest werequoted at $120-$160/st DEL for 2019. Sources noted the Gulf Coastmarket at $100-$120/st DEL, while West Coast tons were reported evenwith the Midwest at $120-$160/st DEL.
Creditors of Brazil’s Viana, Espírito Santo state-based Fertilizantes Heringer SA on Dec. 3 approved the company’s Judicial Reorganization plan, but the plan has yet to be approved by the Judicial Reorganization Court, according to a statement by the company. Fertilizantes Heringer filed for judicial reorganization in February, a request accepted by the Second District Court in Paulínia, in São Paulo state (GM Feb. 8, p. 1).
The company has been racking up losses, and reported a third-quarter loss of R135.9 million on revenue of R366.9 million, compared to the year-ago R117.4 million and R1.19 billion, respectively (GM Nov. 15, p. 31). However, it did report a positive adjusted EBITDA for the quarter of R8.6 million, up from a year-ago loss of R24.1 million.
As previously reported, Russia’s Uralkali and Uralchem have signed a binding letter of intent with Heringer’s controlling shareholder, Heringer Participacoes, and its quota holders, which could ultimately give those two companies control of Heringer (GM Sept. 27, p. 1).
Morocco’s OCP SA and Nutrien Ltd. Each hold about a 10 percent stake in Fertilizantes Heringer.
John E. McGlade has resigned from Bunge Ltd.’s Board of Directors, effective immediately, the company said on Dec. 4. He joined the Board in 2014 after he retired as CEO, President, and Chairman of Air Products & Chemicals Inc.
Itafos, Toronto, reported on Nov. 21 that Brent de Jong, Chairman of the Board of Directors, has stepped down and has left the Board. Current Board member Anthony Cina will act as Interim Chairman. Other Board members include David Delaney, Evgenij Iorich, Dr. Mhamed Ibnabdeljalil (interim CEO), and Ronald Wilkinson.
Technology provider KBR, Houston, announced on Dec. 4 that it has secured a contract for its ammonia synthesis technology from Wuhuan Engineering Co. Ltd. (WUHUAN), a Chinese EPC contractor (GM Sept. 20, p. 27), for the Talcher fertilizer unit as part of a benchmark coal-to-urea project in India. KBR will provide License and Basic Engineering Design (LBED), catalyst, and proprietary process equipment for the plant, based on KBR’s ammonia synthesis technology.
The project is part of the Government of India’s efforts to increase domestic urea capacity for fertilizer production, reducing India’s reliance on imported urea and fertilizer. At present, there are no operational coal-to-urea plants in India.
Talcher Fertilizer Ltd. (TFL), a joint venture of Indian public sector companies formed to complete the project, awarded WUHUAN a lump sum turnkey (LSTK) contract to implement coal gasification and ammonia/urea packages earlier this year.
Since the 1960s, KBR said it has licensed, engineered, or constructed more than 237 ammonia plants worldwide.
Rural retailer Tractor Supply Co., Brentwood, Tenn., said on Dec. 5 its Board of Directors has named Hal Lawton, 45, as its President, CEO, and a member of the Board of Directors, effective Jan. 13, 2020.
Lawton, who is currently President of Macy’s, will succeed Tractor Supply’s CEO Greg Sandfort, 64, who previously announced his intent to retire. Sandfort will remain with the company through Feb. 29, 2020, and then serve as advisor until Aug. 31, 2020, to ensure a seamless transition. He will serve out his term on the Board until May 7, 2020.
Prior to Macy’s, Lawton was Senior Vice President, eBay North America. He spent 10 years in various leadership roles at Home Depot, and started the company’s internet business. He was also an associate principal at McKinsey & Co.
Lawton holds a B.S. in Chemical Engineering from North Carolina State University and an MBA from the University of Virginia.
Some analysts believe that U.K. polyhalite developer Sirius Minerals plc could be vulnerable to an international takeover following the collapse of its ambitious stage-2 funding plan in September, according to the U.K’s Proactive Investors, citing FinnCap analyst Martin Potts.
Potts said it was “almost inevitable” that the Scarborough, Yorkshire-based firm will be taken over “at a huge discount” following the cancellation of its US$500-million bond issue (GM Sept. 20, p. 1). The US$500 million bond had been a critical part of Sirius’ ambitious US$3.8 billion Stage 2 financing needed to complete its North Yorkshire polyhalite mine and processing project as then-envisaged (GM May 3, p. 1).
The London-based FinnCap analyst believes the buyer is likely to be a Chinese player given – he said – that China is most in need of the fertilizer potential of Sirius’ polyhalite resource.
Certainly, and particularly since the collapse of its stage-2 financing plans, Sirius has been looking at the potential to bring in a partner for the acquisition of “a significant part” of the project. Analysts at the London branch of Germany’s Berenberg said in October a strategic investor could be the only lifeline left for the polyhalite developer (GM Oct. 4, p. 23).
Sirius is now working on a revised two-stage development plan for its polyhalite mine and processing project following a strategic review of the project (GM Nov. 15, p. 26). However, the revised plan is seen in some quarters as “highly optimistic.”
The plan comprises “an Initial Scope” to include progress of shaft sinking to achieve first polyhalite and the drive 1 materials transport system (MTS), and is estimated to require around US$600 million of funding to be raised (GM Nov. 15, p. 26).
The estimated capital costs of the second stage of the revised plan – the “Deferred Scope,” which incorporates the remainder of construction activities required to deliver 10 million mt/y of polyhalite capacity ramped-up and operational – is put by the company at up to around US$2.5 billion.
Since the decision to pull the bond issue, Sirius has slowed development work across the project in order to conserve funds (GM Nov. 15, p. 26; Sept. 20, p. 1). The company’s share value has plummeted some 76 percent since Aug., and as of close of trading on Dec. 5 stood at 3.52 U.K. pence.
Bunge Ltd., White Plains, N.Y., and BP plc on Dec. 2 announced that they have completed the formation of BP Bunge Bioenergia, a Brazilian bioenergy joint venture that combines their Brazilian bioenergy and sugarcane ethanol businesses (GM July 26, p. 29). The parties report that BP Bunge Bioenergia is now the second largest operator by effective crushing capacity in the Brazilian bioethanol market.
As part of the transaction, Bunge received cash proceeds of $775 million, comprising $700 million of non-recourse Bunge debt that was assumed by the jv at closing, and $75 million from BP, before customary closing adjustments. The proceeds were used to reduce outstanding indebtedness under the company’s credit facilities.
There has been speculation by some analysts that the new incoming CEO of BHP Ltd., Mike Henry, may not be as committed to the mining group’s Jansen potash project in Saskatchewan as current CEO Andrew Mackenzie.
Henry, 53, takes over the helm from Mackenzie, 62, who is retiring, on Jan. 1, 2020 (GM Nov. 15, p. 25).
Scotiabank analyst Ben Isaacson believes that Henry is unlikely to be as committed to Jansen as Mackenzie, and pointed to the investment bank’s belief that there are issues regarding execution, costs, and returns relating to the project, which was initiated during “a very different time” in the potash market, Canada’s Financial Review reported last month.
However, the analyst noted that Henry, a Canadian, and currently BHP’s President Operations Minerals Australia, has experience with marketing bulk products, such as potash.
The U.K.’s Financial Times’ Lex Column, which provides a daily round-up of analyses and opinions covering global economics and finance, sees things differently. While conceding that new bosses are rarely as committed to projects as their originators, Lex pointed out chief executives’ love of growth projects.
BHP revealed in October that the Jansen Stage 1 potash project would be presented to its Board of Directors for a final investment decision by February 2021 (GM Oct. 18, p. 1). The company previously has said it would take less than five years to build and start production. The board would need to sanction a further US$5.3-$5.7 billion to complete the envisioned Stage 1 project, providing potential initial capacity of 4.3-4.5 million mt/y of potash.
That is on top of an approximate US$2.7 billion already committed to sinking and completing the production and service shafts at the project, as well as the installation of essential surface infrastructure and utilities at the site, plus an additional US$345 million approved in October to de-risk Jansen ahead of making the final investment decision.
Mackenzie this past May conceded that the mining group has “over-invested” in Jansen (GM May 17, p. 1), but has long seen potash and Jansen as “an attractive option” for BHP.
However, Nutrien Ltd., at this week’s Citi 2019 Basic Materials Conference held on Dec. 4 in New York, reiterated its position on BHP’s Jansen project, believing the economics do not exist for additional greenfield capacity in the business right now (GM Oct. 25, p. 1; May 17, p. 33).
“We will need a sustained level for quite a number of years of much higher prices to sustain, and to provide a return on that investment,” said Nutrien Executive Vice President and CFO Pedro Farah.
“Jansen Phase I, which based on our own reports will come into the market in eight-to-nine years time, is likely going to be non-profitable. So we’re talking about nine to 12 years until you see profitability in potash of a new entrant, “he said. “So in 10 years’ time at a growth of 2.5 percent, you are basically talking about 15 million mt of additional demand in the market. So there will be greater demand in the market at that point in time to absorb that.”
Russia and Nigeria’s federal government have inked an agreement for the supply of potash. The deal was signed on Dec. 2 with Uralchem Deputy Chairman Dmitry Konyaev signing on behalf of the Russian government, and Nigeria Sovereign Investment Authority (NSIA) CEO and Managing Director Uche Orji signing on behalf of the Nigerian government, Bloomberg reported, citing Nigeria’s Vanguard News.
According to the report, the deal provides for direct purchase of the nutrient, cutting out agents and reducing the purchase price by “some percentage.” Delivery volumes, if agreed, have not been reported.
The supply agreement has been executed under Nigeria’s Presidential Fertilizer Initiative (PFI), launched in December 2016 in partnership with Fepsan, Nigeria’s fertilizer producers and suppliers association. The PFI is aimed at making fertilizer more available and affordable for the country’s farmers. A key element of the plan has been aimed at the revival and expansion of NPK fertilizer producing capacity. At the time of the launch of the initiative, of the more than 30 blending units in the country, only two or three operated at less than 10 percent of capacity.
Today, according to the report, some 26 fertilizer blending plants are operational in the country, which include some previously non-operational facilities, as well as new builds.
Since the PFI was launched in partnership with Fepsan, fertilizer blends have become available year round, and at significantly lower prices than previously (GM June 29, 2018).
Nigeria signed a similar agreement with Morocco’s OCP SA in 2017 for the supply of phosphate for blending (GM May 19, 2017).
