All Posts from April 7, 2023

Danakali Completes Sale of SOP Project Stake

Australia, Featured, Sulfate of Potash

Australian junior sulfate of potash (SOP) developer Danakali Ltd. has completed the sale of its 50% share in Colluli Mining Share Co. (CMSC) to China’s state-owned infrastructure construction firm Sichuan Road and Bridge Group Co. Ltd. (SRBG) for US$166 million in upfront cash and deferred payments.

CMSC is developing the Colluli SOP project in Eritrea, and Danakali’s stake was held by a wholly-owned subsidiary, STB Eritrea Pty Ltd. The shareholding represented Danakali’s entire interest in CMSC. The company announced the agreement with SRBG last October (GM Oct. 7, 2022).

The transaction was completed on March 31, the Australian firm said in a media statement. Danakali confirmed that it will receive US$121 million in two tranches, net of all government taxes. Tranche 1, amounting to US$105 million (A$156 million), has already been received, while tranche 2, amounting to US$16 million, will be received six months from completion.

Danakali said it currently plans to distribute approximately 90% of the net proceeds to its shareholders, but has yet to make a formal decision regarding the proposed distribution and the form it will take.

Danakali’s securities were suspended from official quotation at the close of the ASX market on April 3. The company said in October that it planned to continue as a listed company, but under the requirements of the ASX, Danakali needed to identify a new project or opportunity within six months from the date of the announcement of the disposal of its shareholding in CSMC. 

Danakali said it plans to continue to identify new projects and potential growth opportunities, with a view to return to official quotation. In an April 3 letter to shareholders, Danakali Executive Chairman Seamus Cornelius said the CMSC disposal was completed “well ahead of schedule,” and efforts to identify new projects for investment “will be increased.”

SRBG is a subsidiary of Chengdu, China-based Shudao Investment Group Co. Ltd. (SDIG), which has diversified business interests covering minerals and new materials investment, clean energy investment, transportation and logistics, and new urbanization investment.

CSMC in 2018 executed a binding take-or-pay offtake agreement with EuroChem Group AG for up to 100% of Module SOP 1 production from the Colluli Potash Project (GM June 15, 2018). EuroChem was to take, pay, market, and distribute up to 100% (minimum 87%) of Colluli Module 1 SOP production.

APF to Proceed with Waggaman AS Plant; Files for Permit with Louisiana DEQ

Ammonium Sulfate, Featured, Louisiana, News

American Plant Food River Partners (APFRP), a subsidiary of American Plant Food Corp. (APF), confirmed that it is proceeding with plans to build a 420,000 st/y ammonium sulfate plant at Cornerstone Chemical Co.’s 800-acre Cornerstone Energy Park in Waggaman, La.

APFRP in March filed an initial minor source permit application with the Louisiana Department of Environmental Quality. If the permit is approved, the company would break ground on the $200 million facility in January 2024, with construction completed by mid-2025.

“This project represents a significant investment in Jefferson Parish and will make APFRP a reliable source of crop nutrients for Louisiana and America’s farmers,” said Jerry Bilicek, Chief Operating Officer for APF, in an April 4 statement to Green Markets.

“Reduced nitrogen fertilizer production in the US over the past 30 years, coupled with the growing need for sulfur, has led to an increased reliance on foreign-produced fertilizers,” Bilicek said. “APFRP’s proposed fertilizer production facility will ensure access to a dependable supply of vital crop nutrients made in the US, while improving supply diversity and enhancing domestic food security.”

APF, which is headquartered in Galena Park, Texas, first announced plans for the facility last October (GM Oct. 28, 2022). At the time, APF said the plant would cost $225 million and be able to produce 500,000 st/y of ammonium sulfate, but both the cost and capacity estimates have been lowered with value engineering completed.

The facility will source ammonia and sulfuric acid from Incitec Pivot Ltd.’s (IPL) Waggaman ammonia plant and Cornerstone, respectively, with the latter producing sulfuric acid along with other chemicals. Following last month’s announcement that CF Industries Holdings Inc. has agreed to purchase IPL’s 880,000 st/y (800,000 mt/y) ammonia production complex in Waggaman (GM March 24, p. 1), CF will reportedly inherit the deal to supply ammonia to the new APF facility.

APF also reported in October that it is exploring a technology that would allow it to extract ammonium sulfate from wastewater already produced at the site. The extracted product could represent as much as 13% of the facility’s production capacity, the company said.

According to the DEQ permit application, the facility will consist of three ammonium sulfate granulation plants and two ammonium sulfate and NPK fertilizer handling structures. All equipment and material transfer points in the facility will be equipped with vent take-offs to minimize dust, and enclosed belt conveyers will be used to transport the ammonium sulfate to a 60,000 st storage building.

The NPK fertilizers that will be received, stored, and distributed from the site include urea, MAP, DAP, and potash. The facility will include a dedicated barge dock for incoming shipments of these products, the permit states, and the proposed NPK storage building will have capacity for approximately 30,000 st.

According to the statement from Bilicek, the project represents approximately $200 million in local capital investment in Jefferson Parish and will provide roughly 200 construction jobs and 30 permanent jobs. The facility’s 420,000 st/y ammonium sulfate capacity will be distributed by barge, rail, and truck.

“Cornerstone is one of the largest employers in Jefferson Parish, with hundreds of employees who call South Louisiana home,” Bilicek said. “APF River Partners and Cornerstone are currently engaged with and investing in the community, and regularly communicating with city and parish stakeholders to keep them appraised and updated on the proposed facility’s schedule and progress.”

Blue Ammonia Project Advances in West Virginia

Aqua Ammonia, Featured, News

A proposed clean ammonia production facility is advancing in Mingo County, W.Va., with an anticipated initial production capacity of 2.1 million mt/y and construction slated to begin in 2024, the project’s partners announced on April 3.

The multi-billion-dollar Adams Fork Energy blue ammonia project is being developed by Adams Fork Energy LLC and the Flandreau Santee Sioux Tribe on the site of a reclaimed coal mine near Gilbert Creek, W.Va. The facility is expected to be online in late 2026 or early 2027.

The partners are touting the plant as the largest clean ammonia facility in the US and an anchor project in the Appalachian Regional Clean Hydrogen Hub (ARCH2), a proposed initiative to use natural gas as a feedstock to create hydrogen and capture and store carbon from various industries in the region.

“Adams Fork Energy is a transformational manufacturing investment for Southern West Virginia,” said Francis Sacr, Special Advisor to the President of Adams Fork Energy. “Thanks to leadership in Washington through the Bipartisan Infrastructure Law and the Inflation Reduction Act, we’re excited to advance our clean ammonia production facility that will create family-sustaining local jobs while boosting available supply of clean ammonia, a critical component to sustainable food production and achieving a lower-carbon energy future.”

The project developers said that they have entered into a strategic partnership with CNX Resources Corp., a natural gas company based in Pittsburgh, Pa., with operations in the Appalachian Basin, to provide fuel and carbon sequestration services. Technology provider Haldor Topsoe will furnish its SynCOR™ clean ammonia technology for the facility.

“This project is accelerating America’s lower carbon energy and manufacturing future in the heart of Appalachia,” said Nick Deiuliis, CNX President and CEO. “Similar to our other regional projects, CNX’s unique combination of assets, innovative technologies, and proven operational expertise make us the premier energy and tech company driving the Basin’s lower emission future.”

“This project will be an important part of the energy transition with a CO2 capture of more than 99%,” said Henrik Rasmussen, Managing Director, the Americas, for Haldor Topsoe. “The plant will produce 6,000 metric tons per day of decarbonized clean ammonia in the first phase.”

The project is expected to support 2,000 construction jobs, as well as generate significant tax revenues and capital investment for Mingo County in southern West Virginia. Adams Fork said it has received federal, state, and local bipartisan support, and is expected to displace more than 2.7 million mt/y of CO2 equivalent.

“I’m incredibly proud that the Adams Fork Energy plant will become the largest clean ammonia facility in the country,” said West Virginia Governor Jim Justice. “I’m confident they will be a champion in this emerging field and help our southern West Virginia communities flourish for decades to come.”

Adams Fork Energy was founded in 2010 to convert stranded American fossil fuels into useable chemicals. The company partnered with the Flandreau Santee Sioux Tribe in 2022 to develop these projects.

“The advancement of this project benefits the tribe economically, and the use of innovative technology presents a viable source of domestic energy independence for the US,” said Anthony Reider, President of the Flandreau Santee Sioux Tribe. “Our participation will present unique opportunities for federal funding for the project, and the Tribe will benefit from educational opportunities afforded by the project’s sponsors to our Tribal members.”

U.S. Senator Joe Manchin (D-W.Va.) also hailed the project, noting that it was made possible by programs created in the Infrastructure Law and the Inflation Reduction Act to support the production and use of hydrogen in the US.

“The Inflation Reduction Act and Bipartisan Infrastructure Law continue to deliver for West Virginia,” Manchin said. “Today’s announcement of plans for a clean ammonia production facility in Mingo County will help ensure the Mountain State continues to be a leader in American energy innovation and support good paying, West Virginia energy jobs.”

Strong Energy Earnings Boost CHS’s 2Q; Ag Segment Posts Loss on Lower Prices

Earnings, News, Northern Plains

CHS Inc. on April 5 reported second-quarter net income of $292.3 million on revenues of $11.3 billion, up from $219.0 million and $10.3 billion, respectively, in last year’s second quarter. The improvement was driven by strong refining margins and market conditions in the company’s Energy segment.

Decreased prices for agronomy products and ethanol contributed to lower earnings in the Ag segment, however, which posted a pretax loss of $81.6 million, compared with earnings of $55.2 million in last year’s second quarter. CHS reported lower margins due to market-driven price decreases across most Ag segment categories, including wholesale and retail agronomy products and renewable fuels.

The Ag segment was also impacted by a reduction in oilseed processing margins due to the timing of the impact of mark-to-market adjustments. In addition, CHS reported that its CF Nitrogen investment delivered pretax earnings of $81.7 million, down $72.5 million from last year due to lower equity income attributed to a decrease in urea and UAN selling prices.

“Strong global demand for commodities and improved market conditions for refined fuels led to increased earnings for the quarter, as well as the first half of the fiscal year,” said Jay Debertin, CHS President and CEO. “The strength of our diversified portfolio offset margin pressures experienced within our Ag segment, particularly wholesale and retail agronomy products.”

CHS’s Energy segment posted pretax earnings of $264.8 million for the second quarter, up $254.0 million from last year on higher refining and propane margins, partially offset by higher prices for renewable energy credits.

For the first six months of fiscal year 2023, the company reported net income of $1.1 billion and revenues of $24.1 billion, compared with $671.0 million and $21.2 billion, respectively, in the first half of fiscal year 2022.

“Looking ahead, we will continue to invest on behalf of our owners in infrastructure, supply chain capabilities, and innovative technology throughout our expansive global network to maximize value for our member cooperatives, farmer-owners, and customers,” Debertin said.

Biden Vetoes Resolution to Overturn WOTUS Rule

Featured, News, U.S.

As he promised, President Joe Biden on April 6 vetoed a congressional resolution that would have overturned his administration’s“Waters of the United States” (WOTUS) rule, saying the resolution would “negatively affect tens of millions of US households that depend on healthy wetlands and streams.”

Officially announced on Dec. 30 (GM Jan. 6, 2023) by the US Environmental Protection Agency (EPA) and the Army Corps of Engineers, the new WOTUS rule claimed to restore protections that were in place prior to 2015 under the Clean Water Act (CWA), but with “updates to reflect existing Supreme Court decisions, the latest science, and the agencies’ technical expertise.” The rule was published in the Federal Register on Jan. 18 and took effect on March 20.

The US House in late February, however, passed H.J. Res. 27 (GM March 3, p. 26), a resolution to overturn the Biden new WOTUS rule, calling it “flawed” and “overreaching.” The US Senate on March 29 voted 53-43 to approve a similar resolution (GM March 31, p. 1).

In his veto statement to the House, Biden defended the new rule, saying it “carefully sets the bounds for which bodies of water are protected” under the CWA.

“It provides clear rules of the road that will help advance infrastructure projects, economic investments, and agricultural activities – all while protecting water quality and public health,” Biden said in the statement.

The resolution to overturn the rule, he argued, would leave Americans without a clear definition of WOTUS and cause uncertainty that would threaten economic growth for agriculture, local economies, and downstream communities.

“Farmers would be left wondering whether artificially irrigated areas remain excluded or not. Construction crews would be left wondering whether their waterfilled gravel pits remain excluded or not,” Biden said. “Therefore, I am vetoing this resolution.”

The veto is only the second issued by Biden since his inauguration. Republican lawmakers indicated quickly that they would push to override the veto, though doing so would require an unlikely two-thirds vote in Congress.

“We’ve talked at length about the perils of WOTUS,” said Rep. Sam Graves (R- Mo.), Chair of the House Transportation and Infrastructure Committee that approved the resolution. “You should know them by now. President Biden’s ‘Waters of the US’ rule is going to place much of your land under the purview of the federal government under the guise of ‘clean water.’ However, this isn’t actually about clean water. Every little possible dry puddle shouldn’t be subject to the authority of the federal government. It’s bad for farmers, builders, and landowners. That’s the bottom line.”

In an April 6 statement, Graves said the next step is to override Biden’s veto. “We already had bipartisan support for the resolution,” he said. “Now, we just need more of our colleagues on the other side of the aisle to recognize the pain that these kinds of costly, overreaching policies are inflicting on Americans across the country.”

Graves said he has also signed a brief to the US Supreme Court, which is expected to issue a ruling this year in Sackett v. EPA, a pivotal WOTUS test case. “Either way, our message is clear,” Graves said. “The Biden WOTUS rule needs to go.”

Challenging 2022 Impacts Grupa Azoty

Earnings, News, Poland

Polish fertilizer and chemicals group Grupa Azoty, SA, Tarnów, reported a group net loss of Pln1.02 billion (approximately $238 million at current exchange rates) for the fourth quarter of 2022, with the EBITDA loss also in line with the preliminary figure of Pln296 million (GM March 24, p. 25).

Fourth-quarter group revenues fell 7% compared with last year’s fourth quarter, to Pln5.12 billion. Azoty said earnings were dragged down chiefly by the Fertilisers/Agro segment, which posted a negative EBITDA of Pln173 million for the quarter, a 5% decrease from the same period last year.

The group also confirmed an 8% decline in full-year net profit, to Pln584 million from FY2021’s Pln634 million. However, FY2022 EBITDA increased 31%, to Pln2.55 billion from Pln1.95 billion last year, while revenue rose 55% to Pln24.7 billion.

“The supply and demand situation in the European fertilizers and chemicals industry throughout 2022 was determined by the consequences of Russia’s military invasion of Ukraine and high prices of raw materials and energy carriers, leading to production cuts by European manufacturers,” Azoty said.

As a consequence of the macroeconomic climate, each of the group’s business segments recorded a significant rise in product prices and a simultaneous decrease in sales volumes, and experienced demand-supply imbalances, the group said.

Operating profits were also negatively impacted by impairment losses on non-financial current assets and inventories of finished goods, semi-finished products, and raw materials (GM March 17, p. 25).

The write-downs on inventories in 2022 lowered group EBIT and EBITDA by Pln428 million. The recognition of the impairment losses on non-financial non-current assets resulted in a decrease of Pln924 million in FY2022 group EBIT.

Looking ahead, Grupa Azoty Vice President of the Management Board Marek Wadowski said the group expects the environment in 2023 to remain “challenging” after difficult 2022 conditions associated with the rapid growth of commodities prices, especially gas prices.

“A lot will depend on inflation trends and on central bank policy, because the Azoty group does not sell products solely on the Polish market,” he said. Azoty expects lower demand in agriculture, as well as for products from its plastics and chemicals segments in comparison to previous years.

Ostara Ltd. – Management Brief

Management Briefs, Western Cornbelt

Specialty fertilizer manufacturer Ostara Ltd., St. Louis, Mo., announced on April 6 that Dr. Aaron Waltz has been named Chief Technology Officer. Waltz brings more than 20 years of experience in the agriculture industry, beginning his career at DuPont Pioneer in corn genetics and transgenic traits. He has also worked in technology development roles in the adjuvants, biologicals, and fertilizer industries. He earned a Ph.D. from The University of Nebraska in Lincoln.

“Aaron’s skills are highly complementary to the existing executive team and will enable Ostara to realize our vision of global expansion as we increase production of our portfolio of Crystal Green phosphate fertilizers,” said Kerry Cebul, Ostara CEO. “Aaron’s agronomic expertise, diverse science background, and leadership will be critical as we rapidly expand our platform of technologies and significantly increase production to meet grower needs.”

EuroChem VolgaKaliy to Double Potash Production in 2023

News, News Briefs, Potash, Russia

EuroChem VolgaKaliy LLC, a wholly-owned subsidiary of EuroChem Group AG, produced 427,000 mt of potassium chloride at its VolgaKaliy operation in Russia’s southern Volgograd region in 2022, an increase of “1.9 times” compared to 2021, and plans to produce 906,000 mt this year, according to an Interfax report, citing a representative of the company.

Potash sales volumes from VolgaKaliy also increased 1.9 times compared to 2021, with some 378,000 mt sold. The company is targeting to increase sales volumes to 981,000 mt this year.

According to the report, EuroChem VolgaKaliy plans to increase investments in the development of production by 21.6% in 2023, to RUB21.4 billion (approximately $268.3 million at current exchange rates). The development plans include the completion of construction and commissioning of the second skip shaft this year, which will hoist mined potassium ore to the surface.

New mining equipment will also be put into operation this year, which, according to the company, will increase the volume of penetration and will start “cleaning work” in the mine.

The company is also targeting the commissioning of the granulation lines at the sylvinite processing plant in 2023, which it said will increase the production of potassium chloride from 58.7% of design capacity to 80-82%, with “at least 95% product quality.”

EuroChem’s VolgaKaliy potash mine has been burdened by geological issues that have impacted and delayed the mine’s development. The operation made its first commercial sales in 2021 after producing 228,000 mt that year, according to comments made by EuroChem in February 2022 (GM Feb. 25, 2022).

The group this past January said it expected VolgaKaliy to reach full production capacity of 2.3 million mt/y of potassium chloride by 2025, with the possibility of subsequently expanding capacity to up to 4.3 million mt/y (GM Jan. 13, p. 29).

However, some analysts and market watchers are skeptical that VolgaKaliy can achieve its planned output by 2025. Green Markets Research Director Alexis Maxwell viewed the announcement with caution. “This site has had persistent geological issues, while sanctions have restricted Russian producers’ parts procurement activities,” she said.

EuroChem produced 2.39 million mt of potash at its other potash production site, Usolskiy, south of Berezniki, in 2021 (GM Feb. 25, 2022). The group has not published any operational results since 2021.

The Far West Agribusiness Association – Management Brief

Management Briefs

The Far West Agribusiness Association (FWAA) has named Craig Smith as its new Executive Director. He replaces Margaret Jensen, who announced her resignation in October to pursue personal and family interests. Smith has spent more than 30 years as Director of Government Affairs for Food Northwest, the regional trade association that represents the food processing industry.

Smith graduated from Oregon State University with a degree in Business Finance, holds a master’s degree in International Development from William Carey International University, and is also a graduate of the Institute of Organization Management, sponsored by the U.S. Chamber of Commerce.

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