All Posts from June 7, 2010

United Suppliers acquires Lange-Stegmann’s wholesale fertilizer sales unit

Featured, News

St. Louis-based Lange-Stegmann announced on June 1 an agreement to transfer its wholesale fertilizer sales unit to United Suppliers of Eldora, Iowa, effective immediately.

Terms of the sale were not disclosed, and no assets will be transferred as part of the deal. United Suppliers will utilize the St. Louis terminal and warehouse facilities owned and operated by Lange-Stegmann as part of the sale. Describing the nature of the agreement to Green Markets, Mike Stegmann, president of Lange-Stegmann, said United Suppliers “is just going to step into Lange-Stegmann’s shoes” to handle wholesale fertilizer sales at the St. Louis operations.

Stegmann said those operations supply bulk agricultural fertilizers to more than 100 retail agribusiness outlets in the region surrounding St. Louis. The company has 158,000 tons of storage capacity for both liquid and dry fertilizers there. United Suppliers will have a portion of that space, Stegmann said, along with all of Lange-Stegmann’s existing terminal customers.

Stegmann said most likely one employee ?Çô and possibly more – will move from Lange-Stegmann to United Suppliers as part of the deal, though no official announcement on employee changes was made by either company.

The wholesale fertilizer sales unit was one of three divisions at Lange-Stegmann. In a speech to employees announcing the deal, Stegmann noted that the sale allows Lange-Stegmann to focus on its fastest-growing divisions, the Agrotain and Terminal Operations businesses. Stegmann said the sale of the three-decades-old wholesale fertilizer division is part of the continuing evolution for the privately-held company, and he believes United Supplier’s size and scope can bring growth to the wholesale fertilizer business.

United Suppliers, a wholesale organization owned by agricultural retailers, has four divisions – business resources, chemical, fertilizer, and feed. It operates a total of 12 dry terminals and 14 liquid terminals in 18 states, with four of these terminals located on a river system.

According to its website, United Suppliers’ fertilizer terminals are located in Iowa, Wisconsin, Illinois, Missouri, Nebraska, Kansas, and Texas. The company offers plant nutrition, crop protection, and animal nutrition products, as well as employee development, sales, marketing, finance, accounting, and risk management services to its customers.

Lange-Stegmann’s St. Louis terminal operations were expanded two years ago with the dedication of the St. Louis Urea Center, which was part of a $20 million expansion in facilities. Lange-Stegmann acquired the Agrotain portfolio and formed Agrotain International LLC, a wholly-owned subsidiary, in 2000. Since then, according to the company, high fertilizer prices and grower demand for more efficient fertilizer have driven demand and sales growth for Agrotain. Currently, Agrotain International’s products are licensed and sold in more than 70 countries.

Lange-Stegmann and Agrotain International broke ground on the terminal expansion in September 2006 (GM Sept. 11, 2006), and held a grand opening two years later (GM Sept. 1, 2008), where Stegmann touted the facility’s location on a section of the Mississippi River that is lock- and ice-free. The construction of the St. Louis Urea Center and the Stabilized Nitrogen Technology Granular Production Center (SNTGPC) added some 63,000 st of storage capacity. SNTGPC production capability at the facility is 125,000 tons per year.

In January 2009, Lange-Stegmann sold its bagged, blended nitrogen, phosphorus, and potassium (NPK) fertilizer business to T&N Inc. of Foristell, Mo. At the time Stegmann described that business as a very small part of Lange-Stegmann, and said its sale would allow the company to “focus completely on our bulk and stabilized nitrogen products.”

IFA Conference draws record crowd, but Paris lights fail to brighten industry spirits

Featured, News

By all accounts the 78th Annual International Fertilizer Industry Association (IFA) Conference, held in Paris May 31 to June 2, was a success. The organization said it had a record turnout, with unofficial reports putting the attendance at more than 1,600. And despite the global economic situation, no one walked away depressed.

The lack of depression, however, did not mean that delegates were giddy about the current state of the fertilizer industry. Producers, end users, and traders all agreed that the market situation for N, P, and K is both encouraging and worrying.

Recent declines in the price of ammonia and urea had many in those markets concerned about how much further down things could go. For the record, most delegates felt there was a little more room for a decline – but not much.

The phosphate producers felt comfortable following large long-term sales, but cautious about what the future holds in Southeast Asia and the Americas.

If you were a potash seller, you were upset that prices have come off. If you were a potash buyer, you were upset the price did not fall more.

All in all, despite the generally bearish mood, buyers were not as shell shocked as they were in 2008, and sellers did not think the world was coming to an end as many did following the crash in prices in 2009.

And all was not deal-making and temperature taking. As usual, the IFA team assembled a top-rate lineup of guest speakers to discuss the current issues facing the fertilizer industry. While buyers and sellers met at the four conference hotels to discuss potential deals affecting the next three to six months, leaders of the industry laid out their long-term views of supply and demand in the fertilizer industry.

Eduardo Daher, executive director of the Brazilian Crop Protection Association, told Business Week that despite the desires of the Brazilian government, his country will not be able to attain self-sufficiency in fertilizers anytime soon. He particularly cited the limited natural gas resources in Brazil.

“Brazil will never be self-sufficient,” Business Week quoted Daher. “We will never reach the point of self sufficiency in potash. Forget about nitrogen, we do not solve the gas problem. The gas is not there.”

IFA also presented its International Crop Nutrition Award – renamed the IFA Norman Borlaug Award – to Dr. Jin Jiyun of the Soil and Fertilizer Institute at the Chinese Academy of Agricultural Sciences. The award was renamed in 2010 to honor Dr. Norman Borlaug, who pioneered many technologies and systems that increase crop yield. Dr. Jin was honored for his work with farmers to help them improve fertilizer efficiency and crop production.

Panel discussions ranged from the annual demand and supply forecasts to discussions of the impact subsidies have on changing fertilizer use. Delegates also received a preview of a soon-to-be released 10-year agricultural outlook study from the Organization for Economic Co-operation and Development and the Food and Agriculture Organization.

Vale concludes Brazil fert assets acquisition

Brazil, News

Brazilian mining giant Vale S.A. announced on May 27 that it has concluded the acquisition, through its subsidiary Mineração Naque S.A., of a direct and indirect stake of 58.6 percent in the equity capital of Fertilizantes Fosfatados S.A. – Fosfertil (Fosfertil), and the Brazilian fertilizer assets of Bunge Participações e Investimentos S.A., for a total of US$4.7 billion.

Vale said it paid $3 billion for the Fosfertil stake, which corresponds to 72.6 percent of the common shares and 51.4 percent of the preferred shares, from Bunge Fertilizantes S.A., Bunge Brasil Holdings B.V., Yara Brasil Fertilizantes S.A. (Yara), Fertilizantes Heringer S.A. (Heringer), and Fertilizantes do Paraná Ltda. (Fertipar). The sum is equivalent to a price per share of US$12.0185.

The remaining US$1.7 billion was attributed to the acquisition of the Bunge fertilizer assets in Brazil, which include phosphate rock mines in Araxá (Minas Gerais) and Cajati (São Paulo) and processing plants in Cubatão and Guará (both in São Paulo), but do not include retail/distribution operations.

Pursuant to Brazilian corporate law and capital markets regulations, Vale said it will launch a mandatory offer – to be filed with CVM, the Brazilian Securities Commission, in the near-term – to buy the 0.19 percent of the common shares held by the minority shareholders of Fosfertil for US$12.0185 per share, the same price paid to the other common shareholders of Fosfertil.

As announced earlier this year, as part of the acquisition of Fosfertil, Vale holds an option contract with The Mosaic Company that gives it the option to acquire Mosaic’s direct and indirect stakes in Fosfertil, corresponding to 27.27 percent of the common shares and 16.65 percent of the preferred shares and to 20.27 percent of the equity capital of Fosfertil, for nearly US$1.030 billion, at a price per share of US$12.0185. Vale said the transaction with Mosaic is expected to be concluded in the near future. Vale plans to buy out the remaining 0.2 percent stake of Fosfertil held by minority shareholders in a tender offer that will be filed in coming weeks.

In addition to the acquisition of Mosaic’s Fosfertil shares, Vale reported earlier that it has also agreed to acquire from Mosaic a processing plant located in Cubatão in São Paulo for US$50 million. Vale said it has a nominal capacity to produce 300,000 mt/y of single superphosphate (SSP), which is the phosphate nutrient used most often in Brazil. Mosaic in February confirmed the transactions with Vale and said they will have no impact on Mosaic’s significant fertilizer blending and distribution business in the country and its SSP production and port activities in the Paranagua complex.

Vale said the recent acquisition is in line with its strategy to become a leading global player in the fertilizer business. “The build-up of a large world-class value creation platform is being pursued through a combination of acquisitions and organic growth,” the company said. “Given the quality of the assets being acquired and the strength of long-term market fundamentals, we expect this transaction to generate returns above our weighted average cost of capital, creating significant shareholder value.”

Yara confirmed on May 28 that it had sold its shares in Fosfertil and its 50 percent stake in the Anitapolis phosphate rock project to Vale. Yara reported in January that it had agreed with Vale to sell its shares in Fosfertil in Brazil, and that it would sell its stake in the Anitapolis phosphate rock project to Vale at the same time. Yara owned 15.5 percent of Fosfertil directly and indirectly following the acquisition of Fertibras in 2006. The Anitapolis project, a plan for developing a phosphate mine in Brazil, was acquired by Yara when it bought Adubos Trevo in 2000. The project is still at an early stage, but significant development work has been done.

The sale of the Fosfertil shares provides Yara a pretax gain of approximately US$550 million, while the sale of the Anitapolis stake generates an additional pretax gain of approximately US$20 million. The total cash effect after tax is expected to be around US$680 million, Yara said.

Bunge held a 42.3 percent interest in Fosfertil. The company confirmed in January that it had entered into a definitive agreement with Vale under which Vale would acquire Bunge’s fertilizer nutrients assets in Brazil, including its interest in Fosfertil, for $3.8 billion in cash. Net proceeds after taxes, transaction fees, and expenses will be approximately $3.5 billion, Bunge said.

“We’re pleased to have successfully concluded the sale of our Brazilian nutrients assets, allowing us to realize the significant value we built in this business over the years,” said Alberto Weisser, Bunge chairman and CEO. “Proceeds from the transaction provide us with the financial flexibility to redeploy capital for growth and improve our financial profile. In the near term, we’ll use approximately $1.5 billion to pay down a portion of our debt and will continue to focus on other opportunities to enhance shareholder value.”

Canpotex concludes potash sale to Sinofert

News Briefs, Potash

Vancouver-Canpotex, the marketing arm of Canadian potash producers PotashCorp. of Saskatchewan, Agrium Inc., and The Mosaic Co., has reportedly reached a deal to sell 70,000 mt of potash to Sinofert for US$26 million. The price works out to roughly $370/mt CFR, slightly higher than the $350/mt negotiated in January between Belarusian Potash Co. (BPC) and Chinese buyers (GM Jan. 4, p. 1). Canpotex negotiated a spot sale of some 350,000 mt of Canadian potash to Sinofert in February (GM Feb. 15, p. 14) at an undisclosed price. It had announced in January that it would not sign a year-long contract at the $350/mt level agreed to by BPC (GM Feb. 1, p. 13), and that it would seek spot contracts with Chinese buyers instead.

Western Potash grants options, updates estimates

News Briefs

Vancouver-Western Potash Corp. announced on June 1 that it has granted 1,000,000 stock options to directors, officers, employees, and consultants of the company, at a price of $0.50 per share. The options will expire five years from the date of issuance. The company also reported that it has received an NI 43-101 compliant Mineral Resource Estimate for its Milestone property in southern Saskatchewan that “significantly upgrades the Milestone potash resource.” The resource estimate, prepared by Agapito Associates Inc. of Grand Junction, Colo., shows 41 million mt of Measured Resource (contained KCl), 133 million mt of Indicated Resource, and 560 million mt of Inferred Resource. “We are very pleased with the results of this report which demonstrates that our resource can support an annual potash production rate of 3 million tonnes for well over 40 years,” said Patricio Varas, Western Potash president and CEO. “We are now awaiting the delivery of our Scoping Study towards the end of July. The directors expect that the report will confirm that our Milestone Solution Mining project is indeed a world class asset.”

DOC rules on Chinese potassium phosphate salts

News Briefs

Washington-The U.S. Department of Commerce (DOC) recently issued its final determination in a countervailing duty investigation of certain potassium phosphate salts from the People’s Republic of China (PRC). The DOC concluded that, based on a period of investigation from Jan. 1, 2008, through Dec. 31, 2008, countervailable subsidies are being provided to producers and exporters of the subject merchandise from the PRC. The DOC also determined that, based on a period of investigation from Jan. 1 through June 30, 2009, salts from the PRC are being or are likely to be sold in the U.S. at less than fair market value. The investigation determined a subsidy rate of 109.11 percent ad valorem for PRC producer/exporters, and percentage weighted-average margins of 69.58 percent and 95.4 percent. As a result, the DOC has directed the U.S. Customs and Border Protection (CBP) agency to suspend liquidation of all imports of the subject merchandise entered into or withdrawn from warehouses on or after March 16, 2010. The DOC said it is also instructing CBP to continue to require a cash deposit or the posting of a bond for all companies based on the estimated weighted-average dumping margins. The suspension of liquidation instructions will remain in effect until further notice. The U.S. International Trade Commission is scheduled to issue its final injury determination on or before July 8, 2010.

IFDC urged to innovate fertilizer research

News Briefs

Washington-The need for innovative fertilizer research is a global issue that calls for a global response, declared University of Tennessee Chancellor Jimmy G. Cheek at a two-day meeting of the International Fertilizer Development Center (IFDC) at the World Bank here to launch IFDC’s Virtual Fertilizer Research Center (VFRC). Cheek, a recognized expert in agricultural and natural resources, declared that new and improved fertilizers are critical elements in the effort to feed the world’s growing population, provide sustainable global food security, and protect the environment. “No ‘new’ fertilizer product has been developed in the last 25 years that is affordable for use on food crops in less developed countries,” he asserted, citing widespread deficiencies in micronutrients ?Çô boron, chlorine, copper, iron, manganese, molybdenum, selenium, and zinc. “Research has already shown that enriching fertilizers with micronutrients not only has an impact in alleviating plant deficiencies, but also makes a difference for humans and animals,” Cheek said. “In the end, we will create a research system that produces more food with fewer wasted resources and a reduced environmental impact.” During the two-day meeting, it was disclosed that the VFRC will partner with universities, public and private research laboratories, and the global fertilizer and agribusiness industries to bring together the best scientific, business, and government minds to tackle the issue. Startup funding was provided by the U.S. Agency for International Development.

California agency sued over worm fertilizer

California, News Briefs

Sacramento, Calif.-Calling it an example of regulatory abuse, Pacific Legal Foundation (PLF) is suing the state on behalf of a San Diego-area businessman who was fined $100,000 for selling a fertilizer made from worm droppings. The suit was filed against the Department of Pesticide Regulation, which claims George Hahn, the inventor of Worm Gold, needs to have the product registered as a pesticide because of claims it not only fertilizes, but is also naturally resistant to pests. It’s the odor of worm castings in Worm Gold, presently licensed as a fertilizer, that keeps bugs away, according to the lawsuit. “California’s pesticide laws were intended to protect the public from poisonous chemicals, not to shut down an entrepreneur who’s offering a safe, organic alternative,” said PLF principal attorney Timothy Sandefur. PLF – a Sacramento-based organization for limited government, property rights, and individual rights – said it filed the lawsuit in Sacramento County Superior Court as part of a project that targets regulatory abuse of entrepreneurs.

Estimates of hurricanes swirling

News Briefs

Washington-Additional hurricane forecasts came out last week, and although the numbers differed, none of them were good news for the storm season. The National Weather Service’s forecast was the most ominous. It said there could be between 14 and 23 named storms, and eight to 14 hurricanes. Of the 14, somewhere between three and seven would be major – category III or stronger. A category III storm’s lowest sustained winds are 111 mph. The weather service does not issue predictions on storms that might make landfall. Earlier, Accuweather estimated there would be between 16 and 18 named storms, with seven possibly making landfall, including five hurricanes (GM May 31, p. 13). The phosphate and sulfur industries suffered losses due to storms and hurricanes during the 2004 and 2005 seasons. A more intense storm season is predicted because of the end of the El Niño effect and warmer than normal water temperatures in the Gulf of Mexico and the Atlantic. Hurricane season began June 1 and will run through the end of November.

Management Briefs

Management Briefs

PCS Sales on June 1 announced several organizational changes and promotions. Effective July 1, 2010, Bernie Rock, vice president, Industrial Sales/Trinidad Ammonia, will be promoted to senior vice president, Fertilizer Sales/Trinidad Ammonia, and will report to Stephen Dowdle, newly appointed president of PCS Sales. Darryl Stann, vice president, Marketing, is promoted to vice president, Industrial Sales, reporting to Dowdle. Dave Vincent, director, Product Management – Potash, is promoted to vice president, Marketing, and will also report to Dowdle.

Joe Murphy, director, Product Management – Phosphate, is promoted to director, Product Management – Potash, reporting to Vincent. Chaitanya Kosaraju, manager, Supply Chain Planning & Analysis, is promoted to director, Product Management – Phosphate, also reporting to Vincent.

Rob Kingwell, supervisor, Supply Chain Planning & Analysis, is promoted to manager, Supply Chain Planning & Analysis, and will continue to report to Alton Anderson. Chris Reynolds, senior director, International Sales/Trinidad Ammonia, is promoted to vice president, International Fertilizer Sales/Trinidad Ammonia, and will now report to Rock. Dandan Xiang, manager, International Fertilizer Sales, is promoted to director, International Sales – Fertilizer & Feed, and will continue to report to Reynolds. Shane Williams, senior director, North American Feed, will become senior director, North American and International Sales – Feed, and will continue reporting to Mark Etienne.

The PCS Sales organizational changes come in the wake of the May 25 announcement from Potash Corp. of Saskatchewan Inc. that James Dietz, executive vice president and chief operating officer, is retiring at the end of June, and that David Delaney, current president of PCS Sales, would be taking Dietz’s place (GM May 31, p. 9). Dowdle, current senior vice president of fertilizer sales, will be taking over for Delaney at the helm of PCS Sales on July 1.

Bob Duckworth has joined Jim Hicks & Company as vice president and general manager as of June 1, 2010. He will work out of the company’s Brea, Calif., office, and can be reached at 800-692-2690. Duckworth has many years of purchasing, sales, and management experience in the industry, most recently with Western Farm Service. Prior to that he held positions with Agrium, Tessenderlo Kerley, and Pure Gro Company. He has a B.A. in business from the University of Akron, Ohio.

Martin Midstream Partners L.P. (MMLP), Kilgore, Texas, announced that effective May 28, John P. Gaylord resigned his position as a member of the board of directors of Martin Midstream GP LLC, the general partner of MMLP. Ruben Martin, president and CEO of Martin Midstream GP LLC, said Gaylord left to pursue other personal business interests. “We are grateful for the time he spent with us and his many contributions during MMLP’s formative years,” Martin said. An immediate replacement for Gaylord on the board has not yet been announced.

Gavilon Fertilizer LLC, Savannah, Ga., announced on May 27 that it has established a representative office in the Russian Federation. The Moscow office, located at 3 Frunzenskaya Street, 9, began sourcing a broad range of fertilizer products from Russia last month. “The Moscow Representative Office will be an important asset to our fertilizer operations,” said Brian Harlander, president of Gavilon Fertilizer. “The addition of the Moscow office will enable us to strengthen our relationships and better communicate with key suppliers in the region.”

Gavilon’s Moscow office is managed by Ivan Gostenin, who most recently served as a regional manager at UralChem Group. Business inquiries can be made by calling +7 (499) 940-86-30.

Consolidated Sourcing Solutions (CSS), the new fertilizer sourcing group formed by Central Valley Ag Cooperative of O’Neill, Neb., South Dakota Wheat Growers of Aberdeen, South Dakota, and Famers Cooperative Co. of Ames, Iowa, announced on June 3 that Douglas M. Stone has been hired as president of the organization. Stone is a 20-year veteran of Terra Industries, where he most recently served as senior vice president of sales and marketing. Stone lives in Sioux City, Iowa, and will continue to reside there in his new position with CSS. He has a B.B.A. in marketing from the University of Iowa, as well as an M.B.A. from the University of South Dakota.

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