All Posts from July 7, 2023

EPA, Corps to Issue New WOTUS Rule by September; Industry Groups File Motion to Vacate Previous Rule

Featured, News, U.S.

The Environmental Protection Agency (EPA) and US Department of the Army in late June reported that they are amending the final revised definition of Water of the United States (WOTUS) in response to the US Supreme Court’s May 25 decision in Sacket v. EPA and will be interpreting WOTUS “consistent with the Supreme Court’s decision in Sackett.”

The agencies said they intend to issue a final WOTUS rule by Sept. 1, 2023. At an earlier hearing before the US House Transportation and Infrastructure Committee on June 22, Assistant Secretary of the Army for Civil Works Michael Connor said the Army Corps would be pausing all Clean Water Act (CWA) jurisdictional determinations until a revised WOTUS definition is complete.

The Supreme Court’s 5-4 ruling in Sackett limited the agencies’ regulatory authority over wetlands under the Clean Water Act (CWA), saying the CWA extends only to “wetlands with a continuous surface connection” to water bodies that are already protected as permanent and directly connected to a traditional navigable water (GM May 26, p. 1).

The ruling countered the “significant nexus” standard that guided EPA’s latest WOTUS definition, which was published in late December (GM Jan. 6, p. 1) and went into effect on March 20. Legal challenges prevented the new definition from being implemented in all states, however (GM April 14, p. 1).

The latest updates from EPA and the Corps followed a letter from Republican lawmakers on June 21 requesting information from both agencies on how the Biden Administration planned to rewrite WOTUS after the Sackett decision (GM June 30, p. 1). In the letter, the lawmakers charged that EPA and the Corp had delayed implementing the Supreme Court ruling by unnecessarily freezing the review and issuance of approved jurisdictional determinations (AJDs), delaying the permitting process for projects.

On June 28, a coalition of 18 ag and industry groups filed a motion in U.S. District Court for the Southern District of Texas asking the court to vacate the Biden Administration’s WOTUS rule nationwide, and to require the federal agencies to promulgate a new rule in 45 days while processing AJDs and permits in the meantime.

“The Business Plaintiffs have been caught in the regulatory whiplash created by the long-running cycle of shifting agency interpretations and judicial disapproval of those interpretations, the motion states. “In light of Sackett, it is time for this Court to tell the Agencies ‘in no uncertain terms, that enough is enough’ and order that a new proposed rule be promulgated within 45 days and Sackett’s clear rules apply to AJDs in the interim.”

“In Sackett v. EPA, the Supreme Court unanimously ruled that the EPA had overstepped its authority under the Clean Water Act,” said Mary-Thomas Hart, Chief Counsel for the National Cattlemen’s Beef Association, one of the plaintiffs filing the motion. “A full rewrite of the Biden Administration’s WOTUS definition is the only path to comply with the Sackett decision. NCBA is seeking summary judgement in our lawsuit against the Biden WOTUS rule and urging the Southern District of Texas to strike the rule from the books.”

Dockworker Strike Cripples Canada’s West Coast Ports; Fertilizer Canada Urges Action from Federal Government

Canada, Featured, News, Potash

A strike by Canadian dockworkers has impacted exports and imports out of the Port of Vancouver and other West Coast ports, prompting calls from industry and business associations – including Fertilizer Canada – for the federal government to take swift action to end the strike.

Roughly 7,400 British Columbia port workers with the International Longshore and Warehouse Union (ILWU) walked off the job on July 1 after failing to reach a contract with the British Columbia Maritime Employers Association (BCMEA). The maintenance workers are seeking an 11% wage increase in the first year, a 6% increase in the second year, and a C$8,000 signing bonus, the Globe and Mail reported on July 4.

The two sides announced on July 4 that they were pausing negotiations, each blaming the other for the standstill. As of midweek, a total of 51 ships were either berthed or at anchor near Vancouver, Bloomberg reported, citing public port data. Two of seven terminals at Prince Rupert have also been affected, the Prince Rupert Port Authority said.

Almost 20% of Canada’s traded goods flow through both ports, the country’s first and third largest, representing more than C$800 million worth of cargo per day, according to BMO Capital Markets Corp. Canadian Pacific Kansas City Ltd. and Canadian National Railway Co. both announced that they have reduced movement of railcars to West Coast ports.

Fertilizer Canada on July 5 issued a statement calling on the federal government to take immediate action to end the work stoppage, noting that 95% of the potash produced in Canada is exported to global markets, with more than 75 countries relying on Canadian fertilizer exports, the majority of which flows through the Port of Vancouver.

“The government must take immediate action to end the work stoppage using all means available, including recalling Parliament and enacting back-to-work legislation,” Fertilizer Canada said. “Swift action is needed as the impacts of delays are felt even after a resolution is reached as services need time to ramp back up. Government intervention is needed to protect Canada’s reputation as a reliable trading partner.”

Fertilizer Canada President and CEO Karen Proud on June 30 sent a letter to Seamus O’Regan, Canada’s Minister of Labor, saying the organization was “very concerned” about the impact a strike would have on potash exports. Proud stressed that Canada’s fertilizer industry contributes approximately C$24 billion annually to the country’s economy, with potash second only to gold in export value, contributing about C$5.52 billion to GDP annually.

“Potash is essential to global food security, and we are concerned the strike will jeopardize the delivery of our product to farmers around the world who need it to grow hearty, nutritious crops,” Proud said in the July 5 statement. “The fertilizer industry depends on reliable supply chains to get our products to farmers. This strike is one of many disruptions we have seen and underscores the importance of strengthening Canada’s supply chains.”

More than 120 trade groups also sent a joint letter to Prime Minister Justin Trudeau urging the government to safeguard the supply chain and pass back-to-work legislation, Bloomberg reported.

In April C$4.9 billion of goods were exported from British Columbia, including more than C$1 billion of coal, according to Statistics Canada. Imports totaled C$5.8 billion and included gas liquefaction equipment, vehicles, airplane parts, and biodiesel. Grain shipments have continued as required by the labor code, Bloomberg reported.

EuroChem to Mothball Lifosa Phosphate Plant Due to Impact of Sanctions on Raw Materials, Distribution

Europe, Featured, Lithuania, News, Phosphate

EuroChem Group AG on July 3 said it plans to mothball its Lifosa phosphate fertilizer facility in Lithuania due to the impact of sanctions, which the company said has prevented normal and profitable operations at the site.

Located in Kėdainiai, Lithuania, Lifosa ranks as EuroChem’s largest phosphate plant and one of the largest manufacturers of high-grade phosphate fertilizer in Europe, with total capacity of more than 1 million mt/y. Lifosa’s main product is DAP, but the plant has been down since May for routine annual maintenance.

EuroChem said it will start the mothballing process in October, placing the majority of jobs at Lifosa at risk. “The decision follows more than a year of widespread supply-chain disruptions and shortages of raw materials since the company was sanctioned by the Lithuanian Government and placed under temporary administration,” EuroChem said.

Swiss-based EuroChem said the sanctions have caused Lifosa “many millions of euro in lost revenues to date and a significant negative financial result for the first half of the year 2023,” losses the company said are no longer sustainable.

“While the EU have stated that EuroChem is not sanctioned, we continue to experience the knock-on effects of sanctions, which have seriously impacted our European operations,” said EuroChem CEO and Executive Chairman Samir Brikho.

“Under normal circumstances Lifosa is a financially healthy business running at full capacity, producing a wide variety of high-demand products for our customers around the world,” Brikho added. “However, the placing of Lifosa under sanctions and cutting off its sales and supply chain has created an impossible situation marked by critical raw material shortages, production stoppages, and lack of access to markets and finance.”

The Lifosa plant was acquired by EuroChem in 2002, and EuroChem said it has invested almost €300 million in the facility since then. The facility halted operations in April 2022 after banks froze the company’s accounts due to EU sanctions imposed on EuroChem Group’s former controlling shareholder and CEO Russian billionaire Andrey Melnichenko (GM March 11, 2022).

Melnichenko subsequently resigned from the EuroChem board and withdrew as a main beneficiary of the group following his inclusion on the EU’s expanded list of sanctioned Russian individuals. Lifosa had been under the control of a temporary administrator since the end of May 2022. Production resumed in August last year but was halted in mid-September due to a shortage of critical raw materials, including ammonia, and high natural gas prices (GM Sept. 9, 2022).

EuroChem announced in November that it was completing preparations to restart Lifosa in December at a reduced capacity, assuming critical raw materials could be secured (GM Nov. 18, 2022). Brikho warned at that time, however, that additional steps would be necessary to sustain economic operation beyond December, including obtaining access to competitively priced raw materials and permission to market Lifosa’s products to a broader customer base. He said this required Lifosa’s “quick reintegration into the EuroChem sales and procurement network.”

EuroChem said Lifosa petitioned Lithuania’s government and financial institutions to lift their restrictions on the company “in full compliance with EU sanction regulations.”

“Over the last 15 months, we have engaged in dialogue with the Lithuanian authorities to find a mutually satisfactory agreement that enables our business in Lifosa to continue operating efficiently,” Brikho said. “However, it is unsustainable for us to continue to run the business in this restrictive environment. As a responsible employer, we now have to take some critical decisions.”

Media reports in June said Lithuania seeks to separate Lifosa from the EuroChem system, citing Gintaras Palutskas, Deputy Chairman of Lithuania’s Siemas Committee for Economics.

“Lifosa’s business model depends on accessing global sales markets and sourcing the best quality materials in closest proximity to its operations, at the lowest cost, including from EuroChem Group,” said Marc Heckler, Chairman of the Lifosa Board. “For Lifosa’s future viability, it is imperative we resolve the sanction-related obstacles facing our raw material supply chain, so we can sell freely to all markets and receive payments from our customers.

“We have gone to great lengths to maintain operations and keep our employees at work despite the many production stoppages,” Heckler added. “But this is no way to run a business that in prior years has been markedly successful. Maintaining Lifosa in current downtime mode costs several millions of euro per month and is uneconomic to sustain going forward. Although we will continue to work actively and diligently with the Lithuanian Government to find a solution, we are regrettably moving closer to mothballing in October.”

Landus Breaks Ground on $16 Million Fertilizer Production Facility in Iowa; USDA Provides $5 Million in FPEP Grant

Featured, News, Western Cornbelt

Landus, Iowa’s largest farmer-owned cooperative, announced on June 29 that it will break ground on a nearly $16 million greenfield fertilizer manufacturing and repackaging facility in Boone County, Iowa.

The facility will be constructed on 35.8 acres adjacent to the current Landus 33-acre grain facility in Boone County, and will include a 66,000-square-foot building that will be used for chemical and seed storage, as well as the production of 100,000 gallons of foliar slow release nitrogen (SRN) in the first operational year, and 250,000 gallons in subsequent years.

Landus said the new facility will integrate new targeted foliar nitrogen application technology while decreasing distribution expenses and environmental impact by allowing Landus to provide direct ship distribution options for farmers and suppliers across the Midwest, aided by the company’s unique position as the only Iowa agribusiness with access to all seven railroads.

“At Landus, we keep the farmer at the center of everything we do, and this new facility in Boone delivers the sustainability, advanced logistics, and economic efficiencies that the farmer of tomorrow, and our downstream customers, are rightfully demanding,” said Matt Carstens, Landus President and CEO.

“Our goal is to enhance the precision of input products by reducing the overall amount of nitrogen applied while also lowering the carbon footprint required to produce, store, and ship this critical product,” Carstens added. “As rural champions, Landus is committed to helping provide a sustainable future for generations of agriculture while leveraging sustainable efforts for higher return on crops.”

The project was assisted by a $5 million grant from the USDA Fertilizer Production Expansion Program (FPEP) and has support from the City of Boone and the Boone County Board of Supervisors. USDA Secretary Tom Vilsack attended a kickoff event at Landus on June 29.

USDA’s FDEP program was announced last year (GM Sept. 30, 2022), and the agency reported earlier this year that it was evaluating 21 potentially viable projects to increase fertilizer production across the US totaling up to $88 million (GM Jan. 13, p. 1).

Borealis Completes Nitrogen Business Sale to Agrofert

Austria, Europe, Featured, News, Nitrogen

Vienna-based Borealis AG on July 5 completed the sale of its nitrogen business – which includes fertilizer, melamine, and technical nitrogen products – to the Czech Republic’s chemicals and fertilizer group Agrofert. Borealis said the transaction valued the business on an enterprise basis of €810 million (approximately $880.7 million at current exchange rates).

Borealis received a binding offer from Agrofert last June for the acquisition of its nitrogen business (GM June 3, 2022) after it had pulled out of an earlier agreement to sell the unit to EuroChem Group AG (GM March 11, 2022).

The decision not to proceed with the EuroChem offer followed Russia’s invasion of Ukraine in February 2022 and the resulting sanctions imposed by the EU on Russia. EuroChem’s offer valued the Borealis Nitrogen business on an enterprise basis of €455 million.

The European Commission on March 13 approved unconditionally Agrofert’s proposed acquisition of the business, concluding that the transaction would raise no competition concerns in the European Economic Area (GM March 17, p. 30).

Prague-based Agrofert is one of the leading European nitrogen fertilizer producers, with production facilities in the Czech Republic, Germany, and Slovakia. It distributes fertilizers in the Czech Republic, Hungary, Slovakia, Croatia, Poland, and Romania. The group also produces and sells AdBlue and various technical nitrogen products.

By adding Borealis’ production assets in Austria, Germany, and France, as well as a comprehensive sales and distribution network utilizing the Danube River, this business combination will complement Agrofert’s existing capabilities in serving its customers across Europe, Borealis said in an earlier statement.

“Fertilizer production is one of the key segments of the Agrofert group,” said Agrofert Vice Chairman Petr Cingr. “Our priority now will be to integrate Borealis’ nitrogen business into the Agrofert group that enables us to approximately double our production capacity and, at the same time, to enter new markets, namely France, the Benelux countries, Bulgaria, and Serbia.”

Following the transaction, Borealis CEO Thomas Gangl said Borealis will now continue to focus on its core activities in the fields of polyolefins and base chemicals and on the transformation towards a circular economy. Borealis AG is majority-owned (75%) by Austrian oil and gas company OMV AG.

CF Industries Holdings Inc. – Management Brief

Eastern Cornbelt, Management Briefs

CF Industries Holdings Inc. announced on July 6 that Douglas C. Barnard, Senior Vice President, General Counsel, and Secretary, has informed the company that he will retire effective Jan. 12, 2024. Effective immediately, Barnard will serve as Executive Vice President, Corporate Development and Legal Advisor, reporting to Tony Will, CF’s President and CEO, with primary responsibility for obtaining FTC clearance for the recently announced acquisition of the Waggaman, La., ammonia facility (GM March 24, p. 1). Barnard will also assist with other strategic initiatives and business development support.

Barnard joined CF as General Counsel in January 2004. Prior to that he served as Executive Vice President and General Counsel of Bcom3 Group Inc. Earlier in his career he was a partner in the law firm of Kirkland and Ellis, and served as Vice President, General Counsel, and Secretary of LifeStyle Furnishings International Ltd.

“Doug has been an invaluable leader at CF Industries, providing expert legal advice and strategic business insight that has helped build our company into the global leader it is today,” Will said. “He has had a profound and lasting impact on CF Industries, including his work on our initial public offering, guiding us through transformational acquisitions, and building a world-class legal and compliance function. I want to thank Doug for his extraordinary leadership and partnership, and congratulate him on a wonderful career.”

CF also reported that Michael P. McGrane, Vice President, Chief Compliance Officer, and Assistant Secretary, has been promoted to Vice President, General Counsel, and Secretary as Barnard’s successor, effective July 7, 2023. McGrane will report to Susan L. Menzel, who has been promoted to Executive Vice President and Chief Administrative Officer (CAO). Menzel has served as Senior Vice President, Human Resources, for CF since 2017. As CAO, CF said she will add oversight of the legal function to her current responsibilities for human resources and information technology.

McGrane joined CF in 2011 as Associate General Counsel and Assistant Secretary, and was named Vice President, Chief Compliance Officer, and Assistant Secretary, in January 2016. Prior to joining CF, McGrane was an attorney at Skadden Arps Slate Meagher & Flom, where his practice concentrated on mergers and acquisitions, securities offerings, corporate governance, and general corporate and securities law matters.

Additionally, CF reported that Christopher D. Bohn has been named Executive Vice President and Chief Financial Officer, and Bert A. Frost has been named Executive Vice President, Sales, Market Development, and Supply Chain. “I am pleased to name Chris and Bert executive vice presidents,” Will said. “Their appointments reflect the contributions they have made, and will continue to make, to the success of our company, as well as the strength of our leadership team.”

Superior Ag – Management Brief

Eastern Cornbelt, Management Briefs

Superior Ag, an agricultural cooperative based in Huntingburg, Ind., announced on June 29 that Richard Lloyd has been named as the incoming President and CEO, effective Aug. 1, 2023. Lloyd replaces Barry Day, who will be retiring on Sept. 1, 2023, after 13 years as the co-op’s leader.

Lloyd comes to Superior Ag from Valley Agronomics in Nampa, Idaho, where he served as General Manager since 2007, helping the agronomy joint venture grow from seven locations in Idaho to 35 locations across the Pacific Northwest. Lloyd started in the cooperative system in 2002 as an Account Manager for Agriliance.

“We are thrilled to welcome Richard Lloyd to Superior Ag as our next President and CEO,” said Pat Messmer, Chairman of Superior Ag’s Board of Directors. “He is very customer and employee-oriented and brings a wealth of knowledge from his 20-year career in the cooperative system. The Board of Directors and I are excited about his vision for the future of Superior Ag.”

Superior Ag provides agronomy, grain, livestock nutrition, and energy products and services to farmers in southwestern Indiana, northern and central Kentucky, and the bordering regions of Illinois. The company operates 13 agronomy locations, six grain elevators, a feed mill and feed store, and two retail fuel stations.

Ammonia

Ammonia, California, Eastern Cornbelt, India, Market Watch, Middle East, Northwestern Europe, Pacific N.W., Southeast Asia, Tampa, U.S. Gulf, Western Canada, Western Cornbelt

US Gulf/Tampa:

Tampa ammonia for July remained at $285/mt CFR, $55/mt below June’s $340/mt CFR price. Softer international ammonia pricing may pressure the August Tampa market as well.

Eastern Cornbelt:

Ammonia prices continued to be reported in the $350-$365/st FOB range for fill offers in the Eastern Cornbelt, depending on location and supplier.

Western Cornbelt:

Ammonia fill offers remained at $340-$350/st FOB and $350-$370/st DEL in the Western Cornbelt, depending on location and supplier.

California:

Ammonia remained at $580/st DEL in California, with aqua ammonia referenced at $159/st FOB Stockton and $169/st FOB Sycamore.

Pacific Northwest:

The latest ammonia offers in the Pacific Northwest dropped to $415/st FOB or DEL, down sharply from the last $695/st level. Aqua ammonia was quoted at $108/st FOB in the region, down from $180/st.

Western Canada:

Delivered ammonia pricing fell to C$520-$810/mt for the latest offers in Western Canada, depending on location and time of shipment.

Northwest Europe:      

Sources reported a few small deals out of Antwerp, but nothing that could nail down prices. While buyers are reportedly bidding at $300/mt CFR, area traders said this price is currently too low for sellers. Instead, they estimated successful pricing closer to $310-$315/mt CFR.

Middle East: 

Producers were said to offer product at $240-$250/mt FOB, but with no takers. Sources said the market remains much lower. The last public price of $200-$210/mt FOB still works as a basis for discussion.

The fact that there have been no responses to producer pricing ideas was no surprise to traders, as offers in the $240s/mt FOB are too high for the marketplace. Producers are comfortable offering this level despite knowing they will not be able to conclude a sale, said one trader, because their order books are full into August with contracted business. They see no need to lower prices for a spot deal.

Iranian exports of ammonia totaled 263,000 mt in January-May, Trade Data Monitor reported, up 33.5% from the year-ago 197,000 mt. May exports were noted at 68,000 mt, more than double the 32,000 mt Iran shipped in May 2022. India led buyers with 43,000 mt, followed by Turkey with 23,000 mt.

India:     

The only material currently flowing into India is from cargoes booked under previous contracts, sources reported.

Southeast Asia:     

The Petronas Gurun urea and ammonia plant is back online. The facility is expected to be fully operational by the end of next week. Sources said the plant will first focus on fulfilling its contracts before offering its limited remaining tonnage to the spot market.

Petronas is looking to move the ammonia market higher. The company reportedly offered small 3,000-4,000 mt lots at $330/mt FOB to regional buyers. This pricing flies in the face of larger quantities going for $300-$310/mt CFR.

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