All Posts from February 8, 2019

J.R. Simplot Co. – Management Brief

Management Briefs

The J.R. Simplot Co., Boise, Idaho, announced on Feb. 5 that Darron Page has been promoted to Senior Vice President of Global Solutions. Page takes over for former Global Solutions Vice President Sue Richardson, who has been tasked with enabling a digital transformation strategy for the company as Senior Vice President of Global Business Transformation.

In his new position, Page will be responsible for the vision, strategy, and functional model for the Global Solutions organization, which covers four areas: Sustainability, Procurement, Enterprise Services, and Facilities/Wheels/Aviation. He will report to President and CEO Garrett Lofto, and represent Global Solutions across the company as a member of the Simplot Leadership Team.

“Darron has been a valuable partner and leader within our company for many years,” said Lofto. “His varied experience and innovative mindset will continue to serve the company well.”

Page worked as Vice President of Business Development and Optimization in Simplot’s AgriBusiness Group for the past two years, where he led the group’s strategic business development process in collaboration with commercial and operational partners. His 26-year career with Simplot includes serving as Vice President, Controller and Procurement, from 2014-2017, and Vice President, Supply Chain, from 2012-2014. He also served in retail and financial analysis roles with the company. He has a business degree from Washington State University and an MBA from Boise State University.

“I’m honored for this opportunity and look forward to working with the Global Solutions team and partners across the company,” Page said. “Together we will continue to identify and provide the most efficient and sustainable solutions in our quest to help the J.R. Simplot Company be the best organization we can be.”

Ag Growth International Inc. – Management Brief

Canada, Management Briefs

Ag Growth International Inc., Winnipeg, on Feb. 5 announced the appointment of Anne De Greef-Safft as a director. She is currently a Strategic Consultant with Windjammer Capital Investors, a middle-market private equity firm, and she serves as a member of the board of directors of two of Windjammer’s portfolio companies.

Prior to Windjammer, De Greef-Safft was Group President of Standex International’s Food Service Equipment business. She spent 12 years at Danaher Corp., holding four successive positions as President of operating companies in the U.S., Europe, and Australia. Before joining Danaher, she held various technical and marketing & sales management positions for manufacturing companies in the U.S. and Europe.

De Greef-Safft received her MBA from Babson College in Massachusetts and her BSEE and MSEE degrees from the Catholic University of Louvain (KU Leuven) in Belgium. Currently residing in South Carolina, De Greef-Safft was born in Brussels, Belgium, and is fluent in English, Dutch, French, and German.

CBH Group – Management Brief

Australia, Management Briefs

The CBH Group, West Perth, Australia, said on Feb. 6 that it has appointed Ben Macnamara as its new General Manager of Operations, effective Feb. 18. He is currently CBH’s General Manager – Planning, Strategy, and Development, leading the planning of the future of the storage and handling network.

CEO Jimmy Wilson said the new appointment was the result of current General Manager of Operations David Capper giving notice and deciding to hand over the reins of one of the co-operative’s key roles after five years at the helm.

Macnamara joined CBH in 2014 in the role of Commercial and Business Development Manager. He was appointed to his current role on the Lead Team in December 2017. Prior to joining CBH, he worked for an investment advisory firm and an international professional services firm.

Koch Does Not Have to Sell Oxbow Carbon

News, News Briefs

Billionaire William (Bill) Koch does not have to sell his Oxbow Carbon LLC so that two private equity firms can recoup an investment of more than $250 million in the energy company, the Delaware Supreme Court ruled last month, according to Bloomberg. The court reversed a lower-court order, saying the trial judge misconstrued an investment agreement when he ruled that Crestview Partners LLC and Load Line Capital LLC could force the sale of Oxbow (GM Aug. 10, 2018). Koch had to put up an $87.8 million bond in order to pursue the appeal (GM Sept. 28, 2018).

Delaware Chancery Court Judge Travis Laster had found that a hole in the investment pact allowed Crestview and Load Line to argue that Koch violated good-faith and fair-dealing duties when he sought to thwart a sale. The Supreme Court, however, found no such gap in the agreement.

A Crestview spokesman said the fund was disappointed with the ruling, but would continue to exercise “appropriate oversight of the company’s management and business activities” to protect its investment. Loadline officials could not be reached for comment.

Brad Goldstein, an Oxbow spokesman, said the company is “evaluating its next steps” in connection with the controversy over the proposed sale. Koch had argued that some partners of New York-based Crestview conspired with disgruntled Oxbow executives in a bid to oust him as CEO and force a quick sale. Laster had rejected that argument, finding the conspiracy allegations didn’t overcome Koch’s obligations to sell Oxbow if the funds properly requested it.

During trial, Crestview targeted what it said was Koch’s mismanagement of Oxbow, citing demands that the company pick up the tab for his personal Dassault Falcon jet and his children’s private-school tuition. Koch, who reimbursed the company $5.3 million over the jet in 2015, said the payment was not an acknowledgment of wrongdoing and denies charging the company for his children’s fees to attend Oxbridge Academy in Florida. He argued that Crestview investors, some of whom served as Oxbow directors, engaged in “greenmail” in their unsuccessful bid to oust him.

Oxbow is known as one of the world’s biggest producers of petroleum coke used in aluminum production and is among the largest privately held companies in the U.S. In addition to petcoke, Oxbow has been involved in several commodities, including fertilizer, sulfur, sulfuric acid, coal, carbon, and gypsum. It bought the fertilizer and sulfur trading business of International Commodities Export Corp. (ICEC) in 2011 (GM Feb. 7, 2011; Nov. 29, 2010). However, it sold its Oxbow Fertilizer LLC unit to Oakley Fertilizer Inc., North Little Rock, Ark., in late 2017 (GM Nov. 3, 2017).

Bill Koch is the brother of David and Charles Koch of Koch Industries Inc., Wichita. Bill Koch is worth an estimated $4 billion, according to Bloomberg data.

Bion Touts New Waste-to-Fertilizer Patent

News, News Briefs

Bion Environmental Technologies Inc., New York, a developer of livestock waste treatment technology, announced that it has filed an application under the Patent Cooperation Treaty (PCT) for international recognition of its process to produce a quick-release organic nitrogen fertilizer from livestock waste. The PCT application allows Bion to file patent applications and seek protection in most major market countries throughout the world.

Bion said the U.S. Patent Office issued Patent No. 10,106,447 B2 on Oct. 23, 2018, the first patent issued on Bion’s third-generation technology. It describes a process to recover stable concentrated ammonium bicarbonate from the volatile ammonia in the livestock waste stream, using gas separation, condensation, filtration, and crystallization under controlled operating temperatures, and without the addition of chemicals. Ammonium bicarbonate had a long history of use as a quick-release nitrogen fertilizer until the advent of modern synthetic fertilizers.

Bion said its 3G platform was designed to recover ammonium bicarbonate in a process that will qualify the product under the USDA’s National Organic Program. Bion anticipates making an initial application in the first quarter of 2019 to the Organic Materials Review Institute (OMRI) for certification for use in U.S. organic food production. Bion expects the product to have broad applications in the organic market, including production of row crops; horticulture, greenhouse, and hydroponic production; and potentially retail bagged products.

Heringer Files for Reorganization

Brazil, Featured, News

Brazil’s Fertilizantes Heringer SA, Viana, said on Feb. 4 that it has filed for judicial reorganization in the Judicial District of the City of Paulinia, in the State of Sao Paulo. It said the filing is a matter of urgency. The measure has the approval of the board of directors and the company’s controlling shareholder group.

Heringer said despite efforts to optimize company’s liquidity situation and indebtedness profile in recent months, including seeking potential investors, the company’s situation has deteriorated. It said the filing is an appropriate measure to enable the continuity of activities and preserve company value.

The company said it has suspended activities in nine additional locations – Rondonopolis, Dourados, Tres Coracoes, Uberaba, Rio Verde, Porto Alegre, Rio Grande, Paranagua, and Rosario do Catete – “with the consequent termination of some of its employees,” according to a Bloomberg report.

The company announced the closure of three facilities in late 2018 (GM Dec. 14, 2018). Those plants were identified as Patos de Minas and Sao Joao do Manhuacu in Minas Gerais, and Bebedouro in Sao Paulo. On Jan. 31, it announced the resignations of its CFO and director of supply/logistics (GM Feb. 1, p. 1).

The company has debt of 2.9 billion reais (US$810 million). Heringer posted a nine-month net loss of R$441.4 million on net revenue of R$3.1 billion (GM Nov. 30, 2018), compared to the year-ago loss of R$102.4 million and R$3.3 billion, respectively.

A controlling group owns 51.5 percent of Heringer, with a share free float of 29 percent. Nutrien Ltd., Saskatoon, and OCP SA, Casablanca, each own an approximate 10 percent each of the company.

Nutrien to Buy Long-Time Supplier Actagro

Featured, News

Nutrien Ltd., Saskatoon, on Jan. 5 announced that it has entered into a definitive agreement to purchase 100 percent of the equity of Actagro, LLC (Actagro), Fresno, Calif., a developer, manufacturer, and marketer of environmentally sustainable soil and plant health products and technologies. Nutrien said Actagro’s premier commercial portfolio includes approximately 30 specialty products that have a strong track record of increasing crop productivity and financial returns for growers.

Actagro’s products are produced at two U.S. manufacturing facilities located in Biola, Calif., and Osceola, Ark., and are distributed across global agricultural markets through numerous retailers and distributors. To date, distribution has been focused on North America, Europe, Asia, and Australia.

Nutrien’s Retail business is Actagro’s largest customer, and has been doing business with the company for 10 years. In 2014, Nutrien predecessor Agrium Inc.’s Loveland Products Inc. entered into a commercialization and technology development agreement for soil and plant health nutritional products based on Actagro’s Organic Acids Technology Platform™ (GM Sept. 29, 2014). The agreement gave Loveland, a provider of crop input products for Agrium’s Retail division, expanded distribution, commercialization, and development rights to the platform in the Eastern U.S., Canada, and Australia.

The acquisition also includes Actagro’s research and development team, as well as a near-complete, world-class research and development facility located in California that will support the continued development of soil and plant health technologies.

Nutrien said Actagro will be included in the company’s Retail segment. Actagro has some 100 employees.

“The acquisition of Actagro is aligned with Nutrien’s strategy to invest in higher-margin proprietary products that provide strong value for growers,” said Nutrien President and CEO Chuck Magro. “Actagro has a strong track record of developing and manufacturing high-value crop nutrition products, and we see a significant opportunity to expand the business by leveraging the global reach of our Retail network and the expansion of Actagro’s strong relationships with domestic and international distributors. Nutrien will continue to use its strong balance sheet and cash flow to prudently allocate capital towards growth opportunities that create value for our customers and our shareholders.”

The purchase price is US$340 million, including approximately US$20 million in working capital, and is expected to be accretive to earnings in the first year. Nutrien expects the business to generate approximately US$55 million in run-rate EBITDA two years after close with the realization of synergies and organic growth opportunities. Closing of the transaction is subject to U.S. regulatory approval and is expected to be completed in the first half of 2019.

Actagro LLC began operations in September 1997 when it acquired the assets of Actagro Inc., which was founded as Pacific Micro Minerals in 1980 (GM April 21, 2008).

TFI, ARA Form Safety Alliance with OSHA

Featured, News

The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA) on Feb. 4 announced the formation of an alliance with the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) to enhance workplace and community safety. The associations said the alliance will build upon the stewardship efforts of ResponsibleAg, a voluntary program created in 2014 by TFI and ARA to improve safety and security at agricultural retail facilities.

“Safety is a key priority for the fertilizer industry,” said TFI President and CEO Chris Jahn. “Through this alliance we will provide partner members and the public with information, guidance, and access to training resources to help them protect the health, safety, and security of workers, emergency responders, and the communities surrounding agricultural retail and supply facilities, with a particular focus on the safe storage and handling of fertilizers.”

The alliance will remain in effect for two years, with representatives from each organization meeting periodically to discuss the responsibilities of the participants, share information on activities, and track results in achieving goals. The alliance said it has already completed its first project with the launch of a training video showing a mock agricultural retail facility inspection. The video was filmed at the ResponsibleAg training facility in Owensboro, Ky.

Additional objectives include the sharing of information on OSHA’s National Initiatives, and opportunities to participate in initiatives and the rulemaking process; sharing information on occupational safety and health laws and standards, including the rights and responsibilities of workers and employers; speaking, exhibiting, and/or appearing at OSHA, TFI, and ARA conferences, local meetings, or other events, including the OSHA Alliance Program Forum; sharing information among OSHA personnel and industry safety and health professionals regarding TFI and ARA good practices or effective approaches through training programs, workshops, seminars, and lectures; and encouraging TFI local sections and ARA members to build relationships with OSHA regional and area offices to address health and safety issues, including the safe storage and handling of fertilizers.

“Safety is much larger than one person or one company,” said ARA President and CEO Daren Coppock. “Safety also means being a good steward – a good steward of the land, business, employees, and the communities in which we operate. This alliance is a positive step for ARA, TFI, and OSHA to work together on an issue that is top of mind for ag retailers.”

SOCAR, Gübretaş, Ink LOI for Turkish Urea JV

Asia, Europe, News, News Briefs, Urea

SOCAR Türkiye Enerji AŞ, a Turkish subsidiary of The State Oil Co. of the Azerbaijan Republic (SOCAR), and Turkish fertilizer and chemicals firm Gübretaş have signed a letter of intent to discuss setting up a joint venture in Turkey for the sale and purchase of urea.

The envisaged partnership would be a 50:50 venture. The urea would be imported from SOCAR’s newly-operational plant at Sumgayit, Azerbaijan (GM Jan. 18, p. 28), and from other producers in geographical proximity, according to a Gübretaş filing on Turkey’s Public Disclosure Platform (KAP). The filing indicated that the urea would be sold to the Turkish domestic market and to foreign markets.

SOCAR said the commercial details of the planned joint venture will be disclosed after signing the final agreement with the partner company.

SOCAR’s Sumgayit combined ammonia-urea complex started commercial operation in January (GM Jan. 18, p. 28). It has urea capacity for 2,000 mt/d – around 650,000-660,000 mt/y, according to the producer. Some 70 percent of the urea output is intended for export (GM Nov. 22, 2017).

PhosAgro Sees Q4 Sales Dip, Higher 2018 Output, Sales

News, News Briefs, Phosphate, Russia

PhosAgro, Moscow, reported its fourth-quarter fertilizer and feed phosphates production was up by close to 2 percent, while sales decreased by some 2 percent year-on-year. Full-year 2018 fertilizer and feed phosphate production and sales rose 8 percent and 9 percent, respectively.

Fourth-quarter fertilizer and feed phosphate sales amounted to 1.96 million mt, down from the year-ago 2.01 million mt. Nitrogen-based sales grew 15 percent to 470,400 mt, up from 410,700 mt, while phosphate-based sales and MCP were 7 percent lower at 1.49 million mt, down from the year-ago 1.60 million mt. Fourth-quarter fertilizer and feed phosphate production totaled 2.29 million mt, up from 2.25 million mt.

Full-year 2018 fertilizer and feed phosphate sales increased to 8.83 million mt, up from 8.10 million mt. Nitrogen-based sales grew by 36 percent to 2.20 million mt, up from 1.62 million mt. Phosphate-based sales and MCP were some 2 percent higher at 6.63 million mt, against the year-ago 6.48 million mt. Twelve-months fertilizer and feed phosphate output increased to 8.98 million mt, up from 8.34 million mt.

“We achieved our ambitious production guidance of 9 million mt for the year,” said PhosAgro CEO Andrey Guryev. “And we plan to increase further the production of fertilizers by up to 5 percent in 2019. Thanks to our sales strategy that aims to be ‘closer to our customer,’ PhosAgro made further progress on widening its direct access to priority markets, bolstering sales by 9 percent year-on-year,” he said.

The CEO also highlighted that after the first full year of operations at the group’s new 760,000 mt/y capacity ammonia plant at Cherepovets, that production site is now fully self-sufficient in ammonia feedstock, which he said has “solidified PhosAgro’s leadership position on the industry cash cost curve.” However, group-wide ammonia production was down 8 percent year-on-year in the fourth quarter, at 465,000 mt against the year-earlier 503,400 mt, due to scheduled maintenance work.

Guryev noted that the increase in fourth-quarter production of phosphate-based products was primarily driven by a 24 percent year-on-year rise in MAP production, which, he said, was made possible by the modernization of midstream capacities – both phosphoric and sulfuric acid – at Balakovo. In the upstream sector, fourth-quarter phosphate rock output grew 7 percent to 2.6 million mt, boosted by the completion of the modernization program at beneficiation plant number 3. Full-year output reached 10.07 million mt. Last year saw underground mining account for 80 percent of all mining work, and had a positive impact on the group’s phosphate rock cash cost, the CEO said. He noted that underground mining is nearly two times cheaper than open-pit mining.

In 2018, the group’s fertilizer sales to North America showed the strongest growth, with sales up 78 percent year-on-year to 1.1 million mt, which the group attributed to a deficit of phosphates following the closure of capacities in Florida.

Fertilizer shipments to Latin America grew 24 percent year-over year to 2.0 million mt, boosted by strong sales of nitrogen-based products (up by 59 percent) directly to end-customers.

European fertilizer sales rose by 11 percent to 2.1 million mt, which Guryev attributed to the group’s strategic approach “to move deeper into the distribution chain” and “expand PhosAgro’s on-the-ground presence with new local offices.” Fertilizer volumes sold to Russia, which the group describes as “its priority domestic market,” were up 5 percent in 2018 from a year ago, at 2.4 million mt.

Looking ahead to 2019 market conditions, the CEO noted that the fertilizer industry traditionally starts the new year with the off-season slowdown putting pressure on prices. Furthermore, he believes that prices for phosphate-based fertilizers will remain under pressure throughout the first quarter of this year. But Guryev expects to see a recovery in prices in the second quarter, driven by the beginning of the spring application season in major agricultural regions.

“Overall, price dynamics in 2019 should be flattish, amid more stable global fertilizer supply than in 2018,” he said.

PhosAgro Sales Volumes (‘000 mt)

Product Q4 2018 Q4 2017 % change FY2018 FY 2017 % change
Phosrock 844.9 734.1 +15.1 2,964.2 2,732.2 +8.5

Phosphate-Based Fertilizers
DAP/MAP 645.1 695.8 -7.3 2,912.6 2,963.9 -1.7
NPK 603.7 570.5 +5.8 2,664.6 2,488.8 +7.1
NPS 101.4 199.9 -49.3 423.5 409.8 +3.3
APP 54.5 35.2 +54.8 209.4 170.7 +22.7
MCP 84.4 90.0 -6.2 347.2 350.4 -0.9
PKS 3.3 7.8 -57.7 77.6 101.2 -23.3
Total 1,492.4 1,599.2 -6.7 6,634.9 6,484.8 +2.3

Nitrogen-Based Fertilizers
AN 136.2 76.7 +77.6% 595.3 476.0 +25.1
Urea 334.2 334.0 +0.1 1,600.3 1,139.8 +40.4
Total 470.4 410.7 +14.5 2,195.6 1,615.8 +35.9
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