All Posts from July 8, 2022

CHS 3Q Income Doubles, YTD Nearly Quadruples; Ukraine Situation Updated

Earnings, News, Nitrogen, Northern Plains

CHS Inc., Inver Grove Heights, Minn., has released results for the third quarter ending May 31, 2022, showing net income of $576.6 million and revenues of $13.1 billion, compared to the year-ago net income of $273.6 million and revenues of $10.9 billion. Nine-month net income was $1.2 billion and revenues $34.4 billion, up from the year-ago $305 million and $28 billion, respectively.

“Global grains and oilseed market demand remained strong throughout the third quarter,” said Jay Debertin, CHS President and CEO.

“Decreased global supply due to geopolitical factors, supply chain disruptions, and market volatility also contributed to increased earnings.

“The ongoing war in Ukraine has resulted in significant uncertainty and contributed to ongoing volatility across global energy markets,” he added. “We are leveraging our U.S. refineries to reliably meet the energy needs of CHS customers.”

As for Ukraine, CHS, which does business and has employees in the country, provided an update. It said its operations were dramatically disrupted by the war, and some of the company’s employees have been forced to relocate to other countries and within Ukraine, with many unable to perform all or some work duties.

While the company said that it does not have significant fixed assets or infrastructure in Ukraine, it continues to have grain inventory in various facilities, with the ability to access those limited, which has resulted in an impairment of a portion of those grain inventories.

However, CHS said that it was able to sell limited amounts of Ukrainian inventory during the quarter ending May 31, which reduced its inventory position to approximately $22.5 million.

In the Ag segment, CHS said processing and agronomy businesses delivered another strong quarter, building on momentum that began earlier in the fiscal year. Energy segment refining margins were higher, driven by robust demand across global energy markets and favorable pricing for Canadian crude oil, which is processed by CHS refineries.

CHS noted that certain of its equity method investments continued to perform exceptionally well, including the CF Nitrogen investment, which was driven by strong global demand for urea and UAN.

CHS reported third-quarter Ag pretax earnings of $273.7 million on revenues of $10.4 billion, up from the year-ago $140.1 million and $9.2 billion, respectively. The company said the increase in Ag revenues reflected the higher pricing attributed to market-driven price increases across most of the segment’s product categories during the quarter, including a $771.7 million increase for wholesale agronomy product revenues resulting from strong global market demand and global supply disruptions.

However, CHS said wholesale agronomy saw decreased volumes during the quarter due to less-than-favorable weather conditions during the spring planting and application season compared to last year.

Nine-month Ag income was $615.3 million on revenues of $27.2 billion, up from the year-ago $237.2 million on revenues of $23.6 billion.

Income from the CHS stake in CF Nitrogen was $178.2 million, up from the year-ago $46.6 million. Nine-month income was $429.1 million, up from the year-ago $62.3 million.

Energy income climbed to $163.2 million on revenues of $2.94 billion, from the year-ago $4.96 million and $1.82 billion, respectively. Nine-month Energy income was $243.3 million on revenues of $7.6 billion, up from the year-ago loss of $116.9 million and $4.6 billion, respectively.

ACME Plans Two Green Hydrogen and Ammonia Plants for India

Green Ammonia, Green Hydrogen, India, News, News Briefs

Indian solar power producer ACME Group, Gurugram, on July 5 announced a green hydrogen and green ammonia project in the Indian state of Tamil Nadu. The project reportedly entails an investment of US$6.5 billion.

“This project will comprise 5,000 mw of solar PV plant, 1.5 GW of the electrolyzer, and 1.1 million mt of ammonia synthesis loop,” said ACME Chief Operating Officer Sandeep Kashyap. “ACME is willing to work with the government to help not only to build this project, but also to create an ecosystem of smaller units. We extend our gratitude to the government of Tamil Nadu for the confidence and support offered to us.”

The news comes soon after ACME’s June announcement of a similar project in the Indian stateofKarnataka. That project would result in a 1.2 million mt green hydrogen and ammonia plant associated with a captive solar power unit. The project is planned for 2022-2027.

ACME has set up the world’s first integrated semi-commercial scale project for a green hydrogen and green ammonia plant at Bikaner in Rajasthan.

ACME has also partnered with Norway-based Scatec ASA to build and operate a large-scale green ammonia facility in the Duqm Special Economic Zone of Oman. The first phase of the facility is to produce 100,000 mt of green ammonia annually, which is to be expanded to 1.2 million mt per annum, with about 3.5 GW of electrolyser capacity powered by 5.5 GWp of the solar power plant.

Brazil’s Largest Port Expands Capacity, Easing Fertilizer Crunch

Brazil, News, News Briefs

Brazil’s largest port is getting a new railroad that will help the key agricultural nation expedite imports of much needed fertilizer, according to Bloomberg. An internal railway at Santos Port was approved July 6 by a federal court known as TCU after a months-long process.

The decision paves the way for a complete overhaul in logistics infrastructure within the port, which will likely see its rail capacity double in the next 5-10 years.

One of the main features will be equipment that can quickly unload fertilizer shipments. Brazil, the world’s biggest producer of soybeans, coffee, and sugar, imports 85% of its fertilizers. Farmers are expanding, and fertilizer purchases rose from 26 million mt in 2017 to 40 million mt last year, straining current logistics.

“The productivity of a specialized terminal can be seven times higher than a general terminal, where the cargoes are unloaded directly to trucks,” said Bruno Stupello, Business Development and Regulation Director of the Santos Port Authority.

The port has a capacity to move 50 million mt/y, which will expand to 115 million mt/y.

The next steps, according to Stupello, will be to identify the companies that want to join an association that will operate the new railway and share costs. They will invest close to 900 million reais ($166 million) over the next five years, starting in 2023.

Phospholutions Attracts Additional Investment

News, News Briefs, Northeast, Phosphate, Specialty

Phospholutions Inc., State College, Penn., a sustainable fertilizer technology developer, announced on July 6 additional investment from global agricultural companies to support commercialization of RhizoSorb® in the U.S. row crop market. The recent funding includes investment from Ospraie Ag Sciences (OAS), Bunge Ventures, the for-profit, global investment arm of Bunge Ltd. and UPL Ltd.

Phospholutions said that after extensive on-farm testing and almost 30 years of academic research, RhizoSorbis the first patented fertilizer additive proven to reduce phosphorus fertilizer applications by 50% without compromising yield.

It said the product increases the efficiency of applied and native soil phosphorus by releasing nutrients based on a chemical gradient in the soil, leading to better availability throughout the season. RhizoSorb has been tested on row crops including corn, soybeans, wheat, barley, sunflowers, chickpeas, rice, and turfgrass.

“RhizoSorb® is proven to deliver the same amount of phosphorus to the plant with half the amount of applied fertilizer,” said Founder and CEO Hunter Swisher. “Conventional fertilizers are inefficient, as less than 25% of phosphorus is taken up by the crop during the growing season.

“With recent increases in fertilizer prices and supply constraints in key global markets, farmers urgently need proven solutions to help maximize the return on input costs,” he added. “This investment helps accelerate our commercial launch by supporting this year’s commercial trial program, strategic development partnerships, and enables product to be delivered to the U.S. row crop market for the 2023 growing season.”

This new investment series follows the Series A totaling $10.3 million announced early last year (GM Jan. 22, 2021) which allowed Phospholutions to more than triple in size. At the time, the investments were led by Continental Grain Co., with participation from Tekfen Ventures, Maumee Ventures, Ag Ventures Alliance, and 1855 Capital.

A $1.5 million investment in 2019 by 1855 Capital and Maumee Ventures, the venture capital subsidiary of The Andersons Inc., helped launch the product (GM June 14, 2019). Additionally, Phospholutions recently won a $250,000 investment during The Radicle Challenge by UPL.

Late last year, Phospholutions was also chosen as one of the first five companies selected for the Farm2050 Nutrient Technology Trialing Platform in New Zealand, organized by Finistere Ventures and Innovations Endeavors. New Zealand will join Canada, the U.S., Turkey, India, Brazil, and Africa on the list of global RhizoSorb trial locations planned for 2022.

In the U.S., Phospholutions will continue their partnership with St. Louis-based digital ag company IN10T as they expand their field trial reach to up to 130 additional corn fields across 12 states in the U.S. in 2022 and include farms within the entire Midwest market.

Canada Invests in Sulvaris Technology

Canada, News, News Briefs, Specialty

Canada’s Minister of Agriculture and Agri-Food, Marie-Claude Bibeau, announced on July 4 an investment of up to C$1,685,858 for Sulvaris in Calgary, Alberta, to further develop new technology to produce high-efficiency fertilizers made with organic carbon.

Sulvaris, founded in 2012, develops proprietary technologies that transform industrial byproducts into environmentally sustainable and effective fertilizer products.

Sulvaris’ carbon control technology converts various forms of organic waste into high-efficiency fertilizers that are rich in nutrients and soil-building carbon and economical to use in large-scale agriculture, as well as for lawn and plants in commercial and home use.

The company said these fertilizers improve on conventional chemical fertilizers by releasing nutrients more slowly, which gives plants the ability to absorb the nutrients as they need them to develop and grow. The more efficient uptake means less unabsorbed nutrients are left in the soil, reducing the risk of them releasing harmful greenhouse gas emissions or contaminating waterways.

“In the wake of the conflict in Ukraine, our farmers are being called upon to play an even greater role in feeding the world, and we are continuing efforts to ensure they have access to the resources they need,” said Minister Bibeau. “Our investment in Sulvaris’ innovative fertilizer technology recognizes this key ongoing priority to support development of affordable and environmentally sustainable fertilizers that help our farmers improve food supply.”

“Our commitment to a more circular economy by utilizing byproducts from the oil and gas industry and waste biomass from the agriculture and forestry industries is prominent in our strategy to provide solutions to help meet the world’s 2050 zero emission goals and increase sustainable food production through the development of our carbon-based products,” said Sulvaris CEO Rick Knoll. “By developing these products, we can reduce the intensity of GHG emissions as well as contribute to organic carbon in the soil to build healthier and more productive soils.”

New Company Launched to be Australia’s First Industrial-Scale Producer of Green Fertilizer

Australia, News, News Briefs

A new company, H2Gro, Sydney, was launched in Australia on July 5 with the ambition to develop Australia’s green fertilizer industry and have a commercially operating production facility by fourth-quarter 2023. The company said it was formed after seeing the impact of the global shortage in fertilizers, which has led to subsequent price increases and is threatening the supply chain for Australian farmers.

“To combat this global challenge, H2Gro was established with the ambition of building a homegrown green fertilizer industry to ensure sovereignty over the nation’s food & agriculture supply,” said H2Gro Director Tim Brooks.

The company intends to fill this large gap in the market by becoming Australia’s first industrial manufacturer of green urea fertilizer, which will help provide a reliable supply for the Australian fertilizer industry and lower the current reliance on importing carbon-intensive fertilizer from overseas manufacturers.

According to H2Gro’s website, its technology partner, CAC-H2, Melbourne, will conduct the initial feasibility study to provide H2Gro with a platform to produce large volumes of green urea. Biomass such as sandalwood, eucalyptus, cereal straw, and hardwood/softwood residues are being considered as possible feedstock.

H2Gro said it is currently leveraging its strong network of relationships in Western Australia to both secure land for the project, as well as access to 10 million mt of biomass.

The CAC-H2 process would use next-generation gasification to produce high-temperature, ultra-clean syngas, which would be converted to hydrogen, then further converted to ammonia and ultimately urea. The company envisages production lines consisting of modular sections that can be added as input volumes increase.

Each modular section would produce 12,000 mt/y. The total anticipated production is targeted to produce up to 150,000 mt/y of green urea, along with revenue-generating byproducts including biochar, wood vinegar, carbon credits, and renewable electrical power.

Once the agreements are in place, the plant is designed, and building permits are approved, H2Gro will seek a listing on a favorable exchange in first-quarter 2023 to finance the production of their facility. The company said it is set to launch a capital raise in the coming weeks to fund the initial stages of developing the plant.

Progressive Planet Reports Specialty Production

Canada, News, News Briefs, Specialty

Progressive Planet Solutions Inc. (PLAN), Kamloops, B.C., which calls itself a “disruptive innovator for cement and agricultural tech,” announced on July 5 an expansion into custom-blended regenerative fertilizers and soil amendments using new specialty-blending equipment.

The company said it has performed seasonal, single-ingredient toll-processing of regenerative fertilizer powders since August 2020 at its pilot plant, which has now been fully disassembled with all industrial-sized equipment moved to Kamloops.

Utilizing blending equipment that came fully paid for with the February acquisition of Absorbent Products Ltd., a manufacturer of mineral-based products derived from diatomaceous earth, zeolite, and bentonite, PLAN said it can now uniformly mix up to 20 mt/h multi-ingredient custom fertilizer powders to exact customer specifications.

PLAN announced that this week it began the first commercial production of Hydr8™ in partnership with Eco Health Industries Ltd., Maple Ridge, B.C., which developed the product. Hydr8 is a soil amendment that is a blend of biochar, zeolite, and humates, and the company said its addition to native soils increases the viability of transplants and improves plant resistance to drought and stress.

PLAN said the next phase of product offerings will come from the ability to convert fertilizer powders into pellets to enable application of specialty fertilizer pellets using traditional broadcast fertilizer spreaders.

To enter the pelleted fertilizer market, PLAN ordered a 16-foot-wide disc pelletizer in May 2022 and expects delivery in August 2022, with plans to begin producing both single-ingredient and custom-blend regenerative fertilizer pellets in fall of 2022.

Lida Resources Announces Reverse Takeover of Continental Potash

News, News Briefs, Potash, Saskatchewan, Vancouver

Lida Resources Inc., Vancouver, B.C., a publicly traded mineral exploration company with a focus on South America, particularly Peru, on July 7 reported that it has entered into a letter of intent (LOI) dated July 6, 2022, with Continental Potash Corp., a private corporation, pursuant to which Lida is proposing to acquire all of the issued and outstanding securities of Continental Potash, whereby the security holders of Continental Potash will become security holders of the combined entity.

Upon completion of the proposed transaction, the resulting issuer will continue to carry on the business of Continental Potash as currently constituted. Lida said the proposed, arm’s length transaction will constitute a reverse takeover of Lida by Continental Potash.

The trading of Lida shares was halted on the Canadian Stock Exchange due to the proposed transaction.

According to Lida, Continental Potash holds an option to acquire up to a 100% interest in certain rights, title, and interests (subject to certain royalties) in the Disley Prospect Area, located 50 kilometers northwest of Regina, Sask., and 215 kilometers southeast of Saskatoon.

Fertoz, Excel Partner on Pellet Plant; New Phosphate Discovery Reported

Australia, News, News Briefs, NPK, Pacific N.W., Phosphate Rock, Specialty, Western Canada

Fertoz Ltd., an Australian-based organic fertilizer manufacturer and supplier with mining operations primarily in British Columbia, has invested $1.28 million to jointly develop a fertilizer pellet plant with Montana-based Excel Industries, which supplies organic chicken litter-based fertilizer and compost, as well as other products, to growers in Montana.

Fertoz will work with Excel and its affiliate Range Cubes Mill LLC, based in Kinsey, Mont. Construction is under way on the Montana plant, which boasts good rail access. It will be capable of producing 80,000 mt/y of pellets, with first sales targeted for the end of this year.

The pellets will contain nitrogen, phosphorus, and potassium (NPK) for the organic and regenerative agriculture market in North America, which is expected to grow at a compound annual growth rate of more than 14% over the next five years.

Daniel Gleeson, who was named Fertoz CEO in April, said demand for complete organic NPK products is high, but they have been very limited to growers in the past. The Fertoz rock phosphate will add value to Excel’s products.

Montana is well located in terms of sourcing key input ingredients cost-effectively, including from Fertoz’s nearby rock phosphate mines, as well as its proximity to organic markets in the U.S. West Coast and Pacific Northwest, as well as Alberta and Saskatchewan.

“Our facility will have the ability to make custom blends of NPK, based on growers’ true soil requirements plus other key elements, including microbes and humates, creating a truly value-added product to increase soil health and maximize product utilization,” Gleeson said.

The pellets will allow Fertoz and Excel to effectively deliver at half the cost the same nutritional benefits as synthetic fertilizer, which often is used only up to 40% in the soil due to leaching and other issues, he added, noting capital payback is expected within 15 months.

Fertoz is evaluating leasing options, as well as USDA grants, to assist with funding while maintaining balance sheet flexibility. It is estimated that sustainable farming practices are used on more than 140 million acres nationwide.

Gleeson also announced that Fertoz has discovered high-grade rock phosphate in the Fernie region of B.C. that will add easily accessible phosphate to its future supply capabilities to help meet growing future demand.

Incitec Pivot Ltd. – Management Brief

Australia, Management Briefs

Incitec Pivot Ltd. (IPL), Southbank, Victoria, on July 6 announced the appointment of Chris Opperman as Chief Financial Officer (CFO) designate of the proposed standalone Incitec Pivot Fertilisers business.

IPL said Opperman will lead the fertilizer separation workstream ahead of the shareholder vote on the proposed structural separation in the first half of 2023. The appointment follows Opperman’s role as Interim IPL CFO until June 30. Paul Victor commenced as IPL’s CFO on July 1, with his appointment announced in March (GM March 25, p. 27).

The Australian company announced on May 23 its plan to demerge its fertilizer and mining explosives divisions into two separate Australian Securities Exchange (ASX) listed companies by mid-2023 (GM May 27, p. 1).

Opperman is an experienced leader who has over 20 years of experience in finance, accounting, and investor relations. Since joining IPL in 2010, he has held a number of senior leadership positions within the finance team, including as General Manager – Group Finance & Investor Relations and CFO of the Dyno Nobel Asia Pacific business unit.

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