Long-time industry veteran and former Chairman and CEO of Royster-Clark Inc. Francis P. Jenkins Jr., 78, passed away on Oct. 3, 2020. An obituary was not available at press time, however, Buckler-Johnston Funeral Home in Westerly, R.I., is handling the arrangements.
Clean energy technology company Monolith Materials, Lincoln, Neb., reports that it is planning a 275,000 mt/y carbon-free ammonia plant in Hallam, Neb. Monolith technology converts natural gas into carbon black and co-product hydrogen, with the latter expected to be used for ammonia production.
Monolith hopes to break ground in 2021 on Olive Creek 2, (OC2), a $1 billion complex, with completion expected in 2024. Ammonia production would be integrated with a new 180,000 mt/y carbon black production facility. Monolith expects to sell its ammonia into the Cornbelt, and told Green Markets that it is currently in discussions with area co-ops.
The company expects to use KBR, Houston, for its ammonia technology, and Kiewit Corp., Omaha, for its engineering, procurement, and construction (EPC).
“Since its inception, Monolith Materials has been committed to developing solutions that are environmentally transformative, technologically advanced, and financially viable,” said Rob Hanson, CEO of Monolith Materials, and the company’s co-founder. “Being able to produce one of the world’s most essential products in a way that is carbon-free is a significant step not only for our company, but for the industry and even society as a whole.”
Monolith is already producing carbon black and hydrogen at a smaller plant at Hallam. Ground was broken on Monolith’s first commercial scale carbon black (14,000 mt/y) plant (Olive Creek 1) in late 2016 at Hallam, and that facility is currently being commissioned. Carbon black, which is used in several industries, including batteries, plastics, ink, tires, and rubber, is in production and is expected to be shipped from the plant in the fourth quarter.
OC1’s hydrogen is currently being flared. Monolith said this is the first new carbon black plant to be built in the U.S. since the 1980s. OC1 was developed after Monolith, founded in 2012 in San Carlos, Calif., used a pilot plant to produce the product in Redwood City, Calif. While it still has offices in San Carlos, the company is now headquartered in Lincoln and has its Monolith Technical Center there, which includes a chemical laboratory, rubber compounding facility, and innovation center.
The Nebraska site was selected for three reasons: its proximity to natural gas; central shipping locations; and to be next to Nebraska Public Power District’s (NPPD) Sheldon Station. Hydrogen from OC1 was expected to be used by NPPD to replace an existing coal-fired boiler, with one fired by hydrogen. However, those plans were dropped in July as not financially feasible, according to the Lincoln Journal Star, leaving Monolith to find another market for its hydrogen.
Monolith estimates that current ammonia production practices account for approximately 1 percent of total global greenhouse gas emissions, or roughly the equivalent of the total emissions of the United Kingdom. The company said its carbon-free ammonia bonds Turquoise Hydrogen with nitrogen from the air using the Haber-Bosch process. Turquoise Hydrogen is derived using methane pyrolysis to split the methane molecules into carbon and hydrogen. The process generates no CO2. Monolith projects that it will create 3 mt of cleanly made carbon black for every 1 mt of hydrogen it produces. It said the new facility will run on 100 percent renewable electricity.
“This is great news for 21st-century agriculture, where we face the challenge of decarbonizing age-old processes at the same time as we must scale up production to keep pace with population growth,” said Trevor Brown, Executive Director, Ammonia Energy Association. “We need to deploy every available technology to accelerate this energy transition, and Monolith’s methane pyrolysis process has potential to deliver low-carbon ammonia in the right place at the right scale and at the right cost.”
Monolith is backed by Azimuth Capital Management, Cornell Capital LLC, and Warburg Pincus.
K+S Group, Kassel, announced on Oct 5 that it had signed a contract to sell its Americas salt business to Stone Canyon Industries Holdings LLC (SCIH), Mark Demetree, and affiliates. K+S said the sales price (enterprise value) amounts to $3.2 billion and represents 12.5 times the Americas Operating Unit’s 2019 EBITDA of $257 million. The $3.2 billion price tag is understood to include debt.
The Americas salt assets initially had been expected to fetch just over $2 billion, but according to a Bloomberg report citing people familiar with the matter, SCIH and its affiliates had been able to “far outbid” other suitors.
SCIH owns Overland Park, Kansas-headquartered ice melt manufacturer and salt supplier Kissner Group Holdings LP, which it acquired this past April in a $2 billion buy-out deal. Demetree is the Executive Chairman and CEO of Kissner Group Holdings.
SCIH issued its own announcement of the agreement with K+S, indicating that Kissner Group Holdings was also “a minority owner” signee to the deal.
K+S early on Oct. 5 had confirmed it was in “very advanced” negotiations with SCIH. Stone Canyon, headquartered in Los Angeles, describes itself as “an industrial holding company designed to buy, build, and hold for the long term, with a strategy focused on acquiring and operating market leading companies.”
In early August, it had been reported that the SCIH group was partnering with U.S. investment firm Meritage Group LP in a bid to acquire the K+S Americas salt business (GM Aug. 7, p. 37). But in its Oct. 5 release announcing the agreement with K+S, SCIH said it was advised by Morgan Stanley and Gibson, Dunn & Crutcher LLP. Debt financing and structuring assistance was provided by Greenwich, Conn.-headquartered Eldridge.
Other suitors for the K+S Americas salt assets included private equity firms Advent International, American Securities, and Cerberus Capital Management, which were reported to have also got through to the second bidding round, (GM Aug. 7, p. 37; July 17, p. 30). Bloomberg, citing the people familiar with the matter, said Koch Industries also had been a potential bidder for the salt assets. However, K+S, until this week, had declined to comment on the identities of bidders.
The Americas Operating Unit mainly comprises Morton Salt (USA), acquired by K+S in 2009 for $1.675 billion (GM April 6, 2009), and K+S Windsor Salt (Canada), also acquired in 2009. The unit also comprises K+S Chile, formerly known as the Chilean Company SPL, acquired by K+S in 2006.
The closing of the transaction of the Americas Operating Unit sale is expected to occur in summer 2021, subject to customary closing conditions, including approvals from regulatory authorities. K+S said the purchase price will be paid in cash at that time. According to the sources cited by Bloomberg, to address concerns about a drawn-out antitrust review and deal completion, K+S and Kissner have discussed financing structures that would give K+S access to funds ahead of debt maturities in May 2021
“With the sale of the Americas salt business, we are taking a giant step in reducing debt,” said K+S Chairman of the Board of Executive Directors Burkhard Lohr. “We are thus creating a solid financial basis for the sustainable development of the company.”
The sale of the Americas operating unit forms the cornerstone of K+S debt-reduction efforts. The company announced in December last year the implementation of a package of measures adopted in response “to the difficult external environment” in order to strengthen the financial basis of the company and to reduce debt by significantly more than €2 billion by the end of 2021 (GM Dec. 13, 2019). In March, the company announced it was putting its Americas Operating Unit on the sale block, and believed the sale of the unit would provide the company “with the greatest potential” for reducing debt by the end of 2021 (GM March 13, p. 1).
Back in December, K+S also said it was mulling a sale of a minority stake in its Bethune potash mining operations in Saskatchewan as part of its potential assets sales. But the company subsequently emphasized that Bethune Potash was off the table as far as any potential divestment was concerned, and in June, Lohr told shareholders at the company’s virtually-held AGM that the Bethune plant “is and will continue to be an indispensable component of the future of K+S” (GM June 12, p. 1).
K+S’ net financial liabilities stood at €3.1 billion as of the end of 2019, with net financial liabilities/EBITDA standing at 4.9x, and on June 30, 2020, these were €3 billion and 5.6x, respectively (GM Sept 25, p. 28)
The sale of the Americas operating unit is being accompanied by the reorganization of the remaining administrative functions in Germany. K+S has already announced the merger of the Europe+ Operating Unit and the K+S holding entity. The budget for the administrative functions of the future functional organizational structure will be reduced by 30 percent, for a total of €60 million per year. K+S expects this restructure of the administrative functions to be completed by the end of this year.
This week, the company reiterated that it aims to generate a positive cash flow at all its German production sites “even with a low global price level for potash,” as well as “weak demand for de-icing salt as a result of weather conditions.” It also told investor conference participants last month that the ramp-up of production capability at its Bethune potash operation to 2.86 million mt/y in the mid-2020s is expected to “significantly improve” K+S’ competitive position. It expects 2020 production to be close to 2 million mt/y, up from 1.6 million mt/y last year
K+S last month confirmed a full-year 2020 EBITDA guidance before one-off restructuring expenses at about €520 million, or, including the SG&A restructuring costs, a full-year EBITDA of about $480 million. Full-year 2019 EBITDA came in at €640 million.
The effects from the intended sale of the Americas operating unit have not been included in the full-year guidance, as K+S has said previously the completion of the transaction and a payment of the purchase price is not expected before 2021.
However, Warburg analyst Oliver Schwarz was cited in a Bloomberg report as warning in a note to clients that despite the deal’s $3.2 billion value being “a positive surprise,” it gives rise to “new challenges.”
Without the operations to be sold, K+S’ full-year 2019 EBITDA falls to €410 million from €640 million, Schwarz wrote, noting that the company’s net debt to EBITDA falls by just over one-third despite the overall 60 percent debt reduction achieved through the sale.
The analyst, according to the report, believes K+S earnings are likely to become more volatile as the Americas operations’ profitability has been less volatile than Europe due to the different dynamics of the salt and potash markets.
“In the end, K+S will be even more dependent than before on rising potash prices to successfully deleverage the company,” said Schwarz.
LSB Industries Inc., Oklahoma City, on Oct. 8 announced that it has signed a new long term nitric acid supply contract with a customer. Under the agreement, LSB will supply between 70,000 to 100,000 st of nitric acid per year. Sales are expected to begin in the first quarter 2021.
“We are very pleased to have been chosen as key long-term supplier of nitric acid to an important customer,” said Mark Behrman, LSB President and CEO. “Notably, this contract advances one of our key operating initiatives to leverage our underutilized nitric acid production capacity at our El Dorado facility.
“This contract, along with the previously released CO2 and LDAN agreements, is the result of our focused marketing efforts to sell our excess production capacity and change product mix in order to enhance our margins,” he continued. “We expect these agreements, when combined with the impact of a new fertilizer storage facility that we completed construction on in April, will provide a meaningful increase in incremental annual EBITDA when fully implemented.”
NeuAG LLC, The Woodlands, Texas, said on Oct. 6 it has completed a debt financing agreement with funds managed by Oaktree Capital Management LP, Los Angeles, to assist in funding the construction of a $90 million ammonium sulfate storage and distribution facility in Freeport, Texas.
Previously announced in May 2020 (GM May 15, p. 1), NeuAG will become BASF Corp.’s new exclusive partner to distribute and market ammonium sulfate (approximate 710,000 st/y capacity), which comes from BASF’s caprolactam production. Construction of the new facility, which will be adjacent to the existing BASF complex in Freeport, began in September 2020.
“This financing provides NeuAG with the capital necessary to construct North America’s newest and most efficient ammonium sulfate storage and distribution facility adjacent to BASF’s complex in Freeport, TX,” said Jerry Newcomb, NeuAG Co-Chairman and CEO. “We are excited to be working with the Oaktree team that has a long history of supporting businesses like NeuAG.”
“We expect the construction to be completed in the fall of 2021, allowing NeuAG to begin supplying customers with BASF’s ammonium sulfate in November 2021,” said Joe Newcomb, NeuAG Co-Chairman and President. “As the exclusive distributor of BASF’s ammonium sulfate, we expect to service customers across a broad range of end uses, including agriculture, industrial, and sprayable markets.”
“Ammonium sulfate is a critical component to our caprolactam value chain, and we are excited to be in a relationship with NeuAG, where we are confident that this state-of-the-art facility will be invaluable to our long-term success,” said Jason Kennedy, BASF Director of Supply Chain. “The efficiencies gained with this new plant will ensure best in class product quality and supply chain optimization, positioning us for sustainable growth in the agricultural and industrial markets.”
American Plant Food Corp. (APF), Galena Park, Texas, which has been marketing the BASF AS for some 55 years, told Green Markets in May that the company will continue in the ammonium sulfate business (GM May 22, p. 1). APF’s access to BASF AS ends toward the end of 2021, about the same time NeuAg says its new storage and distribution facility will be ready.
APF noted at the time that it has the infrastructure to move fertilizer, including the new Greens Port Terminal in Houston, which has approximately 60,000 st of storage. APF also has a major supply contract with EuroChem AG, Zug, Switzerland, and urea, phosphate, and potash are stored at the terminal. APF also has large storage at Galena Park, as well as 11 blending plants.
Tessenderlo Kerley International, a unit of Tessenderlo Group NV, Brussels, and specialty fertilizer manufacturer Van Iperen International, The Netherlands, have signed a long-term distribution agreement in which Van Iperen will sell Tessenderlo’s water soluble sulfate of potash (SOP) produced at Kemira Oyi’s plant in Helsingborg, Sweden.
This plant, owned and operated by Kemira, recently signed a long-term partnership agreement for SOP with Tessenderlo (GM Aug. 28, p. 31). The agreement is scheduled to become operational as of January 2021.
CVR Partners LP, Sugar Land, Texas, said on Oct. 5 its subsidiary, Coffeyville Resources Nitrogen Fertilizers LLC (CRNF), has generated its first carbon offset credits related to the company’s voluntary nitrous oxide (N2O) abatement efforts at its Coffeyville, Kan., nitrogen fertilizer plant. CVR has utilized similar technology to abate N2O at its East Dubuque, Ill., nitrogen fertilizer plant since 2011.
CRNF previously entered into a Joint Development Agreement with ClimeCo, a developer of emission-reduction projects for nitric acid plants, to jointly design, install, and operate a tertiary abatement system at one of its nitric acid plants in Coffeyville. The system was designed to abate 94 percent of all N2O in the unit while preventing the release of approximately 450,000 mt of carbon dioxide equivalent (CO2e) on an annualized basis.
CVR said N2O abatement systems at East Dubuque’s two nitric acid plants have abated, on average, the annual release of approximately 233,000 mt of CO2e during the past five years. With the Coffeyville system now operating at design capacity, CVR said its two fertilizer facilities should abate more than 1 million mt of CO2e each year, in combination with the Coffeyville facility’s carbon dioxide (CO2 ) sequestration efforts.
“As a leader in the production of environmentally friendly ‘green’ nitrogen fertilizer, CVR Partners is proud to have generated its first carbon offset credits as a result of our voluntary nitrous oxide abatement project in Coffeyville, Kan.,” said Mark Pytosh, CVR CEO. “Coupled with our Coffeyville CO2 sequestration efforts, this facility is uniquely qualified to produce hydrogen and ammonia that is certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints.”
CVR Partners LP, Sugar Land, Texas, and related subsidiaries amended its ABL Credit Agreement dated Sept. 30, 2016 to expire Sept. 30, 2022, instead of Sept. 29, 2021. The aggregate commitments under the existing revolving loan were lowered from $50 million to $35 million.
South Korea’s Daewoo Shipbuilding & Marine Engineering Co., Seoul, has received approval for its ammonia-powered ship from Lloyd’s Register, the British quality assurance and risk management company, according to an Oct. 6 report from the Yonhap News Agency. Daewoo plans to commercialize the ammonia-fueled 23,000 TEU (twenty-foot equivalent unit) container carrier by 2025, the company said in an emailed statement. Daewoo has been working with Lloyd’s and global engine maker MAN Energy Solutions since June.
Two other South Korea shipbuilders, Samsung Heavy Industries Co. and Hyundai Mipo Dockyard Co., are also advancing ammonia powered vessels, according to Yonhap. Samsung recently received Lloyd approval for its ammonia-fired A-Max oil tanker (85,000 to 125,000 DWT), while Hyundai Mipo received approval in July for a 50,000 DWT oil tanker.
Junior sulfate of potash developer Reward Minerals Ltd., Nedlands, Western Australia, reported on Oct. 2 that the Australian Department of Agriculture, Water, and the Environment has granted environmental approval for the Lake Disappointment Potash Project in Western Australia. The company said Lake Disappointment is the first SOP project to be permitted under the dual exacting standards of a six-week public environmental review process at state level, as well as under Part 9 of the federal Environmental Protection and Biodiversity Conservation Act 1999. The company said the approval, which is effective through Aug. 31, 2060, speaks to the project’s long-life and low environmental impact.
“This is one of our most significant achievements to date for the project, which now has the major environmental approvals in place that will allow full production at the Pre-Feasibility Study level of 400,000 mt per annum of high quality, organically certifiable SOP for decades to come,” said Reward CEO Greg Cochran.
