All Posts from August 9, 2019

APC Starts Red Granular Potash Production, Exports to Brazil

Brazil, Jordan, News, News Briefs, Potash

Arab Potash Co. (APC), Amman, said it will begin exporting red granular potash to Brazil this month, according to Jordan’s Petra news agency, citing APC Chairman Jamal Al- Sarayrah, who was speaking at a press conference on Aug. 4.

The company has started producing red granular potash, which, according to Al-Sarayrah, would open new markets to APC and diversify its customer base. However, the chairman made no comment on the volumes involved.

APC also plans to expand its production portfolio to include specialty fertilizers, global demand for which has grown 5-7 percent, the chairman noted.

Regarding other expansion plans, the company and Jordan’s Ministry of Energy and Resources have inked an agreement to finance studies on the economic feasibility of extracting potash from the country’s Al-Lisan area near the Dead Sea (GM Feb. 15, p. 26).

APC said initial studies indicate there are “huge deposits” of potash in the area in question, which will be extracted if the current economic and technical studies prove commercial extraction to be feasible. The company expects to cover the expected JD12 million (approximately $16.9 million at current exchange rates) cost of the technical study from its own resources.

Al-Sarayrah also reported that the company has floated a tender to conduct a technical and financial feasibility study in Jordan’s Ghour Fifa region to the south of the Dead Sea, which, if proved to be a feasible proposition, could see the production of some 450,000 mt/y of potash, he said (GM Feb. 15, p. 26).

APC last week reported a 46 percent rise in its first-half net profit to JD78.2 million on revenues of JD266 million (GM Aug. 2, p. 29).

The J.R. Simplot Co. – Management Brief

Management Briefs

The J.R. Simplot Co., Boise, has named Erik Vettergren as Vice President of Mining and Manufacturing within its AgriBusiness group, succeeding Klaas Hutter, who will retire Dec. 20 as Vice President Emeritus, but continue to work on special projects. Vettergren will be responsible for all manufacturing facilities, mines, and engineering services, with key goals of safety, operational excellence, innovation, and sustainability. He also will develop and maintain operations, engineering, and capital expenses and budgets, working closely with supply, planning, sales, and marketing groups.

Vettergren joined Simplot in August 2018 as Mining and Manufacturing Senior Director. He previously worked as Upgrade Products General Manager for Nutrien Ltd. (formerly Agrium Inc.) in Kennewick, Wash., overseeing Nutrien’s Kennewick nitric acid/UAN facility, two NPK granulation plants in the Southeast, and a controlled release facility in Missouri. He also managed a Redwater ammonia urea complex in Alberta, and Agrium’s Conda Phosphate Operations near Soda Springs, Idaho.

He holds a bachelor’s degree in chemical engineering from the University of Michigan and an MBA from Western Governors University.

BayoTech Inc. – Management Brief

Management Briefs

Junior technology provider BayoTech Inc., Albuquerque, announced that its Board of Directors has appointed Mo Vargas as President, CEO, and Director. He has over 25 years of experience, most recently as CEO of Concord Blue Energy Inc., Los Angeles, a waste management to renewable energy firm, as well as stints at GE, Siemens, AES, and Lockheed Martin. He holds a degree in Mechanical Engineering from the University of California-Irvine and an MBA from the University of Southern California.

“I’m proud that BayoTech has been able to recruit Mo to lead the team,” said Justin Eisenach, BayoTech founder and former CEO. “It confirms the scale of the value proposition we saw when we started the company.”

BayoTech is developing a modular, scalable, and rapidly deployable platform for the production of onsite hydrogen and nitrogen fertilizer for the agricultural, industrial, transportation, and energy markets (GM Sept. 21, 2018).

 

Kugler Co. – Management Brief

Management Briefs, Specialty

Kugler Co., McCook, Neb., reports that Tom Broz announced his retirement in June after some 35 years of dedication to agriculture, innovation in fertilizer production, and the Kugler Co. The company said Broz’s sensibility and understanding of liquid fertilizers helped Kugler elevate and establish industry standards regarding the production of high-quality fertilizer.

The company said Brian Uerling will be taking over responsibility of project management and day-to-day operations at Kugler’s multiple facilities. He came to Kugler from Kiewit Associates and has been with the company for six years.

The company said to round out the team and continue the quest for superior quality product, David Fielding joined Kugler in 2018. It said his engineering and chemistry background matched up well with the company’s existing quality philosophy and new product development cycle. His father, Jae Fielding, handles sales for the Northern tier U.S. and Canada area, which are served by Kugler’s Rapid City, S.D. plant. In addition to his sales duties, Jae also provides advanced technical support to Kugler product research and production.

Founded in 1924, Kugler Co. is a regional manufacturer and supplier of liquid fertilizer products that are shipped coast-to-coast, as well as internationally.

The Andersons 2Q Income Up; Plant Nutrient Margins Offset Volume Drop

Featured, News, Specialty

The Andersons Inc., Maumee, Ohio, reported second-quarter net income attributable to The Andersons of $29.9 million ($0.91 per diluted share) on sales of $2.32 billion, up from the year-ago $21.5 million ($0.76 per share) and $911.4 million. Sales were up dramatically due to the purchase, effective Jan. 1, 2019, of all of The Lansing Group and Thompsons Ltd. (GM Jan. 18, p. 1).

“Extremely wet weather in many of our core grain origination markets benefited our Trade Group, but hurt both our Ethanol and Plant Nutrient Groups during the quarter,” said President and CEO Pat Bowe. “The resulting market conditions illustrated perfectly the value of the more diversified, newly integrated portfolio we now operate in our Trade Group.

“We were able to capitalize on merchandising opportunities caused by grain and feed ingredient price volatility. However, we’re concerned about the implications of a smaller corn crop on the utilization of our eastern grain assets for the remainder of this year and into 2020,” Bowe continued.

“The Trade Group’s adjusted results were strong, as basis appreciation and good merchandising results helped offset weakness in the food and specialty ingredients units,” he added. “The Ethanol Group remained profitable in a considerably compressed margin environment. As expected, the Plant Nutrient Group’s results were hurt by substantially lower primary and specialty nutrient volumes due to the wet spring, but margins were stronger, resulting in improved year-over-year pretax income. The Rail Group performed well, primarily due to solid leasing results.”

The company said improved nutrient margins were driven by cost containment, operational efficiency, and product mix, and offset a 12 percent volume shortfall. The company also said inventory carrying costs increased year-over-year due to delayed and reduced planting. The company said since it rails product from Canada and Florida, it is not dependent on Gulf barge deliveries, which were delayed. However, it said persistent rain particularly impacted volumes in Ohio, Michigan, and Indiana.

Bowe told analysts that while nutrient margins continue to be stronger than the prior year, fall volumes are typically not large enough for the company to be able to make up the full amount of the shortfall. However, he said that with normal weather, higher grain prices, and nutrient deficiencies, the fall season could be better than normal.

In other news, the company announced that it has signed an agreement to sell the agronomy assets of Thompsons, a wholly-owned subsidiary in Ontario, to Sylvite Holdings Inc., Burlington, Ont. (see related story). The sale is expected to close in September 2019. The Andersons will continue to own and operate Thompsons’ grain and food processing facilities in Ontario.

The Andersons took a $3.1 million pretax impairment charge on its Trade Group’s remaining Tennessee assets.

Wall Street reacted well to The Andersons’ results, which beat many analyst estimates. While shares closed on Aug. 7 up 3 percent to $25.40, they reached as high as $27.49, up 11.5 percent.

Six-month net income was $15.9 million ($0.48 per share) on sales of $4.3 billion, up from the year-ago $19.8 million ($0.70 per share) and $1.55 billion, respectively.

Plant Nutrients Group 2Q-19 2Q-18 YTD-19 YTD-18
Revenues ($/M) 270.6 303.1 399.1 438.7
Pretax Income 15.9 15.1 12 16.2
EBITDA 24.9 23.5 29.9 32.8
Primary Volumes (000 st) 590 657 768 859
Specialty Volumes (000 st) 207 247 372 433
Other Volumes (000 st) 13 13 29 29
Total Volumes (000 st) 810 917 1,169 1,321

 

Trade Group 2Q-19 2Q-18 YTD-19 YTD-18
Revenues ($/M) 1,766.3 365.1 3,364.3 641.1
Pretax Income ($/M) 23.7 8.7 6.3 7.5
EBITDA ($/M) 44.8 16.8 52.5 22.4

 

Ethanol Group 2Q-19 2Q-18 YTD-19 YTD-18
Revenues ($/M) 245.1 201.8 454 375.4
Pretax Income ($/M) 2.1 7.2 4.6 9.9
EBITDA ($/M) 1.8 8.5 3.7 13.1

 

Rail Group 2Q-19 2Q-18 YTD-19 YTD-18
Revenues ($/M) 43 41.4 84.4 91.9
Pretax Income ($/M) 3.2 0.9 7.5 4.9
EBITDA ($/M) 15.8 10.8 32 24.3

The Andersons to Sell Ontario Agronomy Business to Sylvite Holdings

Featured, News

The Andersons Inc., Maumee, Ohio, announced on Aug. 6 that it has reached an agreement to sell the agronomy assets of Thompsons Ltd., a wholly-owned subsidiary in Ontario, to Sylvite Holdings Inc., Burlington, Ont. The sale is expected to close in September 2019. The Andersons will continue to own and operate Thompsons’ grain storage and food processing facilities in Ontario.

On Aug. 7, Corey Jorgenson, President, Assets and Organizations of The Andersons Trade Group segment, sent a letter to Thompsons agronomy customers informing them of the deal.

“Thompsons and Sylvite have been working together now for over 35 years, and this collaboration is a great opportunity to have a larger retail network to benefit you, our customer,” he said. “We believe this new relationship is beneficial to all our stakeholders, especially our customers. Our two companies share the same values and a strong commitment to serving Ontario farmers. We look forward to working together at our shared locations to provide the best possible service to our customers. Sylvite will focus on growing in agronomy products and services.”

Jorgenson noted that final details of the agreement are still being finalized by Sylvite and The Andersons. The sale is expected to close in early- to mid-September. He said the goal is to make this a seamless transition and maintain normal business operations.

Noting that the deal is not yet final, The Andersons said it would provide more details once it has closed. In the meantime, the Thompsons website indicates that the company’s Agronomy Solutions segment is a full-service ag retailer, supplying nutrients, crop protection, seed, and precision ag. It lists some 11 locations in Ontario.

According to its website, Sylvite operates an independent full-service agricultural retail business in Ontario. In addition, it said it is the largest Canadian-owned, independent wholesaler of farm fertilizer in Ontario and eastern Canada, adding that its integrated network includes over 300 service-oriented people, extensive warehousing services, trucking, and agricultural supply.

Mosaic Reports 2Q Loss, Curtails Mine, Lowers Guidance Again

Featured, News

The Mosaic Company, Plymouth, Minn., announced that the unprecedented wet weather in the Midwest negatively impacted its North American spring fertilizer sales volumes and phosphates margins, causing the company to report a second-quarter net loss attributable to Mosaic of $233.1 million ($0.60 per diluted share) on net sales of $2.18 billion, compared to year-ago net income of $67.9 million ($0.18 per share) and $2.2 billion, respectively. Adjusted EBITDA was $349 million, down from the year-ago $480 million.

“We’ve experienced a North American spring season that was wetter and later than any in recorded history,” said Mosaic President and CEO Joc O’Rourke. “While our Potash and Mosaic Fertilizantes businesses continued to perform well, weakness in the phosphates market negatively impacted second-quarter results. Moving forward, strong price increases in grains, together with depleted soil nutrients in North America, are expected to drive fertilizer applications significantly higher this fall.”

Like its peers, Mosaic is looking forward to a significant rebound in 2020, with approximately 95 million acres of corn.

“The actions we’ve taken to reshape our business, including the permanent closure of our Plant City phosphates facility and the acceleration of the development of the K3 potash mine, leading to today’s announced curtailment of potash production at Colonsay, are expected to increase our operating leverage to the anticipated strong market fundamentals in the second half of 2019 and beyond,” O’Rourke added.

Mosaic told analysts that the new Esterhazy K3 mine has produced 400,000 mt of ore through June 30. As a result, the company can take down its higher-cost 2 million mt/y Colonsay mine. Colonsay costs were put at $100/mt. The move is expected to save some $40-$50 million in cash expenditures in 2019. Excluding brine costs, Mosaic puts per ton potash costs at $69/mt, which it says should go to $60/mt in the fourth quarter.

Although Colonsay will remain ready to return to production should the market situation change, for now Mosaic said its thinking is that Colonsay will remain offline through the end of the year. The Colonsay outage is expected to result in the layoff of approximately 350 employees, according to the Canadian press. Mosaic had not confirmed this number at press time.

The second-quarter loss included a $284 million noncash after-tax charge for the permanent closure of the company’s Plant City phosphate facility, which was announced in June (GM June 21, p. 1). Due to the permanent closure, annual costs are expected to go down $40 million. Mosaic said it is currently in negotiations for alternatives at the Plant City site, though further details were not available.

In other news, the company said Mosaic Fertilizantes expects to complete tailings dam remediation activities and return to full operations more than a month ahead of schedule. The Catalao mine tailings dam remediation was completed, and the mine resumed full operations in May. The Tapira mine resumed operations at 60 percent in July, and is expected to resume full operations in August. The Araxa mine has received an operating permit for its tailing dam B6 and is expected to resume full operations in August.

In addition, Mosaic said it is lowering its full-year adjusted EBITDA guidance to $1.8-$2 billion from May’s guidance of $2-$2.3 billion. It was lowered in May from the earlier $2.2-$2.4 billion (GM May 10, p. 1). Mosaic also lowered adjusted EPS to $1.10-$1.50 from May’s $1.50-$2.00, saying this primarily reflects the impact of the lower than expected sales volumes in the first half and a slower recovery in phosphate margins. May’s EPA guidance was down from the earlier $2.10-$2.50.

Mosaic also moved down full-year potash and phosphate sales volume expectations. Potash has moved down to 8.7-9.1 million mt from 9-9.4 million mt, while phosphates are now seen as 8.4-8.8 million mt, down from 8.6-9 million mt. Mosaic Fertilizantes volumes remain the same at 9.4-9.8 million mt.

Six-month potash and phosphate volumes so far this year are both at 4 million mt, with Mosaic Fertilizantes at 3.6 million mt.

Mosaic foresees third-quarter potash sales volumes at 2.2-2.4 million mt, with an adjusted gross margin of $60-$70/mt, phosphates at 2.2-2.4 million mt at $5-$15/mt, and Mosaic Fertilizantes at 3.6-3.8 million mt at $30-$40/mt.

Mosaic is basing its second-half forecasts on a flat-to-$25/mt price increase. Citing recent Nutrien Ltd. results, as well as those in Saudi Arabia and China, Mosaic said dry phosphate pricing is breakeven or below.

Wall Street did not react well to the news. Mosaic shares fell 6.6 percent on Aug. 6 to close at $22.02. While some analysts were concerned that Mosaic might have to reduce its guidance again, others were buoyed by the company’s rebound prospects.

Second-quarter Phosphate gross margin was a negative $12 million on sales of $917 million, compared to the year-ago $154 million and $1.1 billion, respectively. Gross margin per ton was a negative $7/mt, down from a year-ago positive $67/mt. Sales volumes were 2.2 million mt, down from 2.3 million mt. The average finished phosphate price to destination was $398/mt, down from the year-ago $451/mt.

The company also reported a $11 million equity earnings loss, primarily reflecting Mosaic’s interest in the MWSPC phosphate project in Saudi Arabia.

Second-quarter Potash gross margin was $181 million on sales of $599 million, up from the year-ago $132 million and $569 million, respectively. While sales volumes were down at 2.2 million mt from the year-ago 2.4 million mt, gross margin per ton was up at $84/mt from $56/mt. The average potash price to destination was $277/mt, up from $241/mt.

Second-quarter Mosaic Fertilizantes gross margin was off at $35 million on sales of $833 million, compared to the year-ago $53 million and $713 million, respectively. Sales volumes were up, at 2.1 million mt from the year-ago 1.8 million mt. Gross margin per ton was $17/mt, down from $29/mt. The average finished price to destination was $396/mt, up from $386/mt.

Mosaic reported a six-month net loss of $102.3 million ($0.27 per share) on sales of $4.07 billion, down from the year-ago income of $110.2 million ($0.29 per share) and $4.14 billion, respectively. Adjusted EBITDA was $242 million, down from $449 million.

Sirius Minerals Pulls Bond Issue

England, Featured, News, Polyhalite, Specialty

Sirius Minerals plc’s plans to complete its North Yorkshire polyhalite mine and processing plant under development in northeast England have been thrown into doubt this week after the company decided to suspend a proposed US$500 million bond offer, citing current market conditions.

The company said it intends to revisit the market when conditions have improved later this quarter. It had launched the bond on July 19 (GM July 26, p. 28).

The US$500 million bond is a critical part of the company’s ambitious US$3.8 billion Stage 2 financing needed to complete its polyhalite project.

Sirius Minerals needs to find enough buyers and complete the full bond sale before Oct. 30, 2019, to unlock a US$2.5 billion revolving credit facility from JP Morgan Securities LLC (GM May 3, p. 1).

Shares in the polyhalite developer plunged on the news that the bond had been suspended – announced on Aug. 6 – dropping to 9.55 UK pence per share by 17.00 hours BST on Aug. 8, their lowest in four years.

Germany’s Berenberg analyst, Rikin Patel, believes the risks to Sirius Minerals’ North Yorkshire polyhalite project are now “greater than the reward” following the suspension of the US$500 million bond offering, according to a Bloomberg report. However, despite the uncertainty, Berenberg analysts maintained their long-term view of the project, saying the economics were “favorable” if funding could be secured.

Bloomberg reported that Liberum Capital Markets analyst Richard Knights, one of Sirius’ corporate brokers, was more upbeat, saying that Sirius still has effectively two months to get the bond done.

Tipton Farmers Co-op Joins GreenPoint Ag

Featured, News, South Central

Tipton Farmers Cooperative, Covington, Tenn., and Memphis-based GreenPoint AG LLC announced in early August that they have successfully consolidated their operations. The merger was first reported in December 2018, when Tipton and GreenPoint signed a letter of intent to combine all operations under the GreenPoint name.

“We officially welcome Tipton Farmers Cooperative as we come together as the GreenPoint AG family,” said Tim Witcher, President/CEO of GreenPoint AG. “The rich legacy, expertise, and professionalism that Tipton Farmers Cooperative brings is a perfect fit with the culture that comprises GreenPoint AG. The joining of our two businesses advances our strategy for growth, and we’re excited for our future.”

Chartered in 1935 and originally named the Tipton County Supply Association, Tipton Farmers is a farmer-owned supply co-op that serves customers in the southwestern corner of Tennessee. The business offers retail agronomy and fuel products and services, as well as a cotton gin and car care center from its Covington location, with a second retail agronomy center in Halls, Tenn.

“The shared core values of both organizations focused on the success of the grower presents a wealth of possibilities to serve the ever-changing needs of our customers,” said Joey Caldwell, Tipton General Manager.

GreenPoint Ag said the merger gives it a presence in Tennessee and builds on the company’s “large southern retail ag business” by leveraging the “strong reputation and service model” built by Tipton in its core trade area. GreenPoint currently operates 54 agronomy locations in Arkansas, Kentucky, Louisiana, Mississippi, Missouri, Texas, and now Tennessee.

GreenPoint AG was formed in 2012 (GM Aug. 13, 2012) as an agronomy joint venture between Tennessee Farmers Cooperative, La Vergne, Tenn., and Winfield Solutions LLC, a wholly-owned subsidiary of Land O’ Lakes Inc. The farmer-owned company expanded in 2014 by adding the agronomy business of Farmers Inc., Greenville, Miss., with locations at Greenville, Miss., and Rolling Fork, Miss. (GM Aug. 11, 2014).

Fertilizer Canada Amends Codes of Practice in Response to New Environmental Regs

Canada, News, News Briefs

With Canada’s Environmental Emergency Regulations 2019 becoming effective on Aug. 24, Fertilizer Canada on Aug. 1 released a technical bulletin to provide guidance on the major changes that the regulations pose for the fertilizer industry.

The new regulations, which were first published in the Canada Gazette on March 6, 2019, are intended to strengthen environmental emergency management in Canada. Among the measure’s provisions are improvements and additions to the Schedule 1 list of 249 substances that pose an acute hazard to the environment or to human health.

The substances listed in Schedule 1 were originally organized into three hazard categories under three parts, but this has now been consolidated and the number of hazard categories expanded to six, which include aquatically toxic, combustible, explosion hazard, pool fire hazard, inhalation hazard, and oxidizers that may explode. Regulated thresholds for Schedule 1 substances have not changed, but 33 new substances have also been added to the list.

The fertilizer products on the Schedule 1 list include ammonia, ammonium nitrate, and calcium ammonium nitrate. In some cases the new regulations required no changes to Fertilizer Canada’s existing Codes of Practice for those chemicals, but slight changes were required in others.

For example, the new regulations now require Environmental Emergency Plans (E2) for sites that have ammonia and ammonium nitrate at levels that exceed the regulated threshold quantities, both in terms of total volume and if the capacity of the container used to hold the products exceeds Schedule 1 thresholds.

If these circumstances apply, Fertilizer Canada said the regulated party “is required to prepare, implement, and conduct training exercises on an E2 Plan,” and notify the Environment and Climate Change Canada (ECCC) department that it has done so. The Ammonia Code of Practice has also been amended to include additional emergency response drills for those required to have an E2 Plan. In addition, the new regulations contain more detailed requirements concerning public communication for those sites required to have an E2 Plan.

“This technical bulletin aims to provide targeted guidance on the major changes that have been made to the Environmental Emergency Regulations to assist facilities with the changes coming into force, and to provide clarity on changes to Fertilizer Canada’s Codes of Practice,” Fertilizer Canada said. “However, this is not a comprehensive list, and facilities which are storing regulated substances should consult the regulations themselves to determine their compliance obligations.”

The Canadian government estimates that the new regulations implicate an additional 200 businesses, along with the existing 4,800 regulated parties across Canada. Of these facilities, the government estimates that approximately 3,000 will be required to prepare, implement, exercise, and update an E2 Plan.

Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

For additional details visit our Terms of Use.