Yara International ASA, Oslo, will continue to buy potash from Belarus with imports little affected by the European Union (E.U.) trade restrictions imposed against the eastern European country on June 24, the company’s President and CEO Svein Tore Holsether said on July 16.
“Yara has flexibility, but we have chosen to continue buying from Belarus,” Holsether told Reuters. He said Yara was observing the restrictions set by the E.U. and that it would only continue to import potash as long as it could have “a positive impact” on workers’ rights in Belarus.
The CEO said the sanctions had had “some” impact on Yara’s potash imports so far, but declined to say how much. A rapid implementation of the sanctions would have a bigger impact, he said.
In late May, amid the expectation of the imposition of further E.U. measures against Belarus following the forced diversion to Minsk of a Ryanair flight destined for the Lithuanian capital Vilnius from Athens on May 23, Yara said it has “a broad portfolio of potash suppliers” and “continuously maps alternative supply options to be able to respond to supply chain disruptions” (GM May 28, p. 1).
The company had said a change of supply arrangements “could have a cost, but as a large and stable potash buyer it is typically able to secure competitive terms.”
Since the disputed re-election of Belarus President Alexander Lukashenko last August, Yara has issued a series of statements on its website expressing “concern about the Belarus situation” (GM Sept. 18, 2020, Sept. 25. 2020; Nov. 25, 2020; Dec. 11, 2020). Exiled Belarus opposition leader Sviatlana Tsikhanouskaya – as have others – has called upon Yara to suspend Belaruskali potash contracts.
Norway is not an E.U. member state, but is a member of the European Economic Area. It recently was among four other non-E.U. European countries, to join the targeted economic sanctions imposed by the E.U. Council on June 24, which came into force the following day (GM July 16, p. 32). This will ensure that the national policies of Norway and the other four countries conform to the Council Decision, the E.U. Council said in a statement on July 13.
In other news, Yara International EVP & CFO Thor Giæver, responding to an analyst’s question at a company second-quarter earnings call on July 16 (GM July 16, p. 26), said the company’s Salitre phosphates project in Brazil “was progressing,” but reminded that project work had been impacted by the COVID-19 situation.
“We haven’t been able to man the project anywhere near 100 percent over the last year and a half,” he said. “So, we are still progressing, but also are re-evaluating the timeline on the project. We don’t have a new completion date to communicate at this stage.”
The Salitre project – along with the company’s Rio Grande project – was paused in late March 2020 as a result of COVID-19 measures announced by local authorities (GM March 27, 2020).
Yara had indicated a month earlier that the project would be delayed until the second half of 2021, as it worked to increase the phosphate recoveries from the beneficiation process through utilizing different process optimization, as well as re-engineering solutions (GM Feb. 14, 2020). The company had said it was targeting to reach between 60-70 percent recovery. The beneficiation plant at the Salitre site started up in 2019, and remains operational.
Asked about the implications of the recent potash price increases for the company’s potash project in Ethiopia, Giæver said higher potash prices are obviously positive for the project, but Yara “is fully intent on staying within the company’s CapEx guidance, irrespective of price developments.”
“We have said in the past and we continue to think this is a good viable project, but we are keen to find ways to progress that without putting in a lot more capital from the Yara side,” he said.
Earlier in the earnings call, Holsether had told analysts Yara’s approach to new businesses that the company is establishing is to find ways to fund them and allow growth and still manage within Yara’s capital allocation policy.
Yara has been studying the Yara Dallol potash project in the Afar region of Ethiopia for some years. Last year, the company said the project was “on hold despite the project’s robust profitability” (GM Feb.14, 2020). It cited Yara’s strategic direction as behind the decision.
The Norwegian company, which was last reported to have a 51.8 percent stake in Dallol, had been looking at a potential production capacity of approximately 600,000 mt/y of sulfate of potash (SOP) utilizing solution mining (GM Nov. 10, 2017). A mining agreement was signed with the Ethiopian authorities in November 2017.
Responding to an analyst’s question whether Yara sees more interest on the green or on the blue side of ammonia, Holsether said he sees the interest now in hydrogen and the amounts potentially needed of that product.
“There is room for developing both green and blue ammonia, but whether there will be more interest for green or blue depends on the sectors where it will be used,” he said
“Yara will be in both green and blue ammonia, but the majority of the work that we are doing at the moment is within green ammonia, linked to the company’s project in Porsgrunn, which is our largest such project,” he said.
Yara in December revealed its plans for 500,000 mt/y of green ammonia production in Norway through fully electrifying its Porsgrunn ammonia plant, and said it was seeking partners as well as government support for the project (GM Dec. 11, 2020). In February this year, it signed a Letter of Intent with state-owned hydropower company Statkraft AS and Norwegian renewable energy investment firm Aker Horizons, aimed at establishing Europe’s first large-scale green ammonia project at Porsgrunn in Norway (GM Feb. 19, p. 36).
Holsether also reminded the company is working with Orsted in Sluiskil in the Netherlands, and with ENGIE in Australia, as well as on products for green hydrogen and green ammonia.