Fertilizer Industry News

Fertilizer Industry News

UNITED STATES

US imposes phosphate import duties

The United States has imposed duties on Russian and Moroccan phosphate imports.

The following preliminary import duties were set by the US

Department of Commerce (DOC) on 24th November:

• 20.94 percent on Russia’s PhosAgro
• 23.46 percent on Morocco’s OCP
• 72.5 percent on Russia’s EuroChem.

At current price levels, these duties are expected to halt Russian and Moroccan phosphate shipments to the US, reports Argus Media, by returning the US Gulf coast to a net discount to Brazil on a cfr basis.

NOLA phosphate prices immediately leapt by $10/st on the news, with February futures at $380/st f.o.b. and March futures at $384/st f.o.b., Argus reported.

US phosphate producer Mosaic had petitioned US authorities to impose import duties in July (Fertilizer International 497, p8).

“We appreciate the Commerce Department’s diligent work on our countervailing duty petitions,” said Mosaic’s president and CEO Joc O’Rourke. “Mosaic believes in vigorous competition and free and fair trade, and that these foreign government subsidies must be addressed in order to level the playing field in the US market.”

Import duties on Moroccan phosphate were subsequently corrected downwards from 23.46 percent to 16.88 percent by the DOC in January. This was due to an arithmetic error in the department’s original calculation.

“We are gratified that the Department of Commerce has acknowledged and now corrected the error in the calculation of the provisional rate,” OCP said in a statement. “OCP and the Government of Morocco will continue to cooperate with US authorities to establish that there are no grounds for countervailing duties.”

The currently imposed import duties are an interim measure and subject to change. The DOC is scheduled to make a final determination on these countervailing duties (CVDs) on 8th February. This will be followed by a decision by the US International Trade Commission on 25th March 2021 – with the whole matter due to be finally concluded by the start of April 2021.

US buyers had been reluctant to commit to large volume phosphate purchases during the autumn season. This was due to the perceived risk of carrying high-priced inventory into 2021, given that a resurgence of Moroccan and Russian shipments could have seen prices slide downwards.

Glen Kurokawa, CRU Group’s phosphate analyst, commented: “We had been anticipating CVD orders to be imposed on OCP, PhosAgro, and EuroChem, and the DOC preliminary determination is certainly consistent with that view.

“Mosaic and other US phosphate fertilizer producers should be pleased with the result. The decision increases the likelihood they will receive some protection from imports from lower cost producers entering their home market.”

Kurokawa added: “We’ve already seen dramatic changes in global phosphate flows since Mosaic filed its trade petition in July, and those changes could be cemented going forward. Price spreads in the global and North American markets will change as a result.

“These duty rates are preliminary so may yet change. However, they indicate potentially big consequences for the future of US and global phosphate trade. The stakes are big.”

Nutrien writes down US phosphates assets

Canadian fertilizer giant Nutrien wrote down the combined value of its US phosphate plants at Aurora, North Carolina, and White Springs, Florida, by $760 million in November.

The move followed a market reassessment by the company which resulted in a downwards revision to its long-term phosphates price forecast. Nutrien described the phosphates market as “fundamentally oversupplied” adding that this could limit the potential for price gains for years ahead.

“The reason for the impairment, to be very candid… is that we have a view that the market has a lot of fundamental oversupply in low-cost jurisdictions around the world,” Chuck Magro, Nutrien’s president and CEO, said in an investor call. “And that supply will only continue to increase.”

Nutrien is North America’s second largest phosphates manufacturer, after Mosaic, with a market share of around 25 percent. The company produced 354,000 tonnes of phosphate products (P 2 O 5 basis) in the third-quarter of 2020, a year-on-year fall of five percent.

“Nutrien sees a bleak future for phosphate producers, adjusting lower the estimated value of its primary US phosphate assets as a result,” commented Argus Media.

Nevertheless, Nutrien expects that improved farm economics will support fertilizer demand in the Americas in the short-term. The early US harvest in 2020 also provided a longer-than-usual time period for fall fertilizer applications.

The US phosphate industry has been convulsed by periodic mergers and plant closures stretching back several decades. This has seen the industry consolidate from 18 companies operating 22 production sites in 1990 to just four companies operating from 10 production sites currently (Fertilizer International 496, p40).

Nutrien ended phosphates production at the former Agrium-owned Redwater phosphates plant in 2017, a non-integrated operation in Alberta, Canada. Despite this, the company still has the capacity to produce around five million tonnes of phosphate fertilizers annually in North America. While the Aurora plant could run for several decades ahead, Nutrien’s White Springs operation is expected to exhaust its phosphate reserves by 2029.

Cronus extends EPC contract

US project developer Cronus Fertilizers has extended its engineering, procurement and construction (EPC) contract with thyssenkrupp Industrial Solutions (tkIS). The original turnkey contract, for the construction of the Tuscola, Illinois, ammonia plant, dates from October 2018. It will now run until the end of June.

Cronus is also finalising an additional operations and maintenance (O&M) agreement with tkIS. This will ensure thyssenkrupp is involved in keeping the plant up and running once it enters production.

The new contractual arrangements were announced on 15th December. tkIS also revealed that will become a minority shareholder in Cronus Fertilizers, as part of a strengthened partnership between the two companies.

Construction of the much-delayed 2,300 t/d capacity, $1.7 billion Tuscola ammonia plant is currently scheduled to begin in the second half of 2021. Its completion would provide a major new source of locally-produced ammonia for the Midwest Corn Belt.

“We are looking forward to working in partnership with the Cronus team to realize this world-scale ammonia plant,” said Dr Sami Pelkonen, CEO of the chemical & process technologies business unit at tkIS. “Our investment in Cronus Fertilizers demonstrates our commitment to this project and to Cronus’ success in particular.”

“We are developing one of the largest fertilizer facilities in the US and bringing together global experts to ensure the highest quality in both the construction and operations of the Cronus plant,” said Melih Keyman, chairman of Cronus Fertilizers. “We are proud to expand our partnership with tkIS on this important project.”

Cronus says it will update the project’s timeline as development proceeds. The project has missed a number of construction start dates since it was announced in October 2014.

CANADA

Nutrien launches carbon reduction programme for farmers

Nutrien has launched a pilot carbon reduction scheme in North America as part of a new sustainability partnership with its farm customers.

The scheme is aiming to embed and track sustainable farming practices and improve on-farm carbon performance. As part of this, Nutrien will help farmers to monetise their carbon performance by acting as a go-between in the buying and selling of carbon credits.

The new carbon reduction programme will help to reduce greenhouse gas (GHG) emissions and sequester carbon by promoting climate-smart products and sustainable practices. Nutrien, which operates an industry-leading digital platform, says it is well-equipped to measure the resulting improvements in financial, productivity and environmental performance.

Nutrien provides crop inputs and farm services to more than 500,000 growers worldwide, making it “uniquely positioned” to create a carbon reduction programme at scale. Farmers will also have access to the expertise of Nutrien’s in-house agronomy team. The new carbon programme will be piloted across North America in 2021 before being expanded to South America and Australia in future years.

Chuck Magro, Nutrien’s president and CEO, said the new carbon programme would help farmers to practice and profit from sustainability:

“Nutrien is working to solve some of the world’s biggest challenges: producing more food with less land, water and environmental impact. Our aim is to… help our growers benefit from sustainable practices and enable the purchase and sale of their carbon credits, while partnering with governments to help meet public environmental goals.”

Looking ahead, the carbon offsets market is expected to grow by between 40-100 times globally by 2050, according to some estimates, due to the increasing focus on climate action. Agriculture is expected to be a leading participant in this growing market.

“Carbon has the potential to become a substantial economy that will go a long way towards realizing net zero agriculture. Our direct relationship with our growers will help them to be early movers in this space and see financial value from farming sustainably,” concludes Magro.

NORWAY

Yara targets full-scale green ammonia production by 2026

Yara is planning to scale-up ‘green’ ammonia production from renewable energy.

The company announced plans to completely electrify its Porsgrunn ammonia production plant in Norway at an online investor seminar on 7th December.

Yara is aiming to eliminate CO2 emissions from the 500,000 t/a capacity Porsgrunn plant and at the same time dedicate its output to emissions-free shipping fuel, carbon-free fertilizer production and green ammonia for industrial purposes.

Complete electrification of Porsgrunn has the potential to cut 800,000 tonnes of CO2 annually, equivalent to the emissions generated by 300,000 cars each year. By eliminating one of Norway’s largest static CO2 sources, the project would also make a major contribution to Norway’s Paris Agreement climate commitments.

Yara has set itself the goal of reducing its Scope 1 and Scope 2 emissions by 30 percent by 2030. It is also collaborating with Nutrien and the World Business Council for Sustainable Development on a sector-wide approach to nitrogen industry decarbonisation.

Completely electric production of ammonia at Porsgrunn could commence by 2026, according to Yara, although this is conditional on public co-funding and a supportive regulatory framework.

The full-scale green ammonia project is part of a wider Yara strategy to broaden its core business to encompass the hydrogen economy, as well as crop nutrient markets.

“Ammonia is the most promising hydrogen carrier and zero-carbon shipping fuel, and Yara is the global ammonia champion – a leader within production, logistics and trade,” said Svein Tore Holsether, Yara’s president and CEO. “I am excited to announce that a full-scale green ammonia project is possible in Norway, where we can fully electrify our Porsgrunn ammonia plant.”

Yara is hoping to capitalise on its leading position as an international ammonia producer and trader to capture emerging low-carbon shipping, agriculture and industrial opportunities. This market is expected to grow by 60 percent over the next two decades. The company is actively seeking partners and government support to turn its vision of zero-emission ammonia production in Norway into reality.

In recent months, rival ammonia producers such as Nutrien (Fertilizer International 499, p8) and Fertiberia (Fertilizer International 499, p9) have also committed to producing green ammonia at scale.

Yara also wants to use its large global presence to improve on-farm carbon management and cut crop-related emissions.

“Yara is uniquely positioned to help decarbonise the food chain, with trusted relationships with millions of farmers in 65 countries,” said Terje Knutsen, the company’s executive vice president for farming. “We see a clear opportunity to contribute to sustainable agriculture, while at the same building new business for both farmers and for Yara. As an example, we can directly address 70 percent of corn crop emissions with optimal crop nutrition and soil health measures.”

RUSSIA

PhosAgro expands digital farming project

PhosAgro-Region, Russia’s largest fertilizer distributor, will expand the domestic use of digital farming to cover more than 100,000 hectares in 2021.

The expansion of digital services to Russian farmers was unveiled as part a new cooperation agreement with Exact Farming. This will build on an existing joint project that is piloting Exact Farming’s digital app for remotely monitoring fertilizer use.

The digital system developed by both companies automatically records fertilizer data from tags on PhosAgro fertilizer bags. The data are read by mobile phones and automatically transmitted to Exact Farming’s agronomic satellite monitoring system. Precise volumes and grades of fertilizer are then allocated to specific geographical coordinates. In the future, this system will track crop growth/health alongside data on the crop nutrients applied.

PhosAgro’s current digital farming pilot project covers more than 23,000 hectares in 20 Russian regions. As a result of remote monitoring and changes to crop nutrient plans, the project has already increased crop yields by 10 percent in 2020. This generated additional profits of around RUB 5,000/hectare for participating agricultural producers.

The new automated services offered by PhosAgro and Exact Framing will improve agronomic support for users by including soil analyses and fertilizer recommendations. A constantly updated database will also provide more accurate information on how fertilizers perform under various agronomic and meteorological conditions.

Uralchem acquires a controlling stake in Uralkali

Major Russian nitrogen producer Uralchem has finally acquired a controlling interest in Uralkali, one of the world’s largest potash producers.

The purchase of a new tranche of shares, announced on 2nd December, increased Uralchem’s ownership stake in Uralkali to more than 75 percent. This was financed through a long-term loan with Russia’s Sberbank.

The controlling interest will allow both companies to improve “the efficiency of production, logistics, and sales”, Ural-chem said in a statement. This includes jointly providing customers with combined “nitrogen, potassium, and phosphorus” product packages in “key consumer markets around the world”.

Dmitry Mazepin, Uralchem’s chairman, said: “[The] acquisition of a controlling stake in Uralkali is a commercial project based on the high marginality of the potash fertilizer market, confidence in its further growth, and stable demand for the company’s products. We see the potential for increasing the efficiency of Uralchem and Uralkali due to shared experience, standardization of processes, and joint application of the best practices.”

SUDAN

Uralchem and Uralkali in talks to jointly supply Sudan

Uralchem and Uralkali plan to start supplying Sudan with fertilizers in 2021. The two companies already have an export partnership, jointly supplying products to Zimbabwe, Zambia, Kenya, Angola and Mozambique.

Closer business ties with Sudan were unveiled by Dmitry Mazepin during a visit to Khartoum in early December. Mazepin, who is also a leading member of Russian business group RSPP, held talks with Sudanese vice president lieutenant general Mohamed Hamdan Dagalo and the country’s prime minister Abdalla Hamdok during the visit.

“We believe that Sudan can become the platform in the Eastern part of Africa where we can significantly increase our position as a fertilizer seller,” Mazepin said. “Uralchem and Uralkali, for their part, will do their best to promote mutually beneficial and friendly relations between Russia and Sudan. We plan to start supplying fertilizers to the country in 2021”.

Lieutenant general Mohamed Hamdan Dagalo said: “Sudan has large areas of land and is interested in developing agriculture and attracting foreign investors. Uralchem can show by its example that our country is ready and open to long-term cooperation with Russia. And the new government will do everything possible for this.”

CHINA

Forbon and OCP launch joint R&D venture

China’s Hubei Forbon Technology has entered into a 50/50 joint venture (JV) with Moroccan phosphate giant OCP. This will allow both companies to collaborate on research and development (R&D) to develop the next generation of fertilizers products and ‘smart’ agricultural technologies.

Forbon is a leading Chinese fertilizer additives manufacturer and is also highly active in digital agriculture. The new JV, announced in early January, will be located in the East Lake New Technology Development Zone in Wuhan, China.

“OCP has put innovation as a cornerstone of its growth strategy,” said Soufiyane El Kassi, OCP’s chief growth officer. “Being located in the East Lake New Technology Development Zone in Wuhan, the JV will have access to one of the largest and most dynamic network of professionals involved in innovation, as well as leading universities and research centers in China working on the future of agriculture.”

Wang Renzong, chairman & CEO of Forbon, said: “OCP and Forbon have the same vision and ambition for the future of agriculture. With its expertise in artificial intelligence, sensors, precision equipment, the internet-of-things and digital technology, Forbon together with OCP could bring to farmers the best customized solutions for a sustainable and innovative agriculture.”

Closure of the new JV agreement is subject to customary conditions and regulatory approvals.

SAUDI ARABIA

Ma’aden renews agreement to supply Bangladesh

Saudi Arabia’s Ma’aden has signed a yearlong phosphate fertilizer supply agreement with the Bangladesh Agricultural Development Corporation (BADC) for 2021.

State-owned BADC works with the Bangladesh Ministry of Agriculture to manage the country’s agricultural imports.

Ma’aden will supply BADC with diammonium phosphate (DAP) under a renewed contract agreed at the end of December. The terms of the contract, including the tonnages to be supplied, have not been disclosed.

Mosaed Al Ohali, Ma’aden’s CEO, said: “We are pleased to build on our strong partnership with BADC to supply the agricultural industry in Bangladesh with the fertilizer products local farmers need to make the most of their crops. This new agreement will play an important role in boosting crop output and contributing to stable food supplies in the country.”

He added: “With the natural phosphate deposits in the north of Saudi Arabia and proximity to promising markets in South Asia and East Africa, we are in a strong position to serve the globally growing need for fertilizer products. By 2025, we estimate reaching a phosphate fertilizer production capacity of nine million tonnes.”

In 2019, Ma’aden strengthened its access to the African market via the acquisition of fertilizer distribution company Meridian Group.