Blog Archives

Agrium to complete expansion of Vanscoy potash mine by fourth quarter #potash

Agrium to expand Canada potash mine by fourth quarter
Sept 23 (Reuters) – Canadian fertilizer company Agrium Inc expects to complete expansion of its Vanscoy, Saskatchewan, potash mine in the fourth quarter, the company said in an investor presentation on Tuesday.
Agrium said it expected to ramp up production at the mine, which expands to 3 million tonnes annually from 2 million, by 2017.
(Reporting by Rod Nickel in Winnipeg, Manitoba)

Norway’s Yara and CF in talks to create $27.5 bln global fertiliser producer #potash

Norway’s Yara, CF in talks to create $27.5 bln global fertiliser producer

* Yara shares surge nearly 9 pct, CF shares up 3.5 pct

* Potential merged company would rival Potash Corp in market cap

* Fertiliser margins under pressure, market oversupplied (Updates deal value based on CF price, adds Yara advisers, background on past takeover fight, new Yara CEO)

By Balazs Koranyi and Joachim Dagenborg

 

OSLO, Sept 23 (Reuters) – Norway’s Yara and Chicago-based CF Industries are in talks about a merger of equals that would create a $27.5 billion global fertilizer producer to rival world No.1 Potash Corp in an oversupplied and fragmented market.

The deal would give Yara, the world’s biggest nitrate fertiliser maker, major production units in the United States, where costs are lower due to cheap gas. CF Industries would gain a global footprint through Yara’s presence in 150 countries with production assets and a well established distribution network.

The two firms’ combined market capitalisation of $27.5 billion would put it almost on par with Canada’s Potash Corp of Saskatchewan, the world’ largest fertilizer firm worth $28.9 billion.

The firms said in separate filings that the talks were at an early stage, and there were no assurances that these would result in any transaction.

Yara said it had been forced to go public because information about the talks were at a risk of a leak. It wanted to conclude the process quickly but said nothing was expected in the coming days.

Yara shares surged nearly 9 percent in early trade and were 6 percent higher at 1330 GMT, valuing the company at $14.4 billion. CF rose 3.5 percent in early trade, giving the firm. Market capitalisation of $13.2 billion.

“At first glance, we view any future deal as positive for Yara,” JPMorgan said in a note. “A deal would diversify the company’s cost base away from Europe – which remains one of the most expensive production regions globally.”

“Yara could integrate its US export/marketing business for example and expand its nitrate business into North America,” the note said.

The two firms fought a bitter battle in 2010 over control of U.S. rival Terra Industries, won by CF with a $4.7 billion offer. That deal also put Yara and CF into a 50/50 joint venture operating the GrowHow production units in Britain.

Analyst said regulatory concerns would be minimal as CF focuses on the United States while Yara has few U.S. operations. CF has major production assets while Yara is stronger downstream and it runs a coveted distribution network.

With the deal CF would gain access to global distribution while Yara would benefit from cheap U.S. gas, the main ingredient in ammonia, which forms the base of nitrate fertilizers used in agricultural crops.

Global fertiliser margins have been under pressure, mainly due to Chinese overproduction, and the International Fertilizer Industry Association expects global production growth to well outpace demand at least through 2018.

The association sees nitrogen fertiliser output rising nearly twice as fast as demand between 2014 and 2018, increasing the surplus in the market which could reach 9 percent of global production by 2018.

“In terms of revenues, Yara has the highest revenues but the lower margin, while CF has higher margin and lower revenues,” Per Haagensen, an analyst at RS Platou Markets said. “It seems to me that it is a pretty fair merger of equals.”

“I don’t think there will be a third company coming in and trying to join in because these are the two biggest nitrogen producers essentially.”

Yara is being advised by Citi and Norwegian brokerage ABG Sundal Collier.

GOVERNMENT HURDLE

Potentially the biggest hurdle to any deal would be the Norwegian government, which owns a 36.2 percent stake in Yara.

The government said in June it would not cut its stake below 34 percent and any change in that stance would likely require approval in parliament, an uphill battle as the government rules in a minority and relies on opposition parties to push through its agenda.

The trade ministry said it had not taken a position while the majority of parties contacted by Reuters said they could support the deal as long as the combined firm’s headquarters stayed in Norway and the state maintained a 34 percent stake.

Another snag could be that Yara Chief Executive Joergen Ole Haslestad will be stepping down and will be replaced by Norsk Hydro CEO Richard Brandtzaeg in February.

With U.S. gas prices trading near historic lows, Yara has been working to build capacity in North America and plans to build an ammonia plant with Germany’s BASF in Texas.

It has also been expanding rapidly in South America in recent years, buying Bunge’s Brazilian fertiliser business and acquiring the majority of Brazilian phosphate miner Galvani Indústria.

CF Industries in March sold its phosphate business to rival Mosaic Co for $1.4 billion to focus on its core nitrogen fertilizer products. It has also been working on a $3.8 billion expansion of nitrogen fertilizer production in Louisiana and Iowa.

(Additional reporting by Ole Petter Skonnord and Gwladys Fouche; Editing by Terje Solsvik, Keith Weir and Susan Thomas)

PotashCorp Mulls Output Boost on Signs of Rising Demand – Recalling Workers #potash

Potash Corp. Mulls Output Boost on Signs of Rising Demand
By Christopher Donville
Bloomberg
Sep 17, 2014 2:10 PM CT
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, is considering a production capacity increase on signs demand in the $20 billion market for the crop nutrient may rise.
The company, based in Saskatoon, Saskatchewan, may boost its annual operational capacity to as much as 11 million metric tons of potash next year, from an estimated 9.2 million tons this year, Chief Financial Officer Wayne Brownlee said today in an investor presentation in New York.
“There’s probably a little bit of growth room in the offshore market in 2015,” he said. “Given some of the supply constraints we’ve seen in some of our competitors, there may be room for us to have increased volume.”
The company is moving to recover from turmoil in the potash industry since Russia’s OAO Uralkali (URKA) quit a sales accord with a Belarusian competitor in July of last year to operate at full capacity, pushing down prices. Last December Potash Corp. cut 18 percent of its workforce and reduced capacity following the price decline.
The producer has now begun the process of recalling some laid-off workers to its potash mines, Brownlee said. He estimates global shipments of potash, a form of potassium that strengthens plant roots, may increase in 2015. This year, sales will be between 58 million and 59 million tons.
Potash Corp. rose 0.9 percent to C$39.01 at the close in Toronto, rebounding from a 0.6 percent decline earlier. The shares have gained 11 percent this year.
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Carlos Caminada, Robin Saponar

Uralkali: No plans to bring back Russia-Belarus potash pact #potash

Uralkali: No plans to bring back Russia-Belarus potash pact

September 16, 2014

http://www.mining.com/uralkali-no-plans-to-bring-back-russia-belarus-potash-pact-27372/?utm_source=digest-en-potash-140916&utm_medium=email&utm_campaign=digest 

 

In July last year Uralkali CEO Vladislav Baumgertner blasted the global potash market wide open sending stock prices in the sector tumbling and projects back to the drawing board.

Baumgertner’s breakup of the Belarus-Russia potash bloc – which cost him his job and some jail time – was supposed to move potash from a clubby system of tightly controlled global supply and set prices to an open market where volume and cost-based pricing is key.

Baumgertner forecast at the time the price of potash would fall 25% to below $300 a tonne in short order.

The price did tank, but not by as much as feared and recently potash prices have been creeping back up.

At the same time global shipments of the soil nutrient rebounded significantly this year.

Expectations was that Russia and Belarus would eventually patch things up and the potash potentates could go back to business as usual.

But Baumgertner’s successor at Uralkali Dmitry Osipov on Tuesday in an interview with the Wall Street Journal poured cold water on the idea saying “there have been no talks since April and none are planned”:

“Under what conditions should we build this new marketing vehicle? Where should be the headquarters; what should be the proportion; what should be the aim; what should be the goal? There are no answers to these questions.”
The improvement in volumes and pricing have also made recreating the Belaruskali-Uralkali (BPC) marketing operation less pressing.

Shipments could jump as much as 7% this year to 58 million tonnes according to Scotiabank while Osipov sees deliveries reaching as much as 60 million tonnes, boosted by strong sales in North America, record fertilizer application in Brazil and a modest pick-up in demand from palm oil growers in Malaysia and Indonesia.

Producer inventories across North America fell 18% below the five-year average in June, but robust sales from North America did not stop Uralkali regaining 23% global market-share in the first half of 2014, up from 17% a year ago.

Uralkali recently signed a deal with Brazil at $380 a tonne which compares to a spot price of $310 per tonne in July from the Vancouver port.

However, broad-based price increases may await negotiation of a new contract price with China for early 2015.

China’s sovereign-wealth fund took a 12.5% stake in Uralkali September last year.

This could make price negotiations between China and Canpotex – the North American marketing and distribution arm of the big three producers Potashcorp, Agrium and Mosaic – more difficult.

Nevertheless a 10% hike on today’s $305 CFR China price — setting a new higher floor – is widely expected.

Video – Uralkali CEO on economic sanctions and potash markets #potash

Uralkali to Seek Price Increase From China

 

Sept. 15 (Bloomberg) — OAO Uralkali Chief Executive Officer Dmitry Osipov talks about the outlook for potash production, growth strategy and the impact of Russia trade sanctions on business. He speaks with Erik Schatzker and Olivia Sterns on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

 

http://www.bloomberg.com/video/uralkali-ceo-russia-sanctions-not-hurting-business-nMKb60dgRtSNzFIkFgLHQQ.html

BHP Billiton donates $1 million to LeRoy rink #potash

  • 13 Sep 2014
  • The StarPhoenix
  • SCOTT LARSON
  • THE STARPHOENIX

BHP Billiton donates $1 million to LeRoy rink

 

BHP Billiton is contributing $1 million over four years to the rebuilding of the community hockey rink in LeRoy, which was destroyed by fire in May 2013.

“The LeRoy Rink has been an integral part of the community for years and we are proud to support the ‘Raise the Roof ’ project to rebuild the LeRoy rink,” said Chris Ryder, vice-president of corporate affairs for BHP Billiton Potash, in a media release.

The rink was home to a number of hockey teams, the figure skating club and it also housed much of the community’s hockey history.

“We look forward to continuing to build lasting relationships with our host communities, such as the Town of LeRoy, in the future,” said Ryder.

“This generous donation will help make the LeRoy ‘ Raise the Roof ’ project become a reality,” added LeRoy Mayor Brian Thoen.

BHP Billiton’s Jansen Potash Project is situated about 11 kilometres from LeRoy.

All Canadian PotashCorp miners rescued after fire

Canadian Potash Corp miners rescued after fire

 

WINNIPEG, Manitoba, Sept 11 (Reuters) – The last of 96 miners trapped after a fire in one of the Canadian potash mines of Potash Corp of Saskatchewan was rescued late on Thursday, after some of them had spent more than 24 hours underground.

The mine halted production when the fire started, and a spokesman for Potash Corp, the world’s second-biggest producer of a form of potassium used mainly to fertilize crops, said it would assess the situation before deciding when to resume mining.

Fire broke out around 4 p.m. local time on Wednesday in a water truck inside Potash Corp’s Allan, Saskatchewan mine, said Bill Johnson, the company’s spokesman.

Ninety-six workers were sent to underground refuge stations while a crew entered the mine and put out the fire.

The crew dispersed the smoke sufficiently to get nearly half the workers out of the mine late on Wednesday night. But by Thursday, 54 workers were still in refuge stations on the east side of the mine, where smoke remained hanging in the air.

Some fans were damaged in the fire, delaying smoke clearance before the rescue of the remaining miners. Late on Thursday evening, Johnson said all workers had got out of the mine.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Dan Grebler and Clarence Fernandez)

As music sales fall, sax player Kenny G turns to stockpicking – PotashCorp

As music sales fall, sax player Kenny G turns to stockpicking

By David Randall

NEW YORK Fri Sep 12, 2014 1:08am EDT

 

NEW YORK (Reuters) – Kenny G, the best-selling jazz musician who once played at President Bill Clinton’s inaugural ball, wakes up every morning to Starbucks.

The saxophonist doesn’t drink coffee. Instead, the man whose real name is Kenny Gorelick obsessively checks the company’s stock price. Gorelick was one of the first investors in the Seattle-based chain. He was introduced to Starbucks chief Howard Schultz through an uncle, before the company went public, and soon bought a stake. Shares are up more than 12,000 percent since beginning public trade.

That success helped spark a stockpicking habit that consumes his attention as his music earning potential is eaten away by digital music, which pays less than physical album sales, and online piracy.

These days, Gorelick spends his mornings in front of his computer screen, trading blocs of shares of the approximately 30 companies in his portfolio. Over the last decade, he has earned about as much money from stock trading as from music, he said.

“Most people in the music business don’t make as much money as we used to,” said Gorelick, who topped the contemporary jazz sales charts for several years running in the 1990s and whose 2010 album cracked jazz’s top ten. “You have your 1 percent of Beyonce and U2, who are playing stadiums, who are going to make tons of money. I’m going to put myself in the normal category of a music person who has been successful.”

Gorelick, who holds a degree in accounting from the University of Washington, keeps his assets in two main accounts: one for his own trading and one that is overseen by Todd Morgan, a founder of Los Angeles-based firm Bel Air Investment Advisors.

Morgan said that it was common for his clients, all of whom must meet the firm’s $20 million minimum in investable assets, to keep a portion of their portfolios for stock trading.

“We encourage them that if they are active traders to open an account away from us. Why get in the middle of it?” Morgan said.

Wealthy investors with more than $1 million in their accounts are unusual in their affection for trading individual shares, according to new data from E*Trade and other brokers.

The wealthy typically keep 30 percent of their portfolios or more in individual stocks, said Lena Haas, senior vice president of Retirement, Investing and Saving at E*Trade. Investors with accounts below the $1 million mark typically hold 10 percent or less of their assets in individual shares, about half of the amount typically seen before the 2008 financial crisis, she said. That reflects a rush by small investors into index funds that passively track the performance of the broad market.

Picking stock winners is not easy. Only 30 percent of professional fund managers outperformed the benchmark Standard & Poor’s 500 index over the last decade, according to data from Lipper, a Thomson Reuters company.

Yet individual shares do have advantages, advisers say, including the ability to defer tax liabilities during an investor’s lifetime and favorable tax treatment for their heirs. Wealthy investors who trade a portion of their own accounts may also be able to increase the diversity of their portfolios.

GROWTH STOCK PICKER

Gorelick has been more fortunate than other musicians when it comes to the income he’s lost to streaming and digital downloads. His 2010 album, “Heart and Soul”, sold nearly 12,000 copies in its first week, with an unusually high 86 percent of sales coming in higher-priced compact discs, according to figures from Nielsen SoundScan, which tracks music purchases. His next solo album is due later this year.

As far as stock performance goes, “I have a good batting average but I’m definitely not perfect,” Gorelick said.

He asks people he considers smart about what is happening in their fields. If he comes across a company that looks promising, he watches it for a while, reading coverage of the companies and doing other research, and then might buy on a dip.

One of his biggest recent winners was a stake in Potash Corp of Saskatchewan Inc, one of the world’s largest fertilizer exporters. He heard about the company from a friend in Canada. The friend was a successful stock picker and that “made his advice easy to follow,” Gorelick said. He watched the stock for two months, and bought significantly when it dipped one day to around a split-adjusted $30 per share in 2010.

The shares shot up to a split-adjusted $62 per share the following year as the company fought off unsolicited takeover bids. Gorelick sold on the way back down, at $60 and below. “I made a lot of money on that stock,” he said.

Nearly the opposite happened with his stake in biotech Dendreon Corp, recommended by a friend. Gorelick began buying shares around $35 in early 2011. Not long afterward, the company announced that sales of its prostate cancer vaccine Provenge were not meeting expectations. Gorelick sold for less than $5 a share. It now trades at less than $2 per share.

“I don’t listen to tips from friends as much anymore,” Gorelick joked.

Gorelick still has “a fair amount” of his original shares in Starbucks Corp and watches the stock price every day, he said. Yet he tries to keep himself from getting caught up in every change of the ticker.

“I can get emotional in my music, and try to make more sense when it comes to trading,” he said.

(Reporting by David Randall, editing by Paritosh Bansal and Peter Henderson)

The quest for improved agricultural productivity spurs investor interest #potash

The quest for improved agricultural productivity spurs investor interest

 

By: Henry Lazenby

11th September 2014

 

 

TORONTO (miningweekly.com) – Rising demand for protein and more sophisticated diets in developing countries were spurring investors to get excited about investing in fertilisers.

The ‘protein story’ was still providing a good thesis for investment, as the developing world continued to consume more meat and dairy products, which required exponentially more agricultural inputs than traditional staples, which in turn, required improved nutrients to ensure better-yielding crops.

“It bodes well for phosphates, nitrogen and potash,” Brazilian entrepreneur, and founder in 2005 at the age of 23 of fertiliser junior Verde Potash, Christiano Veloso told Mining Weekly Online in an interview.

He said that the protein story was still evolving, with much of Africa still to follow the route Asia had gone in recent years. This would mean increased demand for quality fertilisers to achieve improved agricultural output, driven by the need for increased productivity owing to the scarcity of arable land, climate change, scarce water supplies and labour, among other factors.

In Asia and Africa, protein consumption per capita was still far below the norm in Europe and North America.

FUTURE BREADBASKET

The development of Brazil into what could very well be the world’s food basket for numerous generations to come, augured well for TSX-listed Verde Potash, which was developing the largest potash mine in the country.

Brazil is currently dependent on importing about 67% of its fertiliser needs from abroad and, with the agriculture industry estimated to grow by about 5% yearly, the need for fertiliser imports would only widen the market, even when taking into account new fertiliser plants expected to start operating in the future.

Brazil’s government had set a target to become ‘fertiliser independent’ by 2020.

The country currently had one operating potash mine, diversified miner Vale’s Taquari-Vassouras mine, in Sergipe, which produced about 8% of Brazil’s potash needs. That mine was due to be exhausted by 2016. MBAC Fertilizer Corp last year started single super phosphate powder production at its Itafós Arraias project, becoming the first large-scale fertiliser producer in the agricultural Cerrado area.

Veloso said Brazil’s government had set a target to become “fertiliser independent” by 2020.

He pointed out that a critical advantage to Verde Potash was that the Cerrado Verde project was located in the heart of Brazil’s agricultural hub, which was responsible for about 25% of the country’s gross domestic product, and about 36% of the country’s exports.

Veloso said Brazil’s agricultural exports had increased by 400% in the last decade, owing to the development of the Cerrado and other agricultural advances.

CRITICAL ADVANTAGE

Verde’s market advantage was rooted in the bounty of traditional potash, or potassium chloride (KCl) located at its Cerrado Verde project, and in that it had developed a proprietary fertiliser product called ThermoPotash (TK), which provided a suite of critical minerals to crops.

Among the benefits of TK was improved productivity, which piqued the interest of local commercial farmers. “They understand that increased productivity means improved margins,” Veloso said, who had been on an aggressive marketing campaign this year.

TK contained an array of nutrients including potash, calcium, magnesium and silicone.

It also comprised less salt than traditional fertilisers, with the added benefit of being more environmentally sustainable.

Verde’s TK is a controlled release, non-chloride multi-nutrient potash fertiliser, which the company aimed to produce in the first phase of its Cerrado Verde potash project, in Minas Gerais, Brazil.

Veloso said the company would aim to sell TK to the local Brazilian organic crops market, which was selling its produce at premium pricing. This spurred organic farmers to devote significant resources to accredited crop inputs that would drive higher yields.

The market for Brazilian organic products in 2012 was valued at about $385-million, according to Instituto de Promocao do Desenvolvimento (IPD). IPD predicted sales growth for this market of 20% to 25% a year over the next five years, with 2014 sales of $440-million. Brazil’s main organic crops included sugar, palm oil, coffee, fruits and juices.

Verde Potash this year released test results that had established that TK resulted in better-quality coffee than when compared with plants fertilised using only KCl.

The company reported that when compared with an identical test crop fertilised with KCl, the TK-fertilised coffee reached the standard of specialty coffee, a category that commanded premium prices.

“Farmers see the benefits of TK. They are ready to buy our product, especially among the organic and niche crops producers,” he said.

SUSTAINABLE INPUT

Verde Potash had also obtained approval from IBD Certifications, the largest certifier in Latin America and the only Brazilian certifier of organic products with global credentials, to use TK on organic crops.

Traditional potash was not certified for use on organic crops and was, therefore, not an option for organic farmers, which set TK up to participate in a niche market, which Veloso pointed out, had the potential to grow very large.

Veloso also noted that TK was more environmentally sustainable than any other traditional fertilisers. For example, the traditional method of correcting soil pH entailed using limestone in the ground, which reacted to give off significant amounts of carbon dioxide. TK did not do this, paving the way for various environmental certifications to follow that would allow TK to be used in the supply chains of several environment-friendly product lines.

These included a plethora of certified organic and environmentally sustainable products, and could also boost the credentials and public perception of the ethanol market, of which Brazil was the most significant producer globally.

PROJECT FUNDING

Verde in March announced that about $105-million in government funding for its its $113-million Cerrado Verde project had been confirmed.

This capital would be provided through loans with subsidised interest rates, equity investment and nonreimbursable project investment grants from the BNDES and/or the Financing Agency for Studies and Projects, both of which are branches of the Brazilian government that operate Inova Agro.

Veloso stressed that the company had the potential to grow significantly over the coming decade, however, he refused to ‘waste paper’ in doing so. “I often see companies growing at all expense, as if they are in a race to get to the finish line (starting production), but in the process they lose a lot of shareholder value by diluting stock for capital.

“We are focused on developing a scalable project in phases, which would require the least amount of capital input, while securing free cash flow from an early stage,” Veloso, which owns about 7% of the company, said.

The company expected to launch its environmental permitting application by the end of the year. Once that was granted and in hand, the company would be able to produce and sell the first TK within about two years.

The 1 000 t/d TK plant would cost about $113.6-million to build, including a $14.7-million contingency, and would have an internal rate of return of 23.5%, with an estimated payback of the initial capital after five years.

Over the 31-year mine life, sustaining capital would total $31.5-million.

An April prefeasibility study had pinned an estimated after-tax net present value of $145.7-million (at a 10% discount rate) to the project.

Verde Potash’s TSX-listed stock on Thursday rose 13% to C$0.70 apiece, having gained 24% so far this year.

Fire at Allan potash mine forces nearly 100 miners into refuge station for eight hours

Fire at potash mine forces nearly 100 miners into refuge station for eight hours
September 11, 2014
By The Canadian Press
SASKATOON – A potash mine near Saskatoon has shut down for the day after a fire forced nearly 100 workers into a refuge station.
Bill Johnson with Potash Corp. of Saskatchewan (TSX:POT.TO – News) says the workers were not injured and are now at home.
The fire broke out Wednesday afternoon at the company’s Allan mine.
Johnson says the fire was sparked by an underground truck and sent smoke throughout the mine.
The 96 workers on shift spent eight hours in the self-contained safety unit until a crew put out the fire and cleared the smoke.
Johnson expects the mine will resume operations on Friday.
%d bloggers like this: