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Potash/Phosphate

Yara, CF in talks to create $27-billion global fertilizer giant to rival Canada’s Potash Corp – by Peter Koven (National Post – September 23, 2014)

The National Post is Canada’s second largest national paper.

A potential combination of the world’s two biggest nitrogen producers threatens to break up the established order in the fertilizer industry and create a new dominant player to match Potash Corp. of Saskatchewan Inc.

U.S. producer CF Industries Holdings Inc. and Norwegian firm Yara International ASA announced Tuesday they are in early negotiations to form a US$27-billion giant. It would be the untouchable leader of the nitrogen fertilizer sector, with more than four times as much ammonia production capacity as the next largest rival.

“We’ve had a slew of M&A on the nitrogen side in the last four or five years, but it would be the crowning achievement if these guys get together,” said Spencer Churchill, an analyst at Paradigm Capital. “Because they would be just a dominant force.”

The proposed “merger of equals” got an immediate thumbs-up from investors and analysts, as the two companies appear to be a sensible fit. CF is the dominant producer in the United States, while Yara is a big player in other countries and has a broad distribution network that CF can access. There are possible tax synergies for CF shareholders if the combined company is headquartered outside the U.S. And Yara would benefit from the low natural gas prices CF enjoys in North America.

Nitrogen prices have held up better than potash prices in recent years. As a result, there is speculation a combined CF-Yara could become the flagship investment in the sector, unseating Potash Corp.

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REUTERS SUMMIT-Russia’s Uralkali sees flat H1 potash supply to China – by Polina Devitt and Andrey Kuzmin (Reuters U.S. – September 23, 2014)

http://www.reuters.com/

(Reuters) – Russia’s Uralkali, the world’s largest potash producer, expects volumes to China to remain flat or rise slightly in the first half of 2015, the company’s head of sales told Reuters.

The company hopes to increase the price in the new contract by 10 percent from the $305 per tonne on a cost-and-freight (CFR) basis of the previous contracts, Oleg Petrov said in an interview at the Reuters Russia Investment Summit.

China is the world’s largest consumer of the crop nutrient, and its contracts are seen as a benchmark by most participants in the market. Potash prices are gradually recovering after Uralkali broke a powerful trading alliance with Belarus in 2013.

“The pace of market recovery has exceeded our expectations,” Petrov said. Negotiations over the new contract with China for the first half of 2015 are expected to start in October and to end by January.

“We expect a price rise on contract markets – in China and India; spot market reaction will depend on many factors,” Petrov said at the summit, held at the Reuters office in Moscow. Uralkali’s contract with India lasts until February.

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Canada’s small fertilizer companies shuffle ranks, search for capital – by Rod Nickel (Reuters India – September 17, 2014)

http://in.reuters.com/

(Reuters) – Capital-strapped small fertilizer companies in Canada are shuffling their senior executive ranks to draw investors in a period of weak prices.

Stonegate Agricom Ltd, which is developing a phosphate mine in Idaho, said on Tuesday that Chief Executive Mark Ashcroft resigned, the latest change at the top among small players in the sector. Others that have installed new senior executives this year include Canada’s Arianne Phosphate and Karnalyte Resources Inc.

Fertilizer values are rising off the floor prices reached earlier this year, but their upside looks limited, Rabobank said in a report on Monday.

Stonegate’s parting with its CEO was mutual, said co-chairman Ian McDonald, who will carry out CEO duties on an interim basis with co-chairman Kerry Knoll. He declined to give further details.

“Nobody’s having any parties, because nobody’s happy, but there’s been no pressure here based on Mark’s performance,” McDonald said.

Stonegate shares dropped 3 Canadian cents, or about 19 percent, to 13 cents in Toronto. For the year, the stock is down nearly one-third.

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Northern companies establish Saskatchewan mining presence – by Lindsay Kelly (Northern Ontario Business – September 16, 2014)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

It was during a trip to Toronto about a year ago that Wayne Ablitt and Don Croteau realized they were both thinking of expanding into Western Canada with their respective companies, Jannatec Technologies and Schauenburg Industries Ltd. But with expansion comes considerable expense, not to mention the challenges of breaking into a new market.

“We stopped and looked at each other and said, ‘Why not do something together rather than duplicate things?’” recalled Croteau, managing director of Schauenburg’s North Bay office.

So Croteau and Ablitt devised a plan to bring the two companies together, sharing costs and resources, and a year later, D3 Mining Solutions is ready to debut from its Saskatoon office.

Joining the partnership are suppliers Porcupine Canvas out of Timmins and Maslack Supply out of Sudbury, along with a Winnipeg-based dome manufacturer. The companies will retain their individual identities and home locations, but will operate in Saskatchewan together under the umbrella company D3 Mining Solutions.

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Phosphates past being reduced to rubble – by Suzie Schottelkotte (Washington Times – September 14, 2014)

http://www.washingtontimes.com/

Associated Press – MULBERRY, Fla. (AP) – Piece by piece, remnants of Florida’s phosphate mining roots are collapsing into rubble.

Last month, a wrecking ball began crushing a century-old Polk County building that used to store phosphate until the newly mined rock dried out. The massive structure of steel-reinforced concrete, built near Mulberry in 1909, was among the few vestiges of phosphate’s rise as a Polk County economic powerhouse.

Now, the old Prairie Pebble Phosphate Co. building is little more than 28,000 tons of concrete debris, and the sight of its crumbling walls tugged at Richard Fifer’s heart.

“I hate to see these old buildings come down,” said the Mulberry historian. “They represent an era we’re never going to get back. Sure, we still have some remnants of the 1950s and the ‘60s, but there’s really nothing left from the early days in the 1910s and 1920s.”

The 40,000-square-foot Prairie building, called a dry bin, had been shut down since 1964, when newer technology rendered it obsolete.

Scavengers had stripped away most of its steel, leaving it precariously unsafe, said John Simon, president of Tampa-based JVS Contracting, which bought the building and surrounding 17 acres in May.

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The quest for improved agricultural productivity spurs investor interest – by Henry Lazenby (MiningWeekly.com – September 11, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Rising demand for protein and more sophisticated diets in developing countries are 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 noted 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 high-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. 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.

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Allan potash mine: All trapped workers returned to surface, some ‘grouchy and hungry’ (CBC News Saskatoon – September 11, 2014)


 

http://www.cbc.ca/news/canada/saskatoon

All miners returned to surface, some after more than 24 hours underground

Miners who spent some 24 hours trapped underground at PotashCorp’s Allan mine east of Saskatoon have made their way to the surface, after a fire forced dozens of workers to seek shelter in safety stations on Wednesday.

Around 8:30 p.m. CST Thursday, the last three workers who were in safe spaces below ground were up and out. Earlier in the day, 51 of their co-workers returned to the surface.

A union leader said he was able to speak to some of the workers who were brought up and reported they were safe, but some were “grouchy and hungry”. Mike Belyk was one of the workers who returned to the surface Thursday afternoon.

“[I’m] just relieved to be back up, to get home see your family,” he said. “Other than that it wasn’t too, too bad.” Belyk said miners were in contact with rescue teams and people found ways to pass the time. “We had communication. Played cards. Played a lot of cards.”

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Potash Corp. Veteran Challenges Uralkali With Russian Mines – by Yuliya Fedorinova (Bloomberg News – September 8, 2014)

http://www.bloomberg.com/

OAO EuroChem, a Russian fertilizer maker building $7.4 billion of potash projects, is gearing up to challenge the dominance of OAO Uralkali with production from its two mines reaching the market in five years.

“We expect we’ll be able to mine the first potash at both mines in late 2017,” Clark Bailey, EuroChem’s mining head, said in an interview. About two more years will be needed to start shipments to external customers, he said.

EuroChem is developing an annual capacity of 8.3 million metric tons of potash, a form of potassium that strengthens plant roots, in two phases at the Verkhnekamskoe deposit in the Perm region and in another two at the Gremyachinskoe deposit in the Volgograd region in western Russia. The company controlled by billionaire Andrey Melnichenko kept its pace even as Uralkali plunged the $20 billion market into turmoil in July last year by ending a marketing venture with Belarus that accounted for 40 percent of worldwide potash exports.

EuroChem, which already produces nitrogen and phosphate nutrients, plans to consume a portion of the potash itself to boost its output of complex fertilizers. Even as it bets on cost advantages such as proximity to a port to take on market leaders, the key to EuroChem’s success in potash could lie in the efficiency of suppliers such as K+S AG (SDF), Europe’s largest.

“While EuroChem’s projects are the only ones at an advanced stage in the industry globally, they’re more likely to take market share from high-cost producers like K+S than from low-cost producers like Uralkali,” ZAO Raiffeisenbank analyst Konstantin Yuminov said by phone.

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Potash miners face over-supply threat of their own making – by Rod Nickel (Reuters U.S. – September 4, 2014)

http://www.reuters.com/

WINNIPEG Manitoba – (Reuters) – A pickup in fertilizer demand has brightened the outlook for North American potash companies who suffered through plunging prices and profits after a European trading consortium collapsed in 2013.

But any celebration among investors may be premature.

A surplus of potash mining capacity is set to grow even larger in coming years, weighing down the global industry while favoring low-cost eastern European producers over North American miners, who are sticking to a marketing strategy that risks falling behind the times.

And the times are changing. Belarusian Potash Company (BPC), the counterpart to North America’s potash trading consortium Canpotex Ltd, collapsed a year ago, with one partner looking to increase volumes rather than limit output and hope for higher prices.

The first new mines in Western Canada in four decades are also under construction and would be fierce rivals to Canpotex partners Potash Corp of Saskatchewan, Mosaic Co and Agrium Inc.

This year, global capacity will hit 82 million tonnes, but demand will fall well short, even at a record-high level of 57 million tonnes, according to London-based commodity research firm CRU. That gap is set to widen slightly by 2020, when capacity looks to reach 99 million tonnes, far more than is needed to meet demand of only 73 million.

CRU’s demand forecast is based on an assumption that demand will grow faster than it has in the last seven years. If it does not, the supply-demand gulf will grow even wider.

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More than manure stinks here [Fertilizer minerals] – by Trent Loos (High Plains Journal – August 11, 2014)

http://www.hpj.com/

In the past two weeks I have been fortunate to be a part of two different meetings on the subject of soil health. One of them was on the East Coast and the other was a celebration of manure in Nebraska at the University of Nebraska-Lincoln’s (UNL) Manure Demonstration Day. They both made me think that we need to do a much better job of singing the praises of that plant food excreted by the 9 billion animals we produce every year.

On the eastern shore of Maryland at the Maryland Commodity Classic, Dean Cowherd with the National Resources Conservation Service of Maryland made a statement that truly sticks with me: “There are more microbes in one teaspoon of healthy soil than there are people on the planet.”

Wow! I think that is a mouthful when you think about healthy living things and how we manage them. Far too often we allow people to fall prey to the notion that “sterile” is better, and nothing could be further than the truth.

Then I headed to Lexington, Nebraska, where the folks at UNL put on a tremendous display of the benefits of applying the greatest source of plant food on the planet: animal manure. In a radio conversation with Amy Schmidt and Charles Shapiro, the comment was made, “And where would plants be without animal manure?”

That is a true story. Let’s just take quick look at the plant food requirements of U.S. agriculture.

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Manitoba looks to jump into potash industry, develop mine (CBC News Manitoba – July 23, 2014)

http://www.cbc.ca/news/canada/manitoba

The Manitoba government is hoping to develop a significant potash deposit in the western part of the province near Russell, Man. Chris Radford, Mayor of Russell, said having the potash industry present would be great for his community.

“Well this would be fantastic news for our area,” said Radford. “It’s something that obviously we’ve been looking forward to for a long time. There have been a lot of times that they have talked about this in the past and we certainly hope that this time things will be able to move forward.”

The province-owned Manitoba Potash Corporation has acquired the rights to a vast deposit of the mineral, used as a key ingredient in fertilizer. It has bundled together the mineral rights to much of the potash in the province.

The next step will be to ask major players in the industry to do a feasibility study on developing a mine, said Manitoba’s Minister of Mineral Resources Dave Chomiak

“We’ve gone to the market and asked people to look at it and see if they are interested in doing a feasibility, which if proved positive, would lead to a potash development,” he said.

Chomiak said It could take up to a decade to develop a potash mine, but it could generate as many as 600 jobs and provide hundreds of millions of dollars in royalties for the province.

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UPDATE 2-Potash Corp boosts outlook as profit tops expectations – by Rod Nickel (Reuters U.S. – July 25, 2014)

http://www.reuters.com/

(Reuters) – Potash Corp of Saskatchewan raised its full-year earnings outlook on Thursday after second-quarter profit fell less than expected due to improving global fertilizer demand.

Earnings have declined year over year for four straight quarters as the price of the crop nutrient hit a six-year low earlier this year. The breakup last year of global trading partnership Belarusian Potash Co accelerated the price slide, as it created more competition among producers.

Lower prices have recently rekindled demand, however, and cost-cutting has also improved Potash Corp’s bottom line.

Shares of Potash Corp jumped 4 percent to $37.62 in premarket trading. “The key question is, ‘Is this just pent-up (potash) demand finally being satisfied, or is it going to continue into 2015,'” said Peter Prattas, analyst at Cantor Fitzgerald. “Our view is that demand has room to increase slightly in 2015, but we’re not going to continue with the momentum we’ve had to start the year.”

The company said it has a strong potash order book from U.S. buyers for the second half, and Canpotex Ltd – its offshore trading partnership with Mosaic Co and Agrium Inc – is fully committed through the third quarter.

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Phosphate: Morocco’s White Gold (Bloomberg News – November 04, 2010)

http://www.businessweek.com/

(Please note, this article was published in November 2010.)

In May 2009 a petite brunette from Paris wearing black heels scrambled up a pile of mine tailings on the outskirts of the Moroccan town of Khouribga. From up there, Béatrice Montagnier, a hotel specialist with the hospitality consulting firm Horwath, took in the view: parched plains scoured by bulldozers; an old warehouse baking in the sun; a jumble of two-story concrete block homes with a rectangular minaret beyond them.

She spun around 360 degrees snapping photos with her pink cell phone and imagining the future: a planned 800-acre resort project that would attract visitors from around the world. How many hotel rooms would they need? she wondered. Should it be three stars or four? And where would the museum be going? There was one issue—project funding—about which Montagnier had no questions. The estimated $1 billion needed to build the resort would come from the ground beneath her feet.

Miners have been working in Khouribga for almost a century, but only now is the area poised to become central to the global economy. Back in the 1920s pioneers started tunneling through the earth here, digging through layers of sediment formed under an ancient sea, looking for phosphate-rich rock and occasionally plucking out the tooth of a 30-million-year-old shark. The phosphate extracted from the rock, used in fertilizer, detergent, food additives, and more recently lithium-ion batteries, sold for decades in its raw state for less than $40 per metric ton. Those days are gone. It’s currently trading at about $130.

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Arianne Phosphate lifts Quebec resource base – by Henry Lazenby (MiningWeekly.com – July 18, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – TSX-V-listed Arianne Phosphate, which is developing the Lac à Paul project, in Quebec, this week reported that its 2014 drilling programme had enabled it to significantly lift its flagship project’s compliant inferred resources.

The Saguenay, Quebec-based firm on Wednesday said it had added 146-million tonnes grading 5.30% phosphorus pentoxide (P2O5), when using a 3.5% P2O5 cutoff grade, from the South TraMan Zone in the inferred category to its mineral resources.

The company also revealed that it had identified a new inferred resource from the Traverse zone totalling 17-million tonnes at 5.98% P2O5, at a 3.5% P2O5 cut-off grade.

Arianne noted that the added 163-million tonnes grading 5.37% P2O5 of inferred resources at the South TraMan and the Traverse Zones, along with the 78-million tonnes grading 5.34% P2O5 of inferred resource at Nicole Zone and a potential mineral target of between 260-million and 390-million tonnes, with grades ranging from 5.34% to 7.13% P2O5, near the Paul Zone, could be of significant benefit to its operations and deserved further investigative work.

The company released a feasibility study for Lac à Paul in October 2013, outlining an openpit operation with a mine life of 25.75 years and a yearly output of three-million tonnes, grading 38.6% P2O5 at an average mill recovery of 90%.

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As Rock Phosphate Runs Out, What is More Important – Food Crops or Fuel Crops? – by Professor Chris Rhodes (Oil Price.com – June 21, 2012)

http://oilprice.com/

(Please note that this article was published in June 2012)

World rock phosphate production is set to peak by 2030. Since the material provides fertilizer for agriculture, the consequences are likely to be severe, and worsened by the increased production of biofuels, including those from algae.

Introduction

The depletion of world rock phosphate reserves will restrict the amount of food that can be grown across the world, a situation that can only be compounded by the production of biofuels, including the potential large-scale generation of biodiesel from algae. The world population has risen to its present number of 7 billion in consequence of cheap fertilizers, pesticides and energy sources, particularly oil.

Almost all modern farming has been engineered to depend on phosphate fertilizers, and those made from natural gas, e.g. ammonium nitrate, and on oil to run farm machinery and to distribute the final produce. A peak in worldwide production of rock phosphate is expected by 2030, which lends fears over how much food the world will be able to grow in the future, against a rising number of mouths to feed. Consensus of opinion is that we are close to the peak in world oil production too.

Phosphorus is an essential element in all living things, along with nitrogen and potassium. These are known collectively as, P, N, K, to describe micronutrients that drive growth in all plants and animal species, including humans.

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