IM Agriminerals News in Brief 31 October – 6 November

By James Sean Dickson
Published: Friday, 06 November 2015

Uralchem produces 4.4m tonnes fertilisers from January-September 2015; Acron nine month profits rise 37% y-o-y; Compass Minerals Q3 incomes remain flat.

Russia-based Uralchem OAO produced 4.4m tonnes fertilisers in the first nine months of 2015, up 6.2% year-on-year (y-o-y).

The company’s complex fertilisers unit, which produces nitrogen-phosphorus-potassium (NPK) fertilisers, among others, saw 31% y-o-y production growth for January to the end of September. Output in the period stood at 495,000 tonnes.

Production of diammonium phosphate (DAP) and monoammonium phosphate (MAP) rose by 22% y-o-y, to 31,000 tonnes.

Dmitry Konyaev, Uralchem’s CEO, said that production increases were caused by shorter repair time and reduced unscheduled downtime. "Even in the least favourable market conditions, we do not suspend the investment programmes. We continue developing our plants’ capabilities," he said.

Also based in Russia, Acron OAO saw its nine month revenues increase 37% y-o-y to Russian rouble (R) 36.6bn ($577.7m*).

Net profit climbed back from a 2014 loss of R 2.6bn ($41m) to yield R 14bn ($221m) in income.

EBITDA** was up sharply, by 75% y-o-y, to R 16.6bn ($262m).

US-based Compass Minerals Inc. reported net earnings of $27m for Q3 2015, down slightly on the $27.3m adjusted net income booked for Q3 2014. On a non-adjusted basis, profits declined by 69% on 2014 figures, owing to a one-off special item insurance pay-out relating to tornado damage at the company’s facilities.

Fran Malecha, Compass’ CEO, said that despite weakness in the broader agricultural market, the business remained resilient owing to strong salt and plant nutrition sales.

"Despite near-term challenges in plant nutrition demand, premium speciality fertilisers remain a very attractive segment of the agricultural market and we’re well positioned to serve a condensed fall season," Malecha said.

In the UK, the Campaign for National Parks has confirmed that it will not launch a legal challenge against the North York Moors National Park Authority (NYMNPA)’s decision to approve Sirius Minerals Plc’s York Potash project, located in the northeast of England.

"We remain hugely disappointed that this development was given approval and are convinced that development of this type and scale is not appropriate in a National Park," Fiona Howie, the chief executive of the organisation, said.

"However, the only option available to us was judicial review. This would have been focused on challenging the process that has been undertaken, rather than the decision itself. The legal advice we received makes it clear that the NYMNPA followed the process effectively."

Sirius received approval from the NYMNPA for its planned polyhalite potash mine in the summer in a close-run vote. The company is now seeking funding for construction.

Standard & Poor's Financial Services LLC has updated its outlook on Israel Chemicals Ltd (ICL) to negative on potentially weak credit metrics. ICL is rated at BBB by the institution.

"We see the risk of potash prices declining by about 10% in 2016 due to the ongoing supply-demand imbalance," Standard & Poor’s said. "ICL’s earnings and key financial metrics may therefore remain below our expectations for the rating in 2016 unless the company implements countermeasures."

The ratings agency added that it expected the company’s debts to increase owing to its Chinese joint venture.

"We believe ICL has some scope to reduce its operating costs and capital expenditure to conserve cash, since it is committed to maintaining credit measures commensurate with the current rating. However, ICL's policy of distributing approximately 70% of net profits as dividends reduces its financial flexibility," it said.

Belaruskali and the Belarusian Potash Co. (BPC) have announced the collapse of a gallery conveyor at its Production Unit Four in Belarus.

In a statement, the BPC said that the reasons for the accident are still being ascertained, but that there were no resultant injuries.

The production unit, which has a capacity of around 280,000 tpm white potash will now be closed for three-four weeks.

The BPC said that most shipments of its white muriate of potash (MOP) product will continue to be delivered as planned, with outstanding volumes being delivered shortly after the resumption of operations at Production Unit Four.

In India, Coromandel International Ltd booked net profits of Indian rupee (INR) 1.74bn ($26.3m) for Q3 2015, up slightly on last year’s figure of INR 1.7bn ($25.7m).

"Erratic and deficit monsoon [rains] in key addressable markets have impacted overall agri-inputs businesses," Sammer Goel, Coromandel’s managing director, said.

"In spite of these challenges the company has increased its sales volumes for unique grades of complexes and also sustained its market share in phosphatics complex segment," Goel added.

Goel predicted that new policy initiatives in India introduced by the government will address "issues" related to domestic fertiliser production and subsidies.

The Madhya Pradesh government has ordered a probe into an alleged scam of farmers being forced to pay more for fertilisers from state government agencies, according to the Times of India.

The paper reported that 96,000 tonnes of single super phosphate (SSP) fertiliser was sold for between INR 300 ($4.56) and INR 333 ($5) per 50kg bag while the open market rate was set at INR 270 ($4.10) to INR 280 ($4.26) per 50kg bag.

"Taking cognisance of the Times of India report, we will probe irregularities and recover the extra money from fertiliser companies," co-operatives and farmer welfare minister Gopal Bhargav said. "The money recovered will be merged with funds to subsidise farmers. We will plough this money into other welfare activities as it's not possible to identify every farmer and return money."

A recent UN report on the small Pacific island of Nauru, which was once a large-scale supplier of phosphate-rich guano fertiliser, included strong criticism of past mining activities, according to the Sydney Morning Herald.

The document stated that the majority of the island has been rendered uninhabitable after phosphate mining owing to a lack of rehabilitative action.

Mining has resulted in substantial cadmium residues and problems with phosphate dust, causing air and water pollution with "negative impacts on health", the report said.

Egyptian president Abdel Fattah al Sisi has approved the establishment of a phosphate and fertiliser factory cluster, according to the Daily News Egypt.

Presidential spokesperson Alaa Yousef said that the El-Nasr Co. for Intermediate Chemicals would lead the 1m tpa fertilisers project, which would see phosphate and compound fertilisers produced including DAP. Phosphoric acid, a precursor of several fertiliser materials, will also be produced.

"The president stressed the importance of moving forward in the implementation of the project at the lowest possible cost in the shortest possible time and with the highest standards of quality," said Yousef.

"The project will contribute to meeting the fertiliser needs of farmers with an appropriate cost and increase Egyptian exports, as well as to achieve the desired increase in agricultural production and to make social and economic benefits by creating employment."

In New Zealand, Chatham Rock Phosphate Ltd (CRP) has announced another round of capital raising with the aim of yielding 12 months working capital funds.

The raising will be required to maintain the company’s listing on the Toronto Venture Exchange (TSX-V), which it intends to join via a reverse takeover of Antipodes Gold Ltd.

CRP intends to raise New Zealand dollar (NZ$) 1m ($660,000). "We believe [joining the TSX-V] will facilitate fundraising in Canada, the largest mineral resources-focussed marketplace," said Chris Castle, CRP’s managing director.

Perth, Australia-headquartered Minemakers Ltd has signed a memorandum of understanding (MoU) with Mimran Natural Resources, a member of West African agri-food industrial group, Groupe Mimran.

Under the agreement, Minemakers will issue 20% of the capital of its subsidiary, Baobab Mining and Chemicals Corp., for the consideration of $11.25m and the transfer of a phosphate exploration permit in Senegal held by Mimran to Baobab mining.

In addition, 103m ordinary shares in Minemakers will be given to Mimran at a price of Australian dollar (A$) 0.117/share ($0.084/share).

"The new funding, in addition to Minemakers’ existing cash, not only provides for the total development and working capital requirements of the Baobab phosphate project as a small mine, it also provides substantial surplus funds which will be directed towards the exploration and development of the Baobab Project beyond the small mine permit," Minemakers’; CEO, Cliff Lawrenson, said.

ASX-listed Danakali Ltd has published product specification sheets for its proposed sulphate of potash (SOP) granular, standard and soluble products, complementing the company’s 300kg SOP product samples distributed earlier in 2015.

"While discussions with potential off-take parties to secure product sales agreements continue, completion of the production specification sheets represents an important milestone and requirement for securing product sales agreements, an important facet of our project funding process," Paul Donaldson, Danakali’s managing director, said.

Around 4 tonnes drill core material from the Colluli project in Eritrea has been processed at the Saskatchewan Research Council’s labs in Canada for bench testwork and pilot plant trials.

The specification sheets detail chemical assays for heavy metals; particle size distributions of the granular, standard and soluble products; angles of repose; and density and solubility tests, all in compliance with JORC standards.

In Vancouver, Canada, Passport Potash Inc. has announced its suspension from the TSX-V. The exchange suspended trading in the company’s securities as a result of a cease trade order issued by the British Columbia Securities Commission, according to David Salisbury, the company’s CEO.

The company has thus decided to transfer to the NEX. "The board has considered carefully the company's being listed on the NEX and believes this transfer listing holds some short-term advantages as the company works through the steps necessary to overcome very challenging market conditions," Salisbury said.

"We are hopeful that, even in the current environment, we will be able to find savvy investors to provide funding for this excellent project," Salisbury added.

*Conversions made November 2015

**Earnings before interest, taxes, depreciation and amortisation