Fertilizer Markets and Finance

OAO EuroChem, a Russian producer of fertilizer, is seeking a loan of as much as $800 million to help fund investment in potash projects, according to two people with knowledge of the matter.

Lenders have been asked to propose terms for the facility which may include secured and unsecured portions, said the people, who asked not to be identified because the terms are private. The company is seeking a debt maturity of more than five years and the deal may complete in the second half of the year, the people said.

EuroChem, owned by billionaire Andrey Melnichenko, is planning to invest $3.2 billion in its potash business in the next four years, it said in its 2012 annual report. The Moscow- based company currently generates most of its revenues from nitrogen and phosphate operations, according to the report.

Read more at Bloomberg

K + S Potash Canada, a subsidiary of K + S Group, has been awarded a major contract valued at several hundred million to Veolia Water Solutions & Technologies to supply the evaporation and crystallization equipment for the new project “Legacy” that K + S Potash is taking place in the Canadian province of Saskatchewan. It is the largest North American mining plant, designed to reach a production capacity of more than 2 million tonnes of potassium chloride in 2017.

The plant with HPD of Veolia technology -which will become operational in 2015 - will allow evaporation and crystallization at lower cost of operation. Furthermore, K + S Potash Canada has decided to partner with Veolia because of its ability to execute large projects and for his commitment to the efficient use of water and energy.

In this project, Veolia is responsible for the engineering and supply of equipment that make up the core of the process of evaporation and crystallization. The process involves the evaporation of the brine, then performing the crystallization of sodium chloride and potassium chloride (potash). As a final stage, the brine is separated from potash and this is refined to achieve a high quality end product.

The K + S Group is one of the leading global suppliers of standard and specialty fertilizers. In the salt business, K + S Group is the leading producer by production capacity, with plants in Europe, North and South.

Read more at iagua.es

• It is the largest North American mining plant, designed to reach a production capacity of more than 2 million tonnes of potassium chloride in 2017.
• The HPD technology plant of Veolia , which will become operational in 2015 - will allow evaporation and crystallization at lower cost of operation.
•  K + S Potash Canada has decided to partner with Veolia because of its ability to execute large projects and for his commitment to the efficient use of water and energy.

Yara International signalled an appetite for fertilizer deals, particularly in higher-value products such as NPK, as it flagged the role of China, for now, in determining prices of commodity nitrogen nutrient markets.

Juergen Ole Haslestad, the Yara chief executive, said that the nitrogen giant’s balance sheet “has never been stronger”, reflecting “a deliberate effect to build financial flexibility for growth execution”.

The Norwegian group’s net debts, as a proportion of equity, had fallen to levels below 0.1, from a figure of 0.75 early in 2009.

Yara will exploit its low borrowing levels “to realise well-timed profitable growth”, potentially including acquisitions, besides raising its dividends, which Torgeir Kvidal, the Yara finance director, acknowledged had fallen behind a policy of 40-45% payouts.

‘More deal activity’

While making strides in commodity products towards increasing group sales of 32.5m tonnes in 2016, up from 24.5m tones in 2010, Yara had lagged in boosting volumes of value-added fertilizers, such as NPK, which had proved a key support to group profits, Mr Haslestad said.

Indeed, a 6.2% rise in volumes of nitrate and NPK products outside Europe in 2011-12 had “compensated” for a 6.1% drop in sales within the continent, Yara’s core market,

Realising the group’s 2016 ambitions was likely to mean “more merger and acquisition activity” with the value-added sector, an area in which Yara had “high potential” for reaping deal benefits, such as cost cuts, from takeovers.

Read more at Agrimoney

There was speculation ahead of Friday’s meeting that the EU might announce it was recalling all its ambassadors from Minsk.

EU officials did not take such a decision, but Skoog indicated the EU could take further action against Belarus this autumn.

“We will be reviewing sanctions, restrictive measures against Belarus later on in the next few months,” he said.

“As you know, the situation as to the political prisoners, the repression against civil society, and the lack of democracy in Belarus is a determining factor in restrictive measures against that country,” Skoog added.

“And certainly the latest [incident] — and this is the way it is going to be spelled out in the next few weeks — the decision against the Swedish Embassy will, of course, also have an effect on how we discuss our relations with Belarus.”

The U.S.-based rights watchdog Freedom House is among several international NGOs that have been following the teddy bear incident and its fall-out.

“October seems relatively far away, but building momentum and pushing for more sanctions is what’s needed,” said Susan Corke, the director of Eurasia programs at Freedom House, who spoke to RFE/RL after the EU meeting.

“[Potash mining giant] Belaruskali is one [company] that Freedom House has identified as an important one to be considered to add to sanctions and [the EU should] expand the visa bans and continue to maintain solidarity throughout the EU countries,” she said. “Belarus has been good at exploiting that in the past.”

The EU has already imposed a series of sanctions on Minsk for its crackdown on members of the Belarus political opposition.

Read more at Radio Free Europe

French farm-production costs rose 2.4 percent in July as growers and livestock breeders paid more for energy and fuel, feed and fertilizer, the Agriculture Ministry said.

An index of agricultural-input costs averaged 132.4 for the month, against 129.4 a year earlier, the ministry reported today on its website.

Energy and lubricant expenses, making up about 11 percent of the gauge, jumped 3.3 percent, according to the report. The cost of animal feed, with an index weighting of about 25 percent, climbed 2.7 percent.

“The price of animal feed continues to progress since February,” the ministry wrote. “Those for energy and lubricants again head up, after having declined during the second quarter.”

The index for fertilizer, accounting for 12 percent of farming costs, rose 2.9 percent and expenses for seeds and planting material advanced 3.5 percent, the report showed.

Production costs for commodity crops, a subgroup of farming expenses, gained 3.7 percent, while livestock and dairy producers’ costs rose 2.5 percent, the ministry said.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter atccarpenter2@bloomberg.net

K+S AG (SDF), Europe’s biggest potash producer, said it may increase the annual dividend payment after the company sold units and reported a better-than-estimated pretax profit in the second quarter.

The dividend, which is usually a payout of 40 percent to 50 percent of adjusted earnings, will get a boost from a gain booked from the sale of nitrogen fertilizer assets and after K+S sold a gardening division, the Kassel, Germany-based company said today in a statement.

Adjusted pretax profit rose 17 percent from a year earlier to 195.6 million euros ($241.7 million), beating a 186 million- euro analyst estimate. K+S published some earnings on July 30, two weeks ahead of schedule, because figures exceeded analyst estimates. The company said today that the main driver for the 21 percent increase in operating profit and sales was customers making early purchases of potash fertilizer in Europe.

“After there was still cautious early stocking-up of fertilizers at the start of the year, the demand for potash and magnesium products developed positively during the second quarter of 2012,” Chief Executive Officer Norbert Steiner said in the statement. “For 2012, there are opportunities for a higher dividend” on the basis of earnings expectations.

Read more at Bloomberg

Asian stocks rose for a fourth day as measures taken by European leaders to address flaws in their bailout programs eased concern about the sovereign-debt crisis and an index of manufacturer sentiment in Japan improved.

BHP Billiton Ltd. (BHP), the world’s largest mining company, climbed 1.2 percent after commodity prices rallied. Sony Corp. (6758), Japan’s largest consumer electronics company that gets one fifth of its sales in Europe, gained 1.4 percent. Aristocrat Leisure Ltd. (ALL), an Australian manufacturer of gaming machines, slumped 12 percent after reporting preliminary earnings for the first half of this year.

The MSCI Asia Pacific Index advanced 0.4 percent to 117.62 as of 9:46 a.m. in Tokyo, with two stocks rising for each that fell. Markets are closed in Hong Kong today. The Asian benchmark last week capped the biggest weekly gain since January, jumping 2.7 percent, as euro-zone leaders agreed to relax conditions for recapitalizing lenders.

Read more at Bloomberg

The European Union looked set for another wave of zero-duty imports despite member states remaining undecided on the plans, after Brussels acted to protect livestock farmers in the face of expectations of a declining grains harvest.

The European Commission is expected by the end of the month to permit a further 1.2m tonnes of feed wheat to enter the EU without the tariff of E12 a tonne that usually applies.

The ruling came despite a failure of a vote of farm representatives from EU countries to decide for or against the commission’s proposals.

While many states were broadly in favour of permitting the imports, which will ensure easier feed supplies for livestock producers, Poland, the bloc’s fourth-ranked grain producer, voted against the move, a source told Agrimoney.com.

Under EU rules, the hanging result of the vote empowered Brussels to follow through with its proposals.

Read more at Agrimoney

Strategie Grains called time on the long-running downward trend in forecasts for European Union wheat production, citing better hopes for harvests, including the disputed German crop.

The influential analysis group lifted by 1.5m tonnes to 124.2m tonnes its estimate of the region’s soft wheat harvest.

While still well below the groups early-season hopes of a harvest above 133m tonnes, the upgrade contrasted with a succession of lowered hopes for the crop – including four successive monthly downgrades from Strategie Grains itself.

The US Department of Agriculture on Tuesday lowered its estimate for the EU wheat harvest, including the durum variety used to make pasta, by 1.0m tonnes to 131.0m tonnes.

Strategie Grains’ lifted its forecast including durum by some 1.8m tonnes to 132.1m tonnes.

Read more at Agrimoney

Shares in Yara International tumbled 8%, missing out on a rise in most fertilizer stocks, after prosecutors investigating corruption allegations charged two members of the nutrient giant’s senior management team.

Oekokrim, Norway’s white collar crime unit, has charged both Tor Holba, the head of Yara’s so-called “upstream” manufacturing operations, and Hallgeir Storvik, the group’s chief financial officer and head of strategy.

Both are members of Yara’s nine-strong senior management team, headed by Joergen Ole Haslestad, group’ chief executive, and long-term employees of the company and Hydro, from which it was demerged in 2004.

Indeed, Storvik is seen as responsible for spearheading the turnaround from 1999 of Hydro’s fertilizer division, Agri, involving the closure and sales of businesses and reduction of 35% in fixed costs, which paved the way for the creation of Yara, the world’s top nitrogen fertilizer group.

Read more at Agrimoney

May 21 (Bloomberg) — Asian stocks rose, with the regional index rebounding from its biggest drop in six months, after Premier Wen Jiabao said China will focus more on bolstering economic growth.

China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, rose 1 percent in Hong Kong. BHP Billiton Ltd. climbed 1.1 percent in Sydney after RBC Capital Markets said the world’s largest mining company may start a new share buyback. Nintendo Co., a manufacturer of game consoles that gets a third of its sales in Europe, slumped 1 percent in Tokyo.

The MSCI Asia Pacific Index rose 0.2 percent to 112.80 as of 11:25 a.m. in Tokyo, with about about the same number of stocks rising and falling. The gauge fell 2.5 percent on May 18, the most since Nov. 10 and wiping out this year’s gains as Europe’s debt crisis worsened and U.S. economic data missed estimates.

Belarus opposes the politicization of the country’s relations with the European Bank for Reconstruction and Development. This was stated by spokesman for the Foreign Ministry of Belarus Andrei Savinykh on May 17. According to him, Belarus has been actively cooperating with the EBRD in private sector development and implementation of projects on environmental protection and improvement of environmental standards.