Fertilizer Markets and Finance

A two-week healthy-cocoa campaign by YARA Ghana has been launched at Dunkwa-on-Offin in the Upper Denkyira East Municipality of the Central Region.

The annual training course includes workshops, farmer forums, radio talk-shows, and will focus on educating over 2,400 cocoa farmers in 16 districts on best farm-practices including proper fertilizer application for improved cocoa yield in the country. Unveiling the training programme, YARA Ghana Retail Sales Manager Mr. Henry Otoo-Mensah said the increased use of fertilizer combined with proper farm management practices will push Ghana’s cocoa production upward.

He stressed that YARA Ghana understands the needs of farmers with the introduction of the Nitrabor and Asaasewura fertilizers to help improve cocoa yields, translating into more income for them. “The Asaasewura and Nitrabor fertilizers have the potential to significantly reduce the risk of cocoa plants to the black pod disease and any other stress that threatens cocoa growth and production.

Read more at GhanaWeb

Algeria signed accords with Norway and Qatar to build fertilizer factories as growing populations boost food demand, spurring farmers to plant more crops.

Yara International ASA (YAR) of Norway is investing in a $2 billion ammonia, nitric acid, ammonium nitrate and nitrogen fertilizer factory, according to the state-run Algeria Press Service. It’s sharing ownership with Asmidal, part of Algeria’s state-owned Sonatrach.

Norway is also joining Qatar in constructing a $3.5 billion ammonium plant in Hadjar Essed, and a phosphoric acid factory in Oued Koubrite, in the northeast near the border with Tunisia, APS said. They are also sharing ownership with Algeria.

The Algerian government said last year it was allocating $14 billion to build three fertilizer factories by 2020, with a total installed capacity of 35 million tons per year. Foreign ownership in Algeria is limited to 49-51 percent, under its investment law.

Algeria’s Hyproc, another Sonatrach unit, agreed to purchase two LPG tankers from Qatar, each with 117,000 cubic- meter capacities and at a total cost of $450 million, according to the APS report.

To contact the reporter on this story: Caroline Alexander at calexander1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, aims to complete asset purchases within the coming months as it pursues a 33 percent production increase in four years from 2010 levels.

“We are working on several growth opportunities,” Yara Chief Executive Officer and President Joergen Ole Haslestad said in an interview in Oslo today. “We do believe that we will be able to close some of them in the next months to come.”

Yara is among fertilizer producers seeking acquisitions as the cost of raw materials climbs and higher food prices spur farmers to increase plantings, boosting consumption of crop nutrients. World fertilizer demand is poised to rise 2.4 percent to a record in the 2013-14 season, the International Fertilizer Industry Association forecast in November.

Read more at Bloomberg

Oslo (2012-12-07): Yara International ASA has entered into an agreement to acquire Bunge’s fertilizer business in Brazil, significantly strengthening its fertilizer position in the country. The proposed transaction is valued at USD 750 million, and will be subject to the approval of Brazilian competition authorities (CADE) and other customary approvals. Yara and Bunge have also agreed to enter into a long-term fertilizer supply agreement, enabling Bunge to continue supplying fertilizer to farmers as part of its grain origination activities and creating a framework for logistics and other commercial activities.

“I am pleased to announce this important move in Brazil, building further scale for Yara following previous acquisitions in 2000 and 2006. Brazil is a key growth market where there is significant further potential for acreage and yield increases. Today’s agreement also creates a strong platform for future growth opportunities within the Brazilian fertilizer industry,” said Jørgen Ole Haslestad, President and Chief Executive Officer of Yara.

“Our talks with Bunge to reach this agreement have been conducted in a positive and constructive manner, and we look forward to expanding our cooperation with Bunge in our role as a key input supplier to Brazilian agribusiness,” said Jørgen Ole Haslestad.

Bunge operates 22 blending units across Brazil, delivering 4.8 million tons of fertilizer products in 2011, with revenues of USD 2,648 million and an adjusted EBITDA of USD 77 million.

The USD 750 million enterprise value comprises a net operating capital value of USD 385 million and other assets valued at USD 365 million. The operating capital value is subject to post-closing adjustment.

Read more at Reuters

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

OSLO—Tight global grain supply after poor harvests this year should help boost demand for fertilizer in coming quarters, said the chief executive of Norwegian producer Yara International ASA (YAR.OS) Friday, after the company reported a sharp fall in net profit for the third quarter.

Chief Executive Jorgen Ole Haslestad refrained from predicting a rise in prices, but said “we would be surprised if urea prices fell a lot going forward.”

Yara is the world’s largest producer of ammonia, which is used to manufacture fertilizers. The company also produces a range of fertilizers from commonly used nitrogen-rich urea to more complex products such as NPK and nitrate.

Global grain production is expected to fall 3.5% in 2012 compared with a year earlier, mainly due to the U.S. drought, Yara said. Global grain stocks are currently at a four-year low, equivalent to between 65 and 70 days of consumption, and the U.S. Department of Agriculture expects demand to outpace supply in 2013.

“This is a concern to the world, and a challenge to us,” said Mr. Haslestad.

It’s a paradox that higher food demand and higher food prices haven’t already boosted fertilizer prices, said chief financial officer Torgeir Kvidal, partly blaming cheap Chinese exports.

“They [the Chinese] don’t export much more this year than last year, but they export at lower prices due to lower export taxes,” he said. “Why do they accept lower export taxes? One argument could be that economic activity is lower in China. Maybe limiting production and saving energy [there] isn’t as important” as it was.

Read more at 4-traders

Yara International flagged the boost to nutrient groups from tight crop markets as it unveiled as jump of nearly one-half in underlying earnings, becoming the third fertilizer group within 24 hours to unveil data ahead of forecasts.

The Norwegian group, the world’s biggest nitrogen fertilizer company, highlighted that “tight balances in most agricultural markets” were supporting “increased use of fertilizers”, as farmers reacted to “strong price incentives” to boost production.

Chicago corn prices have soared by more than 50% from a mid-June low, thanks to the dent to US production hopes from dry weather, while wheat values have risen more than 40%.

While, in the nitrogen market, buyers remained reluctant to build up inventories, Yara noted that “pre-buying incentives for the new season are stronger than a year ago, given the recent strengthening of grain prices”.

Read more at Agrimoney

Oslo (2012-07-18): Yara International ASA reports strong second-quarter results with increased sales volumes, especially for Yara-produced fertilizer. Margins strengthened compared with last year, primarily for urea reflecting a tight nitrogen fertilizer market.

Yara reports second-quarter net income after non-controlling interests of NOK 2,800 million (NOK 9.86 per share), compared with NOK 2,225 million (NOK 7.73 per share) last year. Excluding net foreign exchange gain and special items, the result was NOK 10.84 per share compared with NOK 7.84 per share in second quarter 2011. Second-quarter EBITDA excluding special items was NOK 5,196 million compared with NOK 3,540 million last year.

“Yara reports strong second-quarter results, reflecting a strong nitrogen fertilizer market and a significant increase in sales of Yara-produced fertilizer, especially outside Europe,” said Jørgen Ole Haslestad, President and Chief Executive Officer of Yara.

“Our value-added nitrate and NPK business continues to perform well, and we are also improving our commodity cost position with production growth in Pilbara and Qafco. With these initiatives, Yara’s gas and oil consumption outside Europe increases to almost 45% of the Yara total,” said Jørgen Ole Haslestad. 

Read more at Reuters

Yara International revealed it may sue the former owners of it Balderton trading operation, and unnamed “individuals”, as it revealed results of a probe into the bribery allegations which have led to charges against two bosses.

The fertilizer giant confirmed that an internal investigation found evidence of “unacceptable payments” in 2007 ahead of the formation of the Lifeco joint venture in Libya, and as Yara negotiated terms on a possible Indian tie-up, allegations over which it unveiled last year.

However, the probe had also found evidence of “a number” of unacceptable payouts too - totalling $15m, and spread between 2006 and 2009-10 - from the Swiss-based Balderton business, plus other payments “of several millions” of dollars “on no commercial basis”.

The probe, which has involved reviewing 740,000 documents and cost NOK30m in fees to law firm Wiersholm which undertook it, had also unveiled “other possible irregularities in relation to Yara’s/Balderton’s trading activities”.

‘Misleading information’

Furthermore, Yara had been given “misleading information” in the group’s acquisition of the first 50% of the Balderton fertilizer trading business in 2006.

Yara bought the oustanding 50% two years ago, for $130m.

“The former owner of Balderton has been notified that Yara is considering legal action on the basis of the findings from the investigation,” Joergen Ole Haslestad, the Yara chief executive, said.

Individuals, which the group did not name, may face “legal or other actions” too.

Mr Haslestad added: “It is disappointing to confirm that unacceptable payments have been made from Yara, but I am nevertheless satisfied with the way this matter has been handled.”

Second in two days

The findings of the probe, which has seen 29 people interviewed and taken Wiersholm personnel 16,000 working hours, comes a month after Oekokrim, Norway’s white collar crime unit, charged two members of Yara’s senior management team.

The pair were 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.

Yara’s announcement also represents a second finding of bribery in two days by an agribusiness giant, after a Glencore subsidiary was convicted of paying-off a European Union official in return for market-sensitive information.

Glencore Grain Rotterdam paid for the official, Karel Brus, to have a holiday in France, besides meeting his mobile phone bills, in return for data on grain subsidies, in bribes paid in 2002 and 2003, a Belgian court heard.

Yara shares stood 1.3% higher at NOK256.20 in morning deals in Oslo.

One of Yara International’s top executives has stepped down from overseeing key parts of the Norwegian fertiliser giant’s global operations, including its Burrup plant near Karratha, while he fights to clear his name from corruption allegations.

Tor Holba was Yara’s head of upstream operations and responsible for the global chemical company’s expensive $176 million splurge for an additional 5 per cent stake in Burrup Fertilisers in 2008 shortly before the collapse of global financial markets.

Along with Yara’s chief financial officer Hallgeir Storvik, he was charged on suspicion of “gross corruption” on Friday night.

The charge was in relation to a continuing probe at the Norwegian fertiliser giant and its operations in countries such as Libya.

Yesterday Yara, whose chief executive Jorgen Ole Haslestad has expressed surprise at the charges, issued a statement saying the pair had voluntarily stepped aside pending the outcome of the investigation.

“Storvik and Holba will continue to work for the company, but without the areas of responsibility they have stepped out of and not as members of executive,” the statement said.

Mr Holba was in Perth as recently as February as part of the company’s move to secure majority control of Pankaj Oswal’s fertiliser empire, and change Burrup’s name to Yara Pilbara.

Torgeir Kvidal was appointed acting Yara CFO and Jan Duerloo will act in Mr Holba’s position.

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

Shares in Yara International gained, despite weaker-than-expected results, after the group said that the sharp recovery in potash demand as, highlighted by Mosaic and PotashCorp, had spread to the nitrogen market too.

Joergen Ole Haslestad, the Yara chief executive, acknowledged that fertilizer demand had proved “slow” in the first half of the fertilizer season, which began last July, with sales falling 12% so far in the key Western European market.

“Substantial winter crop damage and a late spring, with continued dry conditions negative affected European demand for fertilizer in the first quarter” of 2012, following hits from world economic uncertainty and falling crop prices late last year.

Yara’s earnings for the quarter fell 9.4% to NOK2.39bn, equivalent to NOK8.36 a share, below the NOK8.65 a share that analysts had expected.

Read more at Agrimoney

In 2009 Yara entered into an agreement with two partners to participate with 16.67% ownership in Ethiopotash. The partners were XLR with 57.33% ownership and management of the company, and Seftec with 26% ownership. Yara has now agreed to increase its ownership to 51% and take over management of the company, while XLR will retain a 49% ownership.

Ethiopotash is developing a potash resource in Dallol in the Danakil Depression of Ethiopia, based on the mining and exploration permits held by the company.

Drilling activity started at site in 2010, and most drilling and drilling related activities have now been completed. The project development phase will be finalized with a Definitive Bankable Feasibility study which is expected to be completed in mid 2013. This study will be the basis for a decision on whether to proceed with project execution and realization, with production start-up 2-3 years thereafter.

Estimated capacity for the Dallol project is 1-1.5 million tons potash per year, with resources of more than 30 years mining. 

IC Poatash (TSE:ICP) popped 17% to $1.04 share on Monday after Yara International announced a $40 million “strategic investment” in the company on Friday.

Yara, a large chemical company with headquarters in Oslo, Norway, will pay $1.32 per common share of IC Potash. It has also has committed to an off-take agreement and will purchase 30% of all products produced by ICP’s Ochoa project in New Mexico for a period of 15 years.

“ICP will issue to Yara 30,129,870 common shares at a price of $1.32 per common share for total gross proceeds of C$39,771,428,” said ICP in a statement.

“After giving effect to the transaction, this will result in Yara owning 19.9% of the issued and outstanding common shares of ICP on a non-diluted basis. The issue price represents a 41% premium over the 20 day volume weighted average price of ICP’s common shares traded on the Toronto Stock Exchange as of the closing on March 30, 2012. The investment has been conducted as a non-brokered private placement.”

IC Potash plans to produce sulphate of potash and sulphate of potash magnesia at its polyhalite ochoa property in New Mexico, containing proven and probable reserves of more than 400 million tons of ore within the proposed mine plan.

Yara International ASA is a chemical and agricultural business located in Norway. The company has about 7,300 employees, with operations in more than 50 countries and sales to over 120.