Phosphoric and phosphate world 2016

A year of depressed prices and demand.
Welcome to the new 21rst Century.
Still "abundant" we can pay less for P (N and K also) fertilizers.
One day it will be gone.
Scarce thing in some decades.

Copebrás in Chinese hands

On the 28th April 2016 China Molybdenum Co. Ltd. (CMOC) reached an agreement to purchase Anglo American's Brazilian niobium and phosphates assets, Anglo Fosfatos, in a transaction worth US$1.5 billion. While it was ultimately the niobium assets that were the draw card, leading to CMOC paying a premium of around US$500 million, many of the bidders, including EuroChem, Mosaic, Vale and the various private equity firms involved, had shown a keen interest in the phosphate assets. These are seen to be profit-making operations with easy access to a market with promising long-term demand growth. The unexpected conclusion has prompted a number of questions, including: 

• Who is CMOC and why is it interested in phosphates?
• Why did Anglo American sell its phosphate assets?
• Why did CMOC pay a premium over other bidders?
• Will CMOC continue to operate the fertilizer unit or will it spin it off?
• Are there any structural changes that could be made to the business once the transaction is completed? 
• Does the breadth of bidders point to a renewed interest in phosphate assets? 
• How can potential bidders understand the core businesses better in other diversification or spin off opportunities? 

CRU's cross-commodities coverage of metals, mining and fertilizers, in addition to our detailed and robust cost modelling work, can help to answer some of these questions.

Vale Fertilizantes or Vale Fertilizers: ascention

At that time Lula was Brazilian President.
They told Bradesco´s Agnelli, then Vale´s CEO, to buy fertilizers.
Vale bought Bunge Fertilizantes, Fosfértil and Ultrafertil and Mosaic Cubatão plus the stakes of both Yara and Mosaic in Fosfértil.
US$ 6 billion (3.7 in Bunge, the rest mostly to Fosfértil and afiliates).
With Vale´s peruvian and mozambican phosphates and potash in Brazil, Canada and Argentina (projects) it would be one of big five.
But there will be history.
Dilma is ousted and rumours say eventually Vale will change direction.
The fact is that the conglomerate have Uberaba´s impressive complex, plus Cajati and Cubatão´s phosphoric and phosphates plants. Plus Araxá and former Petrobrás and Ultrafértil nitrogenate plants in Cubatão.
And now all news agencies say they are on sale.
Mosaic is not the sole bidder.
The fact is that there will phosphate plants in Brazil.
Eventually plants will be done from scratch again.
Now is time to buy cheap old plants.
And put money and be profitable soon.
Ciclycal business in cyclical environment.
I hope I will be there for a while, speak about Bayóvar, Catalão and Morocan rocks.
Phosphate, in fact, is more in fault than water and energy.
It is the salt of the Earth.

Bloomberg says Vale's fertilizer busines sale is iminent

Deal for potash and phosphate assets said by Bloomberg to close coming weeks.

Focus completes Bayóvar 12 phosphate prefeasibility study

 

 

  

By Alex Emery - Wednesday, January 6, 2016 Wednesday, January 6, 2016

Canada's Focus Ventures said it completed a prefeasibility study for its Bayóvar 12 phosphate project in Peru's Piura region, one of a slew of deposits on the north coast seeking to tap into market demand for the natural fertilizer.

The study, completed by M3 Engineering and Golder Associates, envisages up to 1Mt/y of reactive phosphate production with a total 18.5Mt over the 20-year mine life of the US$127mn project, with operating costs running at US$75.68/t, the Vancouver-based company said in a statement.

The 125km2 property, which lies near Vale's Bayóvar mine and projects being developed by Cementos Pacasmayo and Americas Petrogas in the northern Sechura desert, has proven and probable reserves for 54.7Mt of 12.99% phosphorous pentoxide.

The mine, which will require a power line, a reverse osmosis water treatment plant, tailings pads and a seawater pipeline, will send production by truck to a port facility 43km away, Focus said. The company added it plans to advance the project to the feasibility stage while seeking to optimize the mine plan and equipment purchases.

Focus, which drilled 20 holes in a first-stage drill program, is looking to start production of direct application phosphate rock by 2017, company president David Cass told BNamericas in an interview last year. Focus is part of the Gold Group, an alliance that includes Canadian miners Fortuna Silver Mines, Radius Gold, Medgold Resources and Rackla Metals

Vale has been producing about 4Mt/y of phosphates at the neighboring Bayóvar mine since 2010.

Morocco launches $1.8 bln West Sahara investment plan

RABAT Feb 5 (Reuters) - Morocco's King Mohammed on Friday launched a 18 billion Moroccan dirham ($1.85 billion) investment plan in Western Sahara driven by the country's state-run phosphate company OCP, the state news agency MAP reported.
Morocco has controlled most of Western Sahara since 1975 and claims the sparsely populated stretch of desert, which has offshore fishing, phosphate reserves and oilfield potential, as its own territory.
Morocco's annexation of Western Sahara prompted a rebellion by the opposition Polisario Front, which has been backed by Morocco's neighbour Algeria. The United Nations brokered a ceasefire in 1991, but talks have since failed to find a settlement in Africa's longest-running territorial dispute.Rabat invests heavily there, hoping to calm social unrest and independence claims.The plan includes investments of 8.3 billion dirhams in a new fertilizer plant, 4.2 billion dirhams in a new port near the city of Laayoune and 3.1 billion dirhams in other phosphate industrial facilities, MAP said.The plants and the port will be based in the industrial hub of OCP's subsidiary Phosboucraa in al-Marsa near Laayoune, 100 kilometers (62.14 miles) from Phosboucraa's mines.The announcement came few days after OCP, the world's leading phosphate exporter, started production at a new fertilizer plant dedicated to the African market in the Jorf Lasfar area on the Atlantic coast where it invested 5.3 billion dirhams.


The company is building three other units in the same hub with a capacity to produce 1 million tonnes of fertilizer each, it said.

        
OCP, a major earner of foreign currency for Morocco, posted a 66 percent jump in net profit for the first half of 2015 to 3.99 billion dirhams, helped by a strong U.S. dollar.It has invested heavily and made a series of acquisitions to improve its infrastructure and boost output. It aims to raise output to 47 million tonnes of crude phosphate rock in 2017, from around 34 million tonnes in 2013.The company says it wants to become the world's top fertilizer producer by increasing fertilizer production to 12 million tonnes by 2017, up from 4.5 million tonnes in 2010. ($1 = 9.7505 Moroccan dirham) (Reporting By Aziz El Yaakoubi, editing by David Evans)

Global fertiliser market needs price fall to rebalance - PhosAgro

INTERVIEW- Thursday, 4 Feb 2016 | 2:00 AM ET Reuters

LONDON, Feb 4 (Reuters) - Flagging fertiliser prices are set for a further fall which will likely drive some high-cost Chinese producers out of business to help ease a stocks overhang and lift prices later in 2016, one of the world's largest producers, Russia's PhosAgro, said.

Chief Executive Andrei Guryev said he expected prices for phosphate, potash and nitrogen fertilisers to weaken by at least another 10 percent after dropping 30 percent in the past months, a steeper than usual fall during slack winter demand, which sent stocks ballooning, including those in key consumer India.
"The market must bottom out. Prices could fall by another 10 percent in the next few weeks," Guryev said. "We need to reach the bottom first to reduce stockpiles and begin to grow again".
Guryev declined to say whether the price drop would be driven by PhosAgro itself but said the company, which has increased output by about one million tonnes over the last two years to 6.8 million tonnes, would continue growing production.
"Sometimes, it is quite positive for the market to drop one level down because that is the only way to find a lift which will take you up," he said in an interview.
PhosAgro is the world's third-largest producer of phosphate rock, an essential agricultural nutrient. It also sells compound fertiliser, a blend of processed phosphates, nitrogen, potash and often sulphur.
Guryev said he expected prices for key fertiliser diammonium phosphate (DAP) to drop around 10 percent to $320 per tonne on a free-on-board basis, before recovering to $400 later in 2016.
He said the price drop would mostly hurt higher cost Chinese producers. Guryev said he based his calculations on similar developments in 2013, 2010 and 2008, when low prices drove some high cost production out of the market and ultimately led to a rebound in prices.
PhosAgro is one of the lowest cost producers in the world with cash costs amounting to $145 per tonne of DAP compared to an industry average of $370 and Guryev said the company was prepared for any price scenario.
He said his outlook for the global fertiliser market was positive as Indian consumption was racing ahead thanks to low oil prices, which allow farmers to spend more on fertilisers.
Key Latin American consumers such as Brazil have however reduced demand because of steep currency devaluations. "But overall, this is a healthy trend and their business would soon grow again."
He said Russia and the United States would also be strong markets in 2016, giving hope to clear the stocks' overhang, which Guryev said arose partially because China increased fertiliser production by 92 percent in the past 2 years.
"There are no fundamental reasons for weaker prices but people are delaying purchases and stocks are rising. I think it is driven by market fears - declines in stock markets, weaker currencies and declines in commodity prices," he said.
PhosAgro competes directly and indirectly with companies such as Canada's Potash Corp or U.S. Mosaic.
PhosAgro increased production by 10 percent in 2015 as it benefited from a steep rouble devaluation at home while selling in U.S. dollars.
(Reporting by Dmitry Zhdannikov, editing by David Evans)

BHP Spinoff South32 Said Interested in $1 Billion Anglo Sale

South32 Ltd., the aluminum, coal and manganese producer spun out of BHP Billiton Ltd. last year, is considering bidding for Anglo American Plc’s $1 billion niobium and phosphate business in Brazil, according to three people familiar with the situation.
South32 sent out requests to investment banks as it seeks to hire an adviser to assist in the bidding process, the people said, asking not to be identified because the information is confidential. Goldman Sachs Group Inc. and Morgan Stanley are managing the sale for Anglo, the people said.
First-round bids are due by the middle of next month, and Anglo is seeking to complete the sale in one transaction, rather than split the niobium and phosphate assets, they said. Large North American fertilizer companies are also likely to participate in the auction, two of the people said. Anglo confirmed last month that it would work to sell the business this year.

Source: http://www.bloomberg.com/news/articles/2016-01-13/bhp-spinoff-south32-said-interested-in-1-billion-anglo-sale