Saskatoon-based Nutrien said Monday its board has named its current chairman, Mayo Schmidt, as the company’s new CEO. Replacing Schmidt as Nutrien’s chair is Russ Girling, former CEO of TC Energy.

As CEO, Schmidt replaces Chuck Magro, who said Monday he’s stepping down from that post and his spot on the board of directors to pursue unspecified “new opportunities.” Nutrien said Magro will be “available” to the company until May 16 to help in the transition.

Girling described Schmidt as “a remarkable leader who is committed to our values of safety and integrity, our purpose and our strategy focussed on sustainably feeding the world.”

Kansas-born Schmidt played briefly for the NFL’s Miami Dolphins in 1980 and later rose through senior management at General Mills. He came to Winnipeg in 1995 as president of ConAgra’s Canadian grain unit.

In 2000 he left an executive post at ConAgra in California for the CEO post at what was then Saskatchewan Wheat Pool. Schmidt oversaw the Regina grain firm’s restructuring from near-bankruptcy, shutting most of its smaller elevators and shedding non-core businesses.

In 2007 he spearheaded SaskPool’s merger with Agricore United and remained CEO of the merged firm, Viterra, until 2012. He oversaw its sale to Swiss commodities trader Glencore — which in 2016 spun off its ag unit, now rebranded under the Viterra name.

A 2014 appointment to the CEO post for Louis Dreyfus’ commodities business didn’t pan out, and Schmidt in 2015 became CEO at Ontario power utility Hydro One. There he handled that company’s IPO before his 2018 “retirement” following the election of Doug Ford’s provincial Tory government.

Schmidt also joined the board at Agrium, chairing the Calgary fertilizer and ag input company’s merger committee for its combination with PotashCorp into Nutrien in 2018.

“The outlook for our business is exceptionally strong,” Schmidt said of Nutrien in that company’s release Monday. “I look forward to leading the continued execution of Nutrien’s strategy and driving industry-leading performance across all our lines of business.”

Schmidt said in the coming weeks he’d be “connecting with our employees, valued customers and shareholders to continue building our positive momentum and our focus on advancing sustainable solutions to feed a growing planet.”

Magro, who came to Agrium from Nova Chemicals in 2009, said Monday he’s “very proud of the strong foundation we have built at Nutrien over the last several years” and “look(s) forward to working with Mayo over the coming weeks to support a seamless transition and to my next adventure.”

With Magro’s departure, Nutrien said its board would now cut its seat count from 12 to 11, and the remaining 11 directors would all stand again for election at the company’s annual shareholders’ meeting next month. — Glacier FarmMedia Network

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The partner companies had made various promises at the time and many in Western Canada were cautious, hoping for the best but not fully knowing what to expect.

A year later, Nutrien has begun to settle into its new role in the agriculture world — and according to retailers and producers it hasn’t really shaken things up all that much.

However, a few aspects of the merger still have many in Western Canada cautiously watching.

“I don’t want to pretend to call it a non-event because there’s always a concern about consolidation and all I can say at the moment is it doesn’t have any obvious impact,” said Ray Redfern of Redfern Farm Services in southwestern Manitoba.

Before the merger, Redfern, an independent crop input retailer, sold both Agrium and PotashCorp products. Most Agrium products were bought directly from the company, while PotashCorp products were bought through a middleman, Agrico.

Since the merger, those purchases have continued as before. Redfern estimated, though, that an increasing portion of purchases are now being bought directly through Nutrien.

On the producer side, the merger remains a wait-and-see game as many of the new company’s changes are still ongoing, according to Todd Lewis, president of the Agriculture Producers Association of Saskatchewan (APAS).

“There were some concerns, I know, in some areas with the amalgamations that there was going to be lost capacity, as far as delivery opportunities and picking up fertilizer,” he said.

In July, Nutrien rebranded Agrium’s Crop Production Services retailers as Nutrien Ag Solutions and invested money in upgrades to the retailers.

Lewis expected producers will find out this spring when they go to pick up fertilizer if the changes helped to improve wait times for pickups.

Out of office

There is concern from producers, though, if Nutrien will follow through with all of the promises it made before the merger, according to Lewis.

“A lot (of the news) about (Nutrien) in the media is about the head office here in Saskatchewan. I think Saskatchewan producers see that and kind of wonder about some of the promises that were made, if that wasn’t being kept, are some of the other ones at risk as well.”

Before the merger Nutrien had promised Saskatchewan it would keep Saskatoon, the home city for PotashCorp’s headquarters, as its head office location. PotashCorp was originally a provincial Crown corporation and when it was privatized in 1989, legislation required PotashCorp and any successors to maintain a head office in Saskatchewan.

Since the merger, though, almost all of Nutrien’s executives have been based out of the company’s Calgary office.

One unexpected change made by Nutrien was the company’s decision in February to shut down phosphate production at its facility near Redwater, Alta., northeast of Edmonton.

The Redwater plant, owned by Agrium before the merger, was the only phosphate manufacturer in Canada, while PotashCorp had phosphate facilities in the United States. For cost savings, Nutrien decided to move all of its phosphate production to the U.S.

Independent retailers have been warned by Nutrien they will have to ship phosphate in themselves, Redfern said.

However, for retailers in Manitoba such as Redfern Farm Services, Nutrien has said it will still distribute phosphate product from its facility near Portage la Prairie.

The shift to U.S.-made phosphate products has provided an incentive for more competition in the market. Before the merger, Agrium had the advantage of being the only retailer of Canadian phosphate products.

However, now that all phosphate products will be coming from outside of Canada, other retailers have started to expand their physical presence in Canada.

“(We’re hoping) that added competition here will bring fertilizer prices down, (or) at least keep (them) throttled a little bit anyway because we need good competition to make sure we’re paying a fair price,” Lewis said, adding Nutrien has assured farmers they won’t end up paying more for phosphate because of the closure.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.

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Saskatoon-based Potash Corporation of Saskatchewan and Calgary-based Agrium Inc. announced Wednesday they’ve received clearance from the U.S. Federal Trade Commission (FTC) to close their US$25 billion merger-of-equals transaction and form up under a new name, Nutrien.

With the deal’s closing date set for Jan. 1, common shares of Nutrien are expected to start trading Jan. 2 in both Toronto and New York under the ticker symbol “NTR” and PotashCorp and Agrium common shares will be delisted at market close that day, the companies said.

Agrium CEO Chuck Magro, who next month becomes Nutrien’s CEO, said Wednesday the two firms “expect to move quickly upon closing to begin delivering on the many strategic benefits and synergy potential of this combination.”

The companies have previously said they expect to see annual operation synergies of up to US$500 million from the deal, which will create Canada’s third-largest natural resource company with an enterprise value of about US$36 billion.

Nutrien expects to have a combined workforce of almost 20,000 employees in potash, nitrogen and phosphate production and in Agrium’s crop input retail division, Crop Production Services (CPS). The company said it will have corporate offices in both Calgary and Saskatoon, with Saskatoon serving as the registered head office.

Antitrust regulators in Canada, India and China had already signed off on the deal in September, October and November respectively. Canada’s Competition Bureau granted unconditional approval, while the clearances from China and India call for PotashCorp to shed minority stakes in fertilizer companies in Chile, Israel and Jordan.

The FTC on Wednesday, meanwhile, ruled that a PotashCorp/Agrium marriage would “likely harm competition” in the North American market superphosphoric acid (SPA), and in a specialized, more localized market for nitric acid.

Specifically, the FTC said, PotashCorp and Agrium are two of just three companies in North America making SPA, which is only “rarely” imported from overseas. Agricultural wholesalers and retailers use SPA to produce ammonium polyphosphate (APP) fertilizer.

Also, the agency said, PotashCorp and Agrium each have nitric acid manufacturing plants in Ohio and are the two primary suppliers of 65-67 per cent concentration nitric acid in Ohio, Kentucky, Pennsylvania, Maryland, West Virginia and New Jersey.

Nitric acid at that concentration is used in making fertilizers, explosives, stainless steel and certain specialty chemicals.

The FTC, in its release, cited a complaint that “for most customers, there are no functionally equivalent chemical substitutes for 65-67 per cent concentration nitric acid,” and that it’s “unlikely” a competing player would set up another plant in that region.

Thus, the agency said, PotashCorp and Agrium’s settlement agreement with the FTC requires them to sell Agrium’s SPA plant at Conda, Idaho, about 100 km east of Pocatello, to Itafos, a Cayman Islands-based phosphate fertilizer maker.

Also, the FTC said, the settlement agreement requires the sale of Agrium’s nitric acid plant at North Bend, Ohio, just west of Cincinnati, to New York-based fertilizer and commodity firm Trammo.

Neither of the FTC’s conditions will come as a shock to Agrium, which had already announced deals in early November to sell the SPA plant to Itafos for US$100 million and the nitric acid plant to Trammo for an undisclosed sum, with both sales “intended to address U.S. regulatory concerns.”

When PotashCorp and Agrium first announced their merger plans in mid-2016, major farm groups in both Canada and the U.S. said they would take up the issue with regulators in both countries, citing concerns about lost pricing power.

Canada’s Competition Bureau said in September it had consulted stakeholders in the lead-up to its decision, including the two companies’ customers, competitors, industry groups and government.

However, it ruled the deal “is not likely to lead to a substantial lessening of competition relating to potash in Canada,” and effective competitors were in place in the dry phosphate market.

The bureau also said it didn’t see significant overlap or rivalry between Agrium and PotashCorp in Canadian markets for SPA or nitric acid.

The Nutrien partners in 2016 said they also “remain committed to Canpotex,” the Saskatoon-based potash export logistics and marketing company they own jointly with U.S. fertilizer firm Mosaic Co. — AGCanada.com Network

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Higher sulphur costs, the result of tight global supplies and strong Chinese demand, come as fertilizer makers struggle against a crop price slump that has diminished farmer buying power and as new global phosphate supplies come on stream.

The spike in thinly traded sulphur caused “a bit of pandemonium,” as it is a byproduct of oil and gas output, making it difficult to fill shortages quickly, said Andy Jung, director of market and strategic analysis at Minnesota-based Mosaic.

Mosaic and PotashCorp, among others, convert bright-yellow sulphur into sulphuric acid to make diammonium phosphate (DAP), a widely used phosphorus fertilizer.

While crucial for fertilizer, sulphur is a small, niche product for energy producers that they remove from oil to prevent acid rain-causing emissions. Potential beneficiaries of higher sulphur prices include producers Teck Resources , which declined to comment, and Suncor Energy , which did not respond.

Mosaic and Potash are paying $110 per tonne for sulphur this quarter, up $36 from last quarter, BMO analyst Joel Jackson said (all figures US$).

In response, fertilizer companies have increased DAP prices. It sold at Tampa, Florida for an average $385 per tonne last week, up 21 per cent year over year, according to Mosaic.

PotashCorp declined comment.

Higher fertilizer costs come as North American farmers are already financially stressed.

“If they get too high, guys will just cut back,” said Todd Lewis, president of Agricultural Producers Association of Saskatchewan.

In the past two weeks, Chinese sulphur prices have declined rapidly from their highs in typically volatile fashion, offering some relief, Jung said. Even so, Jackson expects contract sulphur prices in the first quarter of 2018 to exceed fourth-quarter prices.

Despite high prices, some sulphur producers hold large stockpiles.

About 10 million tonnes of sulphur sit at Syncrude’s oil production site in northern Alberta, big enough to be visible from space, said a sulphur industry official not authorized to speak publicly.

Moving it is an expensive, time-consuming process, requiring sustained high prices, the source said.

Syncrude spokesman Will Gibson said sulphur marketing decisions are up to its joint venture owners.

One of the owners, Imperial Oil, declined to comment.

For sulphur producer Canadian Natural Resources, an Alberta-based oil and gas company, revenue from the substance represents only a small share of its portfolio, spokeswoman Julie Woo said.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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Prices of crop nutrient potash have leveled off this year after hitting eight-year lows late last year due to low crop prices and excessive production capacity.

The slump, which has extended to nitrogen and phosphate fertilizers, has led PotashCorp to seek consolidation and idle capacity.

Potash said the all-stock merger with Agrium, valued at $25 billion when it was announced last year, was on track for completion by the end of the year, forming a new company called Nutrien.

Pressure on Potash stock is likely to be short-lived as investors quickly turn their attention to the merger, combining PotashCorp’s fertilizer capacity with Agrium’s network of stores to sell fertilizer and seed to farmers, said Brian Madden, portfolio manager at Goodreid Investment Counsel, which owns PotashCorp shares.

“The bigger prize is the combination of the two businesses,” Madden said. Nutrien “is going to be bigger, and less volatile.”

The regulatory review and approval process for the Nutrien merger is still underway in the U.S., as well as in China.

India recently approved the merger, contingent on PotashCorp divesting stakes in fertilizer companies ICL Israel Chemicals, SQM and Arab Potash Co. Plc within 18 months of a clearance order from the Competition Commission of India.

PotashCorp should resist using those sale proceeds for further acquisitions in an oversupplied market, Madden said.

PotashCorp’s sales volumes exceeded expectations, but the opening of new mines owned by K+S AG and EuroChem will add competition early next year, said BMO analyst Joel Jackson.

The company’s third-quarter revenue rose 8.6 per cent to $1.23 billion, helped by higher sales volumes and average realized prices of potash.

However, the cost of goods sold rose five per cent in the quarter, resulting in a smaller profit.

Net income fell to $53 million, or six cents per share, from $81 million, or 10 cents per share, a year earlier.

PotashCorp tightened its full-year adjusted earnings to 48 cents to 54 cents per share from 45 cents to 65 cents. Excluding items, profit was nine cents a share, lower than the 12 cents analysts expected, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Akshara P in Bangalore and Rod Nickel in Winnipeg. Includes files from AGCanada.com Network staff.

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The Saskatoon company, in the midst of seeking regulatory approvals for a merger with Calgary competitor Agrium, announced last week it will “curtail” production at its mines at Allan and Lanigan, Sask.

The shutdowns will run for 10 weeks starting Nov. 19 at the mine at Allan, about 50 km southeast of Saskatoon, and for eight weeks from Dec. 3 at Lanigan, about 50 km south of Humboldt.

The “inventory adjustment” shutdowns are in line with the company’s strategy of matching supply to market demand and “fully utilizing” its lowest-cost mine at Rocanville, about 120 km southeast of Yorkton.

The shutdowns will involve temporary layoffs, but how many hasn’t yet been determined, PotashCorp said. Employees may be reassigned during the shutdowns to work on “essential services, capital projects and maintenance activities.” — AGCanada.com Network

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Calgary-based Agrium and Saskatoon-based PotashCorp announced Wednesday their new merged company, pending regulatory review and approvals, will be named Nutrien.

“The new organization will be the global leader in reliable, low-cost crop nutrient production, combined with the largest agricultural retail distribution network in the world,” the two companies reiterated in a release.

Nutrien, they said, “will play a critical role in ‘Feeding the Future,’ by helping growers to increase food production in a sustainable manner for a growing world.”

The two companies agreed in September to pursue a $47 billion “merger of equals” in the form of a stock swap. Nutrien’s head office would be in Saskatoon, though it would maintain corporate offices in Calgary.

Regulatory review and approval processes for the merger deal continue, the companies said Wednesday, adding they expect their deal to close in the third quarter of 2017. — AGCanada.com Network

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Australia-based BHP aims to start potash production at Jansen, Sask., about 70 km southeast of Humboldt, in 2023, eventually producing four million tonnes annually, the company said this week.

The mine is already under construction but requires BHP’s board to approve another US$4.7 billion to bring Jansen into production. That decision may happen as early as June 2018.

By the time Jansen opens, potash supply and demand are likely to be in balance, said Giles Hellyer, vice-president of operations for potash, in a phone interview from Saskatoon.

BHP’s tentative plan to proceed with Jansen shocked some analysts, who have said that the market may be oversupplied for the foreseeable future as new mines from K+S AG and EuroChem start up.

“We’re a company which looks at large, long-life, low-cost assets,” Hellyer said. “We take a long-term view.”

Jansen would be the first potash mine globally to use highly efficient boring machines supported by a system to convey ore that allows the machines to run longer and at larger volumes without interruption, Hellyer said.

That system, other digital technology and minimal use of diesel equipment will raise efficiency and reduce energy costs, giving Jansen a competitive edge, he added.

“It’s going to have a very different look and feel to it,” he said of the mine.

The industry will struggle to absorb four mines from competitors that are starting in 2017 and 2018, let alone Jansen, BMO analyst Joel Jackson said in a note on Tuesday. Some analysts thought BHP would abandon its potash ambitions years ago, after the Canadian government blocked its 2010 takeover bid for PotashCorp.

In the lead-up to Jansen’s possible opening, potash prices are likely to remain low, pressuring higher-cost producers and possibly taking capacity out of the market, Hellyer said.

He declined to comment on how BHP sees Jansen’s future potash sales breaking down between the U.S. and outside North America.

BHP, under pressure from activist investor Elliott Management for an independent review of its petroleum division, remains open to taking on a partner in Jansen, Hellyer said, but there are currently no ongoing talks.

BHP has completed more than two-thirds of Jansen’s mine shafts and has another couple of years’ worth of work to go, Hellyer said.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors, based in Winnipeg.

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The Calgary-based fertilizer and ag retail firm sold 636,000 tonnes of wholesale potash in the first quarter ended March 31 at an average of $208 per tonne, compared with 456,000 tonnes at $199 per tonne a year earlier.

Agrium’s retail sales fell 2.2 per cent to $2.24 billion. Wholesale sales of nitrogen, potash and phosphate were up four per cent at $675 million.

The company’s net loss attributable to shareholders was $11 million, or eight cents per share, compared with a profit of $2 million, or two cents per share, a year earlier.

On an adjusted basis, it lost seven cents per share, while analysts on average had expected a loss of eight cents, according to Thomson Reuters I/B/E/S.

Agrium, which is merging with Saskatoon-based PotashCorp, said revenue fell marginally to $2.72 billion, missing estimates of $2.77 billion.

Last week, PotashCorp reported a bigger-than-expected rise in its first-quarter profit.

— Reporting for Reuters by Ahmed Farhatha in Bangalore and Rod Nickel in Winnipeg.

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Shares of the Saskatoon-based fertilizer producer rose 1.6 per cent in early New York trading, touching a three-week high.

Revenue was lower in the first quarter due to weaker prices year over year, but it still exceeded Wall Street’s expectations.

Potash prices have rebounded modestly since last year but remain low due to bloated global capacity and weakening farm incomes. Even so, PotashCorp forecast global potash demand of 61 million to 64 million tonnes this year, exceeding last year’s 60 million tonnes.

Potash said it expected full-year earnings of 45 cents to 65 cents per share, up from its prior forecast of 35 cents to 55 cents.

The company raised the lower end of its estimate for 2017 potash sales to 8.9 million tonnes from 8.7 million tonnes, keeping the upper end at 9.4 million tonnes.

“We expect improved consumption trends and nutrient affordability in key markets to support potash demand and our results through the remainder of 2017,” CEO Jochen Tilk said in a statement.

Bernstein analyst Jonas Oxgaard said earnings benefited from a lower tax rate as well as stronger sales in China, India and North America.

“(It) suggests the potash price recovery is in strong force,” he said in a note.

But Citi analyst P.J. Juvekar said it was too early to envision a major recovery as rivals bring on new potash mines through next year.

PotashCorp has nearly finished expanding its low-cost Rocanville, Sask. mine, which it says will help it weather weak crop nutrient prices.

In September, PotashCorp and rival Agrium announced plans to merge. The deal would combine PotashCorp’s fertilizer capacity, the world’s largest, and Agrium’s farm retail network, North America’s biggest.

Tilk said the companies were working through the regulatory process and still expect the deal to close in mid-2017.

Net earnings nearly doubled to $149 million, or 18 cents per share, in the quarter, beating the analysts’ average estimate of 11 cents.

Revenue fell eight per cent to $1.11 billion, despite a 13 per cent rise in potash sales volumes.

Analysts on average had expected $1.06 billion, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Swetha Gopinath in Bangalore and Rod Nickel in Winnipeg.

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