The Mosaic Company announced Oct. 28, a definitive agreement to acquire the phosphate business of CF Industries Inc., for a combined $1.4 billion.
The sale includes CF Industries’ Plant City Phosphate Complex, the 22,000-acre South Pasture phosphate mine and beneficiation plant in Hardee County, and ammonia terminal and finished product warehouse facilities in Tampa.
“This does include the entire operation in Plant City,” said Dan Swenson, senior director of investor relations and corporate communications for CF Industries. “After the close of the transaction, CF Industries will not have operations in Plant City.”
Mosaic Vice President of Public Affairs — Phosphates Martha Monfried said the change likely will not result in any job loss.
“We don’t anticipate any reduction in force,” she said. “Mosaic would acquire CF’s talent and facilities. The majority of CF and Mosaic workers are at the plants and mines, and we need them to continue working there.
“While we await regulatory approval, we’ll be forming integration teams to assess combining our operations and any improvements or upgrades to Plant City and elsewhere,” Monfried said.
The CF Industries’ facilities currently produce about 1.8 million tonnes of phosphate fertilizer annually, which would be additive to the annual 8.2 million tonnes currently produced by Mosaic. The Plant City complex, at 660 E. County Line Road, converts phosphate concentrate produced at the Hardee County operation. It is one of the largest integrated ammonium phosphate fertilizer complexes in the country, according to CF Industries’ website.
“This is a set of agreements with significant strategic value to both CF Industries and Mosaic,” said Stephen R. Wilson, chairman and chief executive officer of CF Industries Holdings Inc. “The sale of our phosphate operations represents good value for our shareholders and the full set of transactions enables us to sharpen the strategic focus on our nitrogen business.”
Because of the close proximity of CF Industries’ South Pasture mine to Mosaic’s planned Ona phosphate mine, the company will be able to combine the assets. With the existing infrastructure at South Pasture, Mosaic expects to save about $500 million by not having to construct a $1 billion beneficiation plant. Instead, it will invest about $500 million to develop phosphate rock reserves and improve existing mines.
“We are thrilled with this transaction; it’s clearly a good deal for our shareholders,” said Larry Stranghoener, Mosaic’s executive vice president and CFO. “The proximity of the CF assets gives us significant advantages, and the transaction is very appealing financially, both in terms of capital expenditures and earnings.”
Mosaic and CF Industries also signed strategic supply agreements under which CF Industries will provide Mosaic with up to one million tonnes per year of ammonia. Under one agreement, Mosaic will purchase up to 725,000 tonnes annually for 15 years, with pricing based on a formula tied to the prevailing price of U.S. natural gas. This agreement is expected to begin before January 2017. Under a second agreement, Mosaic will purchase about 270,000 tonnes annually for three years from CF Industries’ Trinidad operations at CFR Tampa market-based pricing. Because of these arrangements, Mosaic will forego its proposed ammonia manufacturing plant at its phosphate facility in Faustina, La., saving about $1.1 billion.
“Uniting CF Industries’ phosphate operations with Mosaic’s creates an ideal combination that provides the opportunity for enhanced operating efficiencies and sustainability efforts, lower production costs and reduced capital investment — creating value for our shareholders, customers and employees,” said Mosaic President and Chief Executive Officer James T. Prokopanko. “The addition of these new phosphate assets and securing access to long-term ammonia supplies solidifies Mosaic’s position among the largest and best phosphate producers in the world.”
The phosphate acquisition would be additive to Mosaic’s existing Florida operations and complements the company’s plans to mine phosphate rock reserves in Hardee and Desoto counties and extensions of the existing Wingate mine.
“We are thrilled to add CF Industries’ Florida phosphate employees and facilities to the Mosaic family,” said Gary N. “Bo” Davis, Mosaic senior vice president of phosphate operations. “We look forward to working together to help the world grow the food it needs while strengthening our operations and deep commitments to the Central Florida communities where our employees live and work.”
The transaction is expected to close in the first half of 2014. The $1.4 billion includes $200 million to fund CF Industries’ asset retirement obligation escrow.
Contact Michael Eng at meng@plantcityobserver.com.
AT A GLANCE
Mosaic is the world’s largest combined producer of potash and phosphates.
• Mosaic employs 8,400 people.
• Mosaic has customers in about 40 countries worldwide.
• Mosaic’s largest areas of operation are Central Florida and Saskatchewan.
• Mosaic’s headquarters are in Plymouth, Minn.