Nutrien Ltd. NTR-T +4.00%increase has announced that it is putting its phosphate business up for strategic review in a bid to enhance the company’s long-term value.
Saskatchewan-based Nutrien’s phosphate division is worth around US$2.4-billion, according to Royal Bank of Canada analyst reports.
The global fertilizer major has six facilities across the United States, making it the second-largest producer in North America after the Florida-based Mosaic Co.
But of the four divisions within the company, phosphate is the smallest. In 2024, the division generated US$384-million in adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization. Nitrogen and potash each generated upward of US$1.8-billion. The agricultural retail side of the business generated US$1.7-billion.
Nutrien to sell stake in Argentine nitrogen producer Profertil for $600-million
The move, announced Wednesday with the release of Nutrien’s third-quarter earnings, is therefore in keeping with the company’s commitment to streamline operations, pare back its portfolio and generate cash flow.
“We continue to progress our strategic initiatives and take actions to simplify our portfolio,” Ken Seitz, Nutrien’s president and chief executive officer, said in a press release Tuesday. He said the moves are aimed at “enhancing earnings quality, improving cash conversion and supporting growth in free cash flow per share over the long term.”
Phosphate is mined from underground deposits formed by marine sediment. It is essential to plant photosynthesis, maturing and reproduction. It is one of three key fertilizers used in major agricultural operations, alongside nitrogen and potassium. Phosphate is also used in animal feed for muscle repair and skeletal development, and it is used in soft drinks and food additives.
Globally, the largest phosphate producer is China, accounting for 36 per cent of worldwide output. North American producers mine 11 per cent of the world’s phosphate.
Mosaic is the largest producer on the continent, supplying two-thirds of the phosphate fertilizer used by American farmers. Nutrien is the only other major North American producer. It is also the continent’s largest producer of purified phosphoric acid, which it processes into solid and liquid fertilizers, feed and industrial acids.
Nutrien’s primary phosphate market is North America, and it reaches farmers through the company’s downstream network of agricultural retail operations. It owns 1,300 stores across North America, 200 in South America and 400 in Australia.
The company’s phosphate division suffered from a poor 2024 performance. Last year, sales volumes fell from almost US$2-billion to around US$1.7-billion, in part because Hurricane Helene temporarily shuttered Nutrien’s White Springs, Fla., facility in late September, stalling production. The hurricane also led to increased water treatment costs, which boosted production expenses.
This is not the first strategic review for Nutrien’s phosphate division. In 2019, the company closed facilities in Redwater, Alta., and Geismar, La., to focus production in its two major U.S. operations in Aurora, N.C., and White Springs. Nutrien said it was focused on fully integrating its assets. It wanted to mine rock onsite, which was possible in its U.S. operations.
The current review is part of Nutrien’s company-wide plans to generate strong cash flow and simplify its portfolio. At an investor day in June, 2024, the company rolled out plans to reduce controllable costs across operations and corporate functions by US$200-million by 2026 and maintain capital expenditures of US$2.2-billion to US$2.3-billion through to 2026. This would allow the company to “pursue high conviction capital deployment opportunities,” it said in a statement at the time.
This past September, Nutrien announced it would sell its 50-per-centequity position in Argentina-based nitrogen producer Profertil SA for approximately US$600-million.
Potential buyers for Nutrien’s phosphate operations could include Mosaic, and other fertilizer heavyweights such as Israel’s ICL Group Ltd. and Germany’s K+S AG, alongside private equity funds.
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