The Mosaic Company and CF Industries have signed a definitive agreement where Mosaic will acquire CF’s phosphate business for $1.2 billion in cash plus $200 million to fund CF’s asset retirement obligation escrow. Under the terms of the agreement, Mosaic will acquire CF’s 22,000-acre South Pasture phosphate mine and beneficiation plant in Hardee County, Florida; its phosphate manufacturing facility in Plant City, Florida; and its ammonia terminal and finished product warehouse facilities in Tampa, Florida.
The CF facilities currently produce about 1.8 million mt/y of phosphate fertilizer, which would be additive to the 8.2 million mt/y currently produced by Mosaic.
Mosaic and CF also signed two strategic supply agreements under which CF will provide Mosaic with up to 1 million mt/y of ammonia. Under one agreement, Mosaic will purchase up to 725,000 mt/y of ammonia for 15 years from CF’s Donaldsonville, Louisiana, nitrogen complex beginning no later than 2017. Under a second agreement, Mosaic will purchase approximately 270,000 mt/y for three years from CF’s Point Lisas nitrogen joint venture in Trinidad and Tobago beginning at the close of the phosphate sale.
The Donaldsonville ammonia agreement is not conditional on the phosphate sale transaction and will go into effect beginning no later than 2017. The Trinidad ammonia agreement is conditional on and goes into effect at the closing of the phosphate sale transaction. The Mosaic/CF transactions are expected to close in the first half of 2014, assuming receipt of customary regulatory approvals.
In light of the ammonia supply agreements, Mosaic has decided to forego a proposed ammonia manufacturing plant at its Faustina, Louisiana, phosphate facility, saving approximately $1.1 billion in future capital expenditures.
Assuming closure of the phosphate transaction, the proximity of CF’s South Pasture mine to Mosaic’s planned Ona phosphate mine in Hardee county will allow Mosaic to take advantage of synergies associated with combining these operations. The existing infrastructure at South Pasture will provide Mosaic with savings of approximately $500 million by allowing it to forego construction of a $1 billion beneficiation plant for the Ona mine. Mosaic will instead invest approximately $500 million to develop phosphate rock reserves and improve existing mines.
Mosaic President and CEO James T. Prokopanko said, “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. 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.”