Yara CEO says open to U.S. fertilizer deal

Date:09-27-2011

The chief executive of Yara International ASA, the world's largest nitrogen fertilizer maker, says he is interested in again trying to buy an American rival.

Yara failed last year to buy Terra Industries Inc, a large American fertilizer maker that eventually was bought by CF Industries Holdings Inc for nearly $5 billion.

The deal highlighted just how red hot the fertilizer sector has become in recent years, as food demand rises around the globe.

Yara CEO Jorgen Ole Haslestad told Reuters he would again be interested in an American buyout.

"We'd like to," Haslestad said during an interview at Reuters offices in New York on Friday. "But there are not that many which are up for sale, unfortunately."

Haslestad said he wondered, "Whether Koch has an interest in selling their assets."

Privately held Koch Industries KCHIN.UL owns one of the world's largest nitrogen fertilizer producers.

"One could also think of Mosaic or Agrium," said Haslestad, who became CEO in 2008 and previously worked at Siemens.

Part of the reason American fertilizer rivals are so appealing to the Norway-based company is North American shale natural gas.

Natural gas is one of the main ingredients used to make nitrogen, the most important fertilizer for farmers to apply.

"We are seeing quite a few chemical companies invest in new plants in the U.S. based on cheap gas," he said. "Might that be realistic for some fertilizer companies? Could be."

Strong corn prices also should continue to help the fertilizer industry, as farmers have an incentive to plant more, he said.

"If you look at the difference between the corn price and the fertilizer price it's still extremely interesting for farmers to put in the maximum amount of fertilizer," Haslestad said. "The corn price would have to drop considerably before farmers say, 'No, the fertilizer is too expensive.'"

AFRICA EXPANSION

Yara is spending $20 million to build a port in Tanzania that will help expand its fertilizer delivery network throughout southern Africa.

The project is part of a humanitarian effort Yara is taking part in with Syngenta and other seed and fertilizer companies to improve farming practices in Africa.

"There's a huge potential, there's no doubt about that," Haslestad said.

Yara currently sells 1.5 million tonnes of fertilizer per year in Africa, roughly 10 percent of its total sales.

Once the project, which should be able to handle 45,000 tonnes of fertilizer, is complete in December 2012, fertilizer sales in Africa should jump three-to-five fold, Haslestad said.

"That's obviously what's driving us," he said. "We believe that the fertilizer companies, together with the seed companies, do have a very important role to play."