CF Industries, CHS launch nitrogen fertilizer venture

DEERFIELD - CF Industries Holdings and CHS Inc. said it has launched a nitrogen fertilizer strategic venture with CF Industries Nitrogen, a CF Industries subsidiary, and began receiving delivery of urea and urea ammonium nitrate from CF Industries under a long-term supply agreement.

Through CF Industries $2.8 billion investment, CHS will be entitled to semiannual profit distributions from CF Nitrogen based generally on the volume of granular urea and UAN purchased by CHS pursuant to the supply agreement. CF Industries Holdings is a global manufacturer and distributor of nitrogen products serving both agricultural and industrial customers.

"We are pleased today to start our strategic venture with CHS, beginning the next chapter in a mutually beneficial long-term relationship," said Tony Will, president and chief executive officer, CF Industries. "The venture will deliver attractive returns to CF shareholders as the equity investment helps support our long-standing capital allocation priorities and the supply agreement connects us to a reliable partner who will take ratable delivery of product across the year."

CHS, a global agribusiness owned by farmers, ranchers and cooperatives across the United States, supplies energy, crop nutrients, grain marketing services, animal feed, food and food ingredients, along with business solutions including insurance, financial and risk management services.

"This is an important day for CHS member-owners as we not only complete the single largest investment in our history, but more importantly establish long-term dependable nitrogen fertilizer supply, supply chain efficiency and opportunity for economic value," said Carl Casale, president and chief executive officer, CHS Inc. "This is a strategic decision about adding value for our member cooperative- and producer-owners on par with the significant investments made in our energy and grains businesses over our 85 years of operation."

CHS is entitled to purchase up to 1.1 million tons of granular urea and 580,000 tons of UAN annually from CF Nitrogen for ratable delivery. The 1.7 million product tons available under the supply agreement represent approximately 8.9 percent of CF's total production capacity once its capacity expansion projects are completed at Donaldsonville, La., and Port Neal, Iowa, expected in 2016.