The two largest producers of Florida phosphate have agreed to merge, further consolidating one of the state's oldest and most important home-grown industries.
Cargill Inc., the world's biggest agricultural company, will combine its fertilizer business with IMC Global Inc., the nation's largest phosphate producer, to form a new company with $4.1-billion in annual sales, the companies said Tuesday.
The merger will likely mean more phosphate industry job losses in Florida, where Cargill and IMC employ a total of about 4,800 workers at six mines and five fertilizer plants scattered across Hillsborough and Polk counties.
Executives predicted the new company will be able to cut $145-million in expenses annually by its third year, in part through eliminating redundant overhead costs.
Cuts probably won't include closing phosphate mines or plants where the rock is turned into fertilizer, said Gray Gordon, vice president of Cargill Crop Nutrition in Ruskin. But they could involve overlapping service and maintenance jobs at the companies.
"There will be some synergies," Gordon said. "What it will be, I don't have a clue. But the $145-million has got to come from somewhere."
The merger made waves well beyond Florida and the fertilizer industry. It marked the first time that Cargill, the largest privately held U.S. company, will take part of 0.0i0ts business public.
Family owned since it was founded in 1865, Cargill makes agricultural and industrial products and has 98,000 employees in 61 countries. Fertilizer makes up a small slice of the business.
Cargill will own 67 percent of the new company, with IMC shareholders owning the rest.
Phosphate producers are coming out of a prolonged slump. Prices fell as new production came on line in India and Australia. More recently, the cost of raw materials to produce fertilizer, such as natural gas and sulfur, skyrocketed.
IMC suffered through the downturn, posting five straight years of losses. The company paid down debt over the past year by selling assets, including a marine terminal at Port Sutton in east Tampa.
But fertilizer prices have hit an eight-year high as grain stocks have fallen in China and other countries. With distribution centers in South America and Asia, as well as the Midwest farm belt, the new company should be well positioned to expand, Cargill and IMC executives said.
"Timing is important. (The world) needs more acres, or intensely farmed acres, so that means need for more nutrients and more fertilizer demand," Fritz Corrigan, a Cargill executive vice president who will run the new company, told Bloomberg Business News.
The industry plays a big role in the economy of West Central Florida. Florida accounts for 75 percent of the U.S. phosphate supply and 25 percent of global production. Tampa's port was built on phosphate. Fertilizer and phosphate rock remain its top export, making up about 90 percent of outgoing cargo by weight.
But the number of producers has declined over the years, from 200 in the late 1800s to 12 in the early '70s to five today, said Gordon, the local Cargill executive. The merger would leave just three.
The phosphate industry employed just under 7,500 workers in 1999, half the number on the payroll 20 years earlier.
_ Steve Huettel can be reached at huettelsptimes.com or (813) 226-3384.