Rentech, Inc.

Nitrogen Fertilizer


Global fertilizer demand is driven primarily by grain demand and prices, which, in turn, are driven by population growth, dietary changes in the developing world and increased bio-fuel consumption. Populations in developing countries are shifting to more protein-rich diets as their incomes increase, with such consumption requiring more grain for animal feed. According to the Food and Agricultural Organization, global fertilizer use, consisting of nitrogen, phosphate and potassium, is projected to increase 39% by 2030 as compared to average annual consumption between 2005 and 2007.

The United States is the world's largest exporter of coarse grains, which include corn, grain sorghum, oats and barley. Based on a 2010 report by the International Fertilizer Industry Association, the United States is also the world's third largest consumer of nitrogen fertilizer and historically has been the world's largest importer of nitrogen fertilizer.

Plants require nitrogen in the largest amounts and it accounts for approximately 61% of primary fertilizer consumption on a nutrient ton basis. Nitrogen and sulfur share certain functions in plant growth, such as protein formation, and are generally the most important determinants of crop yield and quality. Sulfur assists plants in utilizing nitrogen more efficiently, and therefore the application of nitrogen must be appropriately balanced with adequate sulfur. Nitrogen has the most consistent demand of the three primary nutrients because it is a key determinant of yield, and because it depletes most rapidly from the soil and must be reapplied annually, in contrast to phosphates and potassium, which can remain in the soil for up to three years after application. Sulfur is highly leachable and although some carryover may occur in certain types of soils, annual reapplication is typically necessary, particularly in irrigated and high yielding soils.

East Dubuque Facility

Our East Dubuque Facility is located in the center of the Mid Corn Belt, the largest market in the United States for direct application of nitrogen fertilizer products. The Mid Corn Belt includes the States of Illinois, Indiana, Iowa, Missouri, Nebraska and Ohio. The States of Illinois and Iowa have been the top two corn producing states in the United States for the last 20 years according to the USDA.

Our East Dubuque Facility can produce up to 830 tons of ammonia per day, with the capacity to upgrade up to 490 tons of ammonia to produce up to 1,100 tons of UAN per day. Our facility has on-site storage capacity of 40,000 tons of ammonia and 80,000 tons of UAN. In 2011, we commenced construction of an ammonia production and storage capacity expansion project, which is expected to be completed by the end of 2013. This project is designed to increase our ammonia production capacity to 1,020 tons per day and add ammonia storage capacity of approximately 20,000 tons.

Pasadena Facility

Our Pasadena Facility is located on the Houston Ship Channel with access to transportation at favorable prices. The facility has two deep-water docks and access to the Mississippi waterway system and key international waterways. The facility is also connected to key domestic railways which permit the efficient, cost effective distribution of its products west of the Mississippi River. Our Pasadena Facility's products are sold primarily through distributors to customers in the United States and in Brazil, and are applied to many types of crops including soybeans, potatoes, cotton, canola, alfalfa, corn and wheat. We believe that the diversification of the geographic markets and crop applications for this facility's products should improve the stability of our overall earnings. Ammonium sulfate prices and margins generally have been less volatile than the prices and margins for the products of our East Dubuque Facility.

Our Pasadena Facility can produce up to 1,750 tons of ammonium sulfate per day and up to 1,750 tons of sulfuric acid per day, a majority of which is upgraded into ammonium sulfate and other products. Our facility has on-site storage capacity of 60,000 tons of ammonium sulfate and 27,000 tons of sulfuric acid. We have commenced a project to increase ammonium sulfate production capacity by 115,000 tons annually.

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