Mississippi Chemical Corporation History

Address:

3622 Highway 49 East
P.O. Box 388
Yazoo City, Mississippi 39194-0388
U.S.A.

Telephone: (662) 746-4131
Fax: (662) 746-9158

Public Company
Founded: 1948
Employees: 1,514
Sales: $485.2 million (2000)
Stock Exchanges: New York
Ticker Symbol: GRO
NAIC: 325311 Nitrogenous Fertilizer Manufacturing; 325312 Phosphatic Fertilizer Manufacturing; 325188 All Other Basic Inorganic Chemical Manufacturing; 32512 Industrial Gas Manufacturing; 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing

Company Perspectives:

Mississippi Chemical Corporation has fostered a culture that is best described as doing the right thing. A strong commitment to workplace safety, environmental stewardship and a commitment to do what we'll say we'll do are also part of the company-wide ethic. This well-established corporate culture may be our most important export. Key Dates:

Key Dates:

1948:: Mississippi Chemical Corporation is organized as a farmers' cooperative under the leadership of Owen Cooper.
1950:: Company becomes first cooperative in the world to build its own nitrogen fertilizer plant.
1966:: Mississippi Chemical completes construction of high-tech ammonia plant in Yazoo City.
1970:: Company enters joint venture with First Mississippi Corporation, establishing Triad Chemicals Inc.
1972:: Company's annual sales climb over $100 million for the first time; double-contract sulfuric acid plant starts production in Pascagoula.
1973:: Cooper retires and is succeeded by Thomas C. Parry.
1986:: Founder Owen Cooper dies; subsidiary, Newsprint South, Inc., is formed.
1987:: Company begins construction of Newsprint South's state-of-the-art newsprint mill.
1993:: Parry retires and is succeed by Charles O. Dunn as CEO and president.
1994:: Mississippi Chemical is reorganized as a publicly held company and begins trading on NASDAQ; company sells Newsprint South.
1996:: Company begins trading on the New York Stock Exchange; buys two potash mines in New Mexico.
1998:: Company starts up joint venture with Farmland Industries, Inc., an ammonia manufacturing plant in Trinidad and Tobago.
2000:: Company buys IMC-Agrico Company's granular urea plant in Faustina, Louisiana.

Company History:

Although it was originally formed as a farmers' cooperative, Mississippi Chemical Corporation is now a multi-million dollar public corporation traded on the New York Stock Exchange. Its home is Yazoo City, Mississippi, located between the hills of the central part of the State and its southern, soggy-bottom Delta area. Through its subsidiaries, the company produces and markets the three essential crop fertilizers necessary for high-yield agriculture: nitrogen, phosphorus, and potassium (potash). Its principal, wholly-owned subsidiaries are MissChem Nitrogen, L.L.C., which produces nitrogen products in Yazoo City; Triad Nitrogen, L.L.C., which manufactures nitrogen in Donaldsonville, Louisiana; Mississippi Potash, Inc., which produces potash fertilizer at its two mines and refineries in Carlsbad, New Mexico; and Mississippi Phosphates Corporation, which makes phosphate fertilizer in Pascagoula, Mississippi. Mississippi Chemical also has a stake in Farmland MissChem Limited, a joint-venture producer of ammonia, a nitrogen fertilizer, in the Republic of Trinidad and Tobago. In addition to fertilizers, Mississippi Chemical makes and distributes industrial-market products. Its anhydrous ammonia, carbon dioxide, nitric acid and standard potash products are all employed in industrial applications, including such end products as acrylics, adhesives, animal feed, carpet fibers, melamine, polymers, resins, rocket fuels, and water treatment chemicals.

1947-51: Origins as a Farmers' Cooperative

In the wake of World War II, both a booming economy and a population surge in the United States created a significant shortage of fertilizers, particularly nitrogen products. By the end of the hostilities, because nitrogen had been used in the manufacture of bombs and ammunition, reserves in both the United States and Europe were almost completely depleted. American farmers desperately needed nitrogen to achieve maximum yields from the limited acreage the federal government permitted them to plant. In 1947, under the leadership of Owen Cooper, director of the Mississippi Farm Bureau, a group of about 600 farmers urged the board of the Farm Bureau to study the feasibility of creating a farmer-owned nitrogen fertilizer plant.

After approving the project, a Farm Bureau board committee initiated the most extensive stock sales drive in Mississippi's history, a necessary step in financing the plant's construction. The goal was to raise $4 million. Meanwhile, confident that the necessary funds would be raised, on October 27, 1948, farmers and farm leaders from six southern states formally organized and chartered Mississippi Chemical as a cooperative and, in November, hired Cooper as CEO and president. The new 22-member board selected Yazoo City as the site for the new plant.

The $4 million target was not reached, but by the end of the drive in 1949, some 7,000 Southern farmers had bought $3.25 million worth of stock, or about 81% of the goal. The shortfall was made up by a $750,000 bond issue approved for Mississippi Chemical by Yazoo County voters. However, before construction could begin, the company had to secure a $3.4 million loan from the U.S. Reconstruction Finance Corporation. The loan was approved in February, 1950, and construction of the Yazoo City facility began.

The facility was completed in 1951, making Mississippi Chemical the world's first cooperative to build a nitrogen production plant. By March of that year, the company had produced its first ton of ammonium nitrate fertilizer and, by the following July, had made its first ton of ammonia. The first products were made using outside sources of ammonia, but in order to produce final fertilizer products economically, two manufacturing facilities were needed: a nitric acid plant and an anhydrous ammonium plant. In tandem, these would provide the fertilizer ingredients without reliance on outside providers. The ammonia plant offered some problems, but by the summer of 1951 it was online, and before the year was out, the company had sold 41,000 tons of ammonium nitrate and 10,000 tons of ammonia to its farmer-shareholders.

1952-72: Growth Under the Leadership of Cooper

After getting the first nitrogen and ammonia production plants on line in 1951, Mississippi Chemical set out both to expand and to diversify. Guided by Cooper, the company undertook some investment ventures and initiated some new projects.

Most importantly, between 1952 and 1972, the company set up a network of delivery terminals across the South. It also increased its output of chemicals, building new plants, notably the $12 million Kellogg ammonia plant built at Yazoo City in 1966. In that same year, Cooper and LeRoy Percy formed Mississippi Action for Progress, the first-of-its-kind partnership of black and white businessmen. Two years later, in 1968, the company completed its new headquarters building in Yazoo City.

In 1970, Mississippi Chemical and First Mississippi Corporation entered into a joint venture, starting up Triad Chemicals Inc., with each partner owning a 50 percent share. The two parties had historic links, for it was the same group of Mississippi businessmen that had helped start Mississippi Chemical in 1948 that founded First Mississippi Corporation in 1957. Triad, a $40 million nitrogen urea complex located in Donaldsonville, Louisiana, soon began producing nitrogen fertilizers.

Two years later, in 1972, the company put into operation its Pascagoula, Mississippi, double-contact sulfuric acid plant--the world's largest at the time. Its output, plus that of the complex at Donaldsonville, helped Mississippi Chemical reach a significant milestone in that same year: combined sales topped $100 million for the first time in the company's history.

1973-93: Growth and Diversification under New Leadership

In 1973, Owen Cooper stepped down, leaving his positions as president and CEO to Thomas C. Parry. Prospects at that juncture, the company's 25th anniversary, looked good. Parry and Mississippi Governor Bill Waller announced plans for a $43 million expansion program geared to increase the annual nitrate production in Yazoo City by 150,000 tons (up to 555,000 tons) and the annual NPK (nitrogen/phosphorous/potassium) output of the plant in Pascagoula by 200,000 tons (up to one million tons). Much of the expense involved arose from mandatory compliance with new EPA air and water standards. Among other things, the company had to build a waste water treatment plant at Pascagoula, which, when completed in 1976, had cost Mississippi Chemical $22 million.

In was also in 1973 that Mississippi Chemical adopted its new slogan: 'We Make Things Grow.' It could have appended the words, 'including us,' at least in the next year, when, for $20 million, it purchased the nation's oldest and largest potash reserve and mine, located in Carlsbad, New Mexico. It followed that up in 1975 with the purchase of some large phosphate rock deposits near Wauchula, Florida. Both these acquisitions reflected the company's policy of buying reserves of raw materials for use in future fertilizer production.

By 1978, the combined operations of Mississippi Chemical's plants reached a 2.5 million ton capacity mark, 30 times the amount that its first plant in Yazoo City could produce in 1951. The value of its assets had also climbed from the company's original $10 million capitalization to $350 million. Two years later, in the 1980-81 period, the company reached the most successful stretch in its history, with revenues of $395 million and patronage earnings of $53.6 million. Thereafter, though, the company entered a difficult period.

The mid-1980s were tough on the fertilizer industry in general. By 1986, when Owen Cooper died, there was a farmer debt crisis that was cutting deeply into fertilizer demands. In addition, much cheaper fertilizer produced in the crumbling Soviet Union was driving market prices down to unprofitable levels.

Mississippi Chemical's worst year was 1987, when it lost over $40 million. The bottom-line realities forced Parry to downsize the company. He ordered the lay off of hundreds of employees, closed the large Pascagoula, Mississippi plant, and dropped company plans for phosphate mining in Florida. Because Mississippi Chemical too easily fell prey to the vicissitudes of unstable commodity trading, Parry also sought to diversify the company's interests. Accordingly, in 1986 the company entered the newsprint business, opening Newsprint South in Grenada, Mississippi, a Mississippi Chemical subsidiary, and in 1987 began construction of its state-of-the-art newsprint mill.

Conditions improved somewhat at the beginning of the 1990s. Demands for nitrogen and potash increased, again reaching profitable levels. At that time, Mississippi Chemical was able to reopen its Pascagoula facility. Its newsprint business was struggling, however, and, in 1994, the year after Parry retired as president, the company sold it.

1994 and Beyond: Going Public and Facing Challenges

Parry was succeeded by Charles O. Dunn as the company's president and CEO. One of Dunn's first tasks was to oversee the transition of Mississippi Chemical from a farmer-owned cooperative into a public company. The conversion was made in August 1994, when the company made its initial public offering of stock, selling five million shares for a total of about $75 million. Initially the stock was listed on NASDAQ, but in 1996 it switched over to the New York Stock Exchange.

It was also in 1996 that the company began a $130 million expansion of its nitrogen fertilizer plant in Yazoo City and acquired Eddy Potash and New Mexico Potash from Trans-Resources of New York. Both acquisitions were potash mining operations in the same area of New Mexico. In an effort to increase its profits from the operation, Mississippi Chemical altered its plans for Eddy Potash. The company concentrated all of Eddy's mining activity on recovering high-grade potash, a move that accelerated the mine's depletion. As a result, the next year, facing declining profits, the company shut down Eddy's mining operations altogether.

Also in 1996, the company entered into an agreement with First Mississippi Corporation to purchase First Mississippi's fertilizer operations. The deal was designed as a tax-free 'Morris Trust' transaction that occurred in two stages: first, the chemical operations of First Mississippi would be spun-off to shareholders as a publicly traded company; second, the remaining fertilizer assets of First Mississippi would merge with Mississippi Chemical. The total price tag in stock and cash would come to about $300 million. The sale was completed in 1997, the year in which Mississippi Chemical also announced the planned expansion of its Pascagoula facility, with the projected rise in its annual diammonium phosphate output to 900,000 tons. In the next year, 1998, in a joint undertaking with Farmland Industries, Inc., Mississippi Chemical began production at its 1,850 metric ton per day ammonia plant in the Republic of Trinidad and Tobago, its first venture outside the United States.

However, the company had to face some serious problems towards the end of the decade, including a natural disaster. In 1998, Hurricane George, causing extensive damage, forced the closing of the company's Pascagoula phosphate plant for several weeks, a shutdown that resulted in a net loss of almost $1 million. Still, the biggest problems were increasing production costs at a time when market demands were declining and surpluses were mounting, threatening a glut and driving prices down. The situation was fairly grim in 1999 and 2000, and the company had little choice but to resort to curtailed production and temporary shutdowns. Ammonia prices in 1999 dropped 25 percent below the previous year, and fertilizer consumption by mid summer had slid five percent below the demand at the start of the year. In August, Mississippi Chemical responded by cutting back production at its Triad Nitrogen number-two ammonia plant in Donaldsonville. In 2000, the company also reduced production at its number-three ammonia plant in Yazoo City and shutdown production at its number-four plant for an indefinite time.

Despite the market conditions, the company continued to plan for better times. In fact, in April 2000, at an undisclosed price, it bought IMC-Agrico Company's granular urea plant located in Faustina, Louisiana, barely a mile away from Mississippi Chemical's ammonia and urea production facilities in Donaldsonville. The acquisition increased the company's granular urea output capacity to 810,000 tons. The fact that it shut down the operations of the Faustina facility within a couple of months argues that Mississippi Chemical was investing more for the future than the present, hoping for a much improved market in the beginning years of the new century. It faced serious problems, though, one being swelling production costs driven by a tremendous increase in the price of natural gas, its principal fuel. The good news was that the price of natural gas had begun to moderate by March of 2001.

Principal Subsidiaries: MissChem Nitrogen, L.L.C.; Mississippi Phosphates Corporation.; Mississippi Potash, Inc.; Triad Nitrogen, L.L.C.

Principal Competitors: CF Industries, Inc.; Agrium Inc.; IMC Global Inc.; Potash Corporation; Terra Industries Inc.

Mississippi Chemical Corporation History

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Key Dates:

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