CF Industries (CF) & Lotte Chemical Ink MoU for Ammonia Project
CF Industries Holdings, Inc. CF recently signed a memorandum of understanding (“MoU”) with South Korean chemical company, Lotte Chemical Corporation to explore a joint U.S.-based clean ammonia project. The MoU will also include long-term clean ammonia offtake into South Korea.
The MOU will allow the companies to evaluate the joint development of and investment in a greenfield clean ammonia production facility in the United States, including at CF Industries’ Blue Point Complex in Louisiana. The prospective ammonia production facility would leverage carbon capture and sequestration technologies to cut carbon dioxide (CO2) emissions from the production process of ammonia to a level that meets or surpasses South Korea’s clean ammonia requirements.
The companies will also measure expected clean ammonia demand in South Korea for power generation, bunkering and other sectors, factoring in the regulatory and policy requirements as well as safety and environmental considerations. This is expected to confirm the scale of long-term offtake volume expectations for a potential clean ammonia facility.
Lotte Chemical plans to produce and sell 1.2 million tons of clean hydrogen by investing a total of 6 trillion won by 2030. Clean ammonia is seen as a safe and efficient hydrogen carrier and storage mechanism.
CF Industries, which is among the prominent players in the fertilizers space along with Nutrien Ltd. NTR, The Mosaic Company MOS and Intrepid Potash, Inc. IPI, has advanced projects to decarbonize its ammonia production network and position it to deliver a substantial volume of clean ammonia within the next few years.
The company is constructing a CO2 dehydration and compression facility at its Donaldsonville Complex to allow the capture and permanent sequestration of up to 2 million tons of CO2 annually, starting in 2025. CF has also started a front-end engineering and design study to build a greenfield clean ammonia facility utilizing carbon capture and sequestration at its Blue Point Complex. It is also constructing North America’s first commercial scale green ammonia capacity at the Donaldsonville Complex, which would allow up to 20,000 tons of green ammonia production starting in 2024.
CF Industries’ earnings of $4.35 per share for the fourth quarter of 2022 topped the Zacks Consensus Estimate of $4.13. Net sales rose around 3% year over year to $2,608 million, but trailed the Zacks Consensus Estimate of $2,814.2 million. The top line was mainly driven by higher prices across the company’s most segments due to disruption in the global supply chain of fertilizers, resulting from higher global energy costs, reduced operating rates globally and geopolitical factors.
CF industries, in its fourth-quarter call, said that it expects global nitrogen prices to gain support from abundant agricultural demand. The company also expects the global nitrogen supply-demand balance to remain tight into 2025, supported by agricultural-led demand and persistently high energy prices in Europe and Asia.
Demand for nitrogen continues to be driven by the need to replenish global grains stocks, per the company. CF believes that it will take at least two years for harvests to fully replenish global grain stocks, which will support strong grain plantings aiding nitrogen applications further.
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