All posts by hlancey@bloomberg.net

Lower Prices Pressure LSB’s 2Q Income, Sales; Brisk Ammonia Fill Program Reported

Ammonia, Ammonium Nitrate, Blue Ammonia, Blue Hydrogen, Earnings, Egypt, Europe, Featured, Low-Carbon, Nitric Acid, Trinidad and Tobago, U.S., UAN

LSB Industries Inc., Oklahoma City, Okla., on July 31 reported net income of $10 million on net sales of $140 million for the second quarter ended June 30, 2024, down from $25 million and $166 million, respectively, in last year’s second quarter.

Second quarter adjusted EBITDA was reported at $41 million, down from $47 million last year, while diluted earnings per share came in at $0.13, compared with $0.33 in second-quarter 2023.

“Our second quarter profitability improved sequentially due largely to improved pricing relative to the first quarter of this year,” said LSB President and CEO Mark Behrman. “While selling prices were down compared to the second quarter of last year, the year-over-year pricing decline was much less significant than the declines experienced over the previous several quarters. We view this as indicative of a stabilization of our markets after a period of downward volatility following the spike in nitrogen prices experienced in 2022.”

LSB described the ammonia market as healthy, with strong pricing driven by a brisk summer fill program, natural gas curtailments in Trinidad and Egypt, extended turnarounds and delayed startup of new capacity, and constrained imports into Europe and the Middle East due to shipping disruptions in the Suez Canal.

The company also noted “solid” UAN pricing following the spring application season, and said its industrial business is seeing steady demand for nitric acid and ammonium nitrate, bolstered by US metals production and infrastructure upgrades and expansion.

Behrman said the company recently started a turnaround at its Pryor, Okla., facility and plans to conduct a turnaround at the Cherokee, Ala., plant in the fourth quarter. “When combined with the multiple smaller projects we have underway, we expect these turnarounds to lead to increased reliability and incremental EBITDA and cash flow,” he said.

LSB noted its five-year agreement with Freeport Minerals Corp., Phoenix, Ariz., to supply up to 150,000 st/y of low carbon ammonium nitrate solution (ANS) from LSB’s El Dorado, Ark., facility, starting in 2025 (GM May 24, p. 1).

“Our second quarter was highlighted by our landmark agreement to supply Freeport Minerals with low carbon ANS for use in their copper mining operations,” Behrman said. “This agreement validates our belief that industrial customers will identify low carbon nitrogen products as a critical pathway toward achieving their decarbonization initiatives.”

Behrman also noted LSB’s progress on two clean ammonia projects at El Dorado and the Houston Ship Channel. The El Dorado project would capture and sequester 400,000-500,000 mt/y of CO2, reducing Scope 1 emissions by 25% and yielding 305,000-380,000 mt/y of low carbon ammonia.

“The EPA is currently indicating a final decision next spring on the Class VI permit application submitted by our partner, Lapis Energy, for our El Dorado carbon capture and sequestration project,” Behrman said. “This timeline would position us to begin producing low carbon ammonia by early 2026.”

LSB’s Houston Ship Channel project with INPEX, Air Liquide, and Vopak Exolum envisions a 1.1 million mt/y blue ammonia plant utilizing blue hydrogen provide by Air Liquide/INPEX (GM Oct. 6, 2023). LSB said the Pre-FEED is underway and expected to be completed in the fourth quarter, with the FEED beginning in the first quarter of 2025. A final investment decision is expected in the first quarter of 2026.

“Concurrently, we continue to have productive conversations with potential off-take parties for the low carbon product from this facility,” Behrman said. “We are encouraged by the positive developments with both of our projects and remain committed to our vision of becoming a leader in the global energy transition through the production of low carbon ammonia and downstream products over the next several years.”

LSB repurchased $64 million in principal amount of Senior Secured Notes and approximately 0.8 million shares of common stock during the second quarter, with year-to-date figures reported at $97 million and 1.5 million, respectively. The company reported total debt of approximately $486 million as of June 30, while cash flow from operations was reported at $41 million and capital expenditures at $15 million.

$11 B Green Ammonia Project Planned in Chile

Ammonia, Chile, Clean Ammonia, Green Ammonia, Green Hydrogen, Hydrogen, Low-Carbon

HNH Energy, a consortium of Austria Energy Group, Copenhagen Infrastructure Partners (CIP), and Ӧkowind, has submitted plans for its green ammonia project to Chile’s Environmental Impact Assessment System in anticipation of starting construction in 2027 with commissioning in 2030. The project involves an estimated investment of $11 billion.

The project will be in San Gregorio in the Magallanes region, which is near the southern tip of Chile. It will produce export-oriented green hydrogen and green ammonia, and will consist of a 1.4 GW onshore wind farm, electrolyzers, ammonia plant, port facility, and seawater desalination plant. It is expected to produce 1.3 million mt/y of green ammonia and 270,000 mt/y of hydrogen, with development occurring in two stages due to land occupation uncertainties.

Trammo DMCC, Transammonia’s Dubai-based subsidiary, and ASOE Chile Diez SpA signed a Memorandum of Understanding (MOU) for an exclusive green ammonia offtake of the entire output of the facility (GM May 21, 2021). The project was initially started by Austria Energy Group and Ӧkowind with CIP joining the joint venture in 2022 (GM Jan. 21, 2022).

EnBW Markets Green Ammonia from Norway

Ammonia, Clean Ammonia, Europe, Green Ammonia, Low-Carbon, Norway

Energie Baden-Württemberg (EnBW) has begun marketing 100,000 mt/y of green ammonia from the Skipavika Green Ammonia (SkiGA) project in western Norway. The volumes are planned to be available starting in 2027 to be transported to various delivery locations including the Skipavika port or terminals in Western Europe. Interested companies can bid for the capacity on the EnBW website.

SkiGA is a joint venture between developer Fuella AS and Skipavika Innovation. EnBW entered cooperation with Fuella in 2023 with a 10% equity stake to support the investment decision and secure exclusive rights to a long-term offtake agreement.

The SkiGA project is one of Europe’s first emission-free green ammonia facilities, built using local green electricity. It is expected to produce 300 mt/d of green ammonia from renewable electricity generated by wind and hydro power. A Power Purchase Agreement (PPA) for up to 130MW of renewable power for 15 years was negotiated by Fuella AS with power producer Hafslund for the project in April (GM April 19, p. 25). 

Singapore Shortlists Consortia for Low-Carbon Project

Asia, Clean Ammonia, Low-Carbon

The Energy Market Authority (EMA) and the Maritime and Port Authority of Singapore (MPA) have shortlisted two consortia to proceed to the next round of proposal evaluations to provide a low or zero-carbon ammonia solution for power generation and bunkering on Jurong Island.

The two consortia leads that have been selected from a total of six are Keppel’s Infrastructure Division and Sembcorp-SLNG. The bunkering players include Itochu Corporation, Nippon Yusen Kabushiki Kaisha, and Sumitomo Corp. 

These consortia will conduct engineering, safety, and emergency response studies for the proposed project. After selection, the leading developer will develop an ammonia solution that generates 55-65 MW of electricity from low or zero-carbon ammonia via a Combined Cycle Gas Turbine, as well as ammonia bunkering capacity of 100,000 mt/y. The lead developer will be announced in 1Q 2025, according to MPA’s press release.

As part of Singapore Green Plan 2030, the Singapore government announced the “Sustainable Jurong Island” initiative to transform Jurong Island into a sustainable Energy and Chemicals (E&C) Park (GM Oct. 28, 2022).

KBR, Clairant Expand Low-Carbon Collaboration

Ammonia, Clean Ammonia, Green Ammonia, Houston, TX, Low-Carbon, Switzerland

Clairant, a specialty chemicals company based in Switzerland, announced that it is expanding its strategic cooperation with KBR for ammonia production. The collaboration will combine Clairant’s AmoMax 10 Plus ammonia synthesis catalysts with KBR’s K-GreeN® ammonia technologies to maximize the economics and energy efficiency of ammonia production

Houston-based KBR’s technology has recently been selected for use at several low-carbon ammonia plants including the Shell Blue Horizons plant in Duqm, Oman (GM July 26, p. 25), the Fortescue Holmaneset green ammonia plant in Norway (GM April 26, p. 26), and the El Nasr Company fertilizer complex in Egypt (GM April 5, p. 25).

Clairant and KBR’s complete green ammonia solution has already been selected for ten green ammonia projects around the world.

Taiwan Fertilizer Partners with Asian Corporations

Ammonia, Clean Ammonia, Japan, Low-Carbon, Saudi Arabia, South Korea, Taiwan

Taiwan Fertilizer Company (TFC) announced that it is partnering with firms out of Japan and South Korea to further its interests in ammonia. It recently signed Memorandums of Understanding (MOUs) with Samsung C&T Corp. of South Korea and IHI Corp. of Japan, with TFC supplying raw materials in cases where their partners possess production capabilities.

IHI develops boiler systems for ammonia co-firing at coal plants and recently achieved a 20% coal-ammonia co-firing test at the Hekinan Power Plant in Japan (GM March 15, p. 27). The company also constructs liquid ammonia storage facilities.

TFC has established an advanced business research center to further innovation and has invested in liquid ammonia storage. TFC recently committed to investing $91 million for two new liquid ammonia storage tanks, and currently has two existing storage facilities with a capacity of 40,000 mt (GM Oct. 6, 2023). TFC imports ammonia from Al-Jubail Fertilizer Co. in Saudi Arabia and reported its first commercial shipment of low-carbon ammonia in June 2023 (GM June 9, 2023).

Compass Minerals – Management Brief

Management Briefs, U.S.

Compass Minerals, Overland Park, Kan., has named Ashley Ward as Vice President, Corporate Controller. Ward will serve as the principal accounting officer with lead responsibility for all technical accounting issues of the company, developing and maintaining all accounting policies and principles, and the management of external reporting requirements to ensure timely and accurate preparation of financial filings with the US Securities and Exchange Commission.

Prior to joining Compass, Ward spent 10 years at Crestwood Equity Partners LP in positions within various business segments, including Assistant Controller and Director, Operational Accounting and Fixed Assets. She started her career at Flint Hills Resources, Louis Dreyfus Commodities, and Barkley in financial reporting and accounting positions.

Incitec Pivot Ltd. – Management Brief

Australia, Management Briefs

Australian miner and fertilizer producer Incitec Pivot Ltd. (IPL) announced the appointment of Fiona Hick as an Independent Non-Executive Director to the IPL Board, effective Sept. 1, 2024. She will also assume the role of Chair of the Board’s Health, Safety, Environment, and Community Committee.

Hick has held executive and leadership roles in the energy and mining industries over a 29-year career with Fortescue Metals Group Ltd., Woodside Energy Group Ltd., and Rio Tinto Ltd. She most recently served as CEO of Fortescue Metals Group, is a Non-Executive Director of Evolution Mining Ltd., and has been the President and Chair of the Advisory Board for the Chamber of Minerals and Energy, Western Australia.

“We are delighted to welcome Fiona to our Board,” said IPL Chairman Greg Robinson. “Fiona has strong executive leadership and corporate experience in the energy and resources sectors. With her engineering background and extensive experience in operations, Fiona will bring valuable leadership and strategic insights to the Board.”

PhosAgro – Management Brief

Management Briefs

The Board of Directors of Moscow-based PhosAgro re-elected the Independent Director Viktor Cherepov as its Chairman at its first meeting since its Annual General Meeting of Shareholders. Alexander Sharabaika was re-elected Deputy Chairman of the Board of Directors. 

“Thanks to the concerted efforts of our workforce and close cooperation between our Board of Directors and management, we have been steadily implementing our long-term strategy for dynamic growth,” Cherepov said. “As a result, we have been able to maintain the positive trend when it comes to production: according to preliminary figures, we increased production of agrochemicals by 3.6% in the first half of this year.”

The meeting also approved the chairmen and members of the Board committees. Cherepov was re-elected Chairman of the Audit Committee; Siroj Loikov was elected Chairman of the Remuneration and Human Resources Committee; Sharabaika was re-elected Chairman of the Strategy and Sustainable Development Committee; and Sergey Samosyuk was re-elected Secretary of the Board of Directors.

Fertilizer Margins, Sulfur Production Boost MMLP

Earnings, News Briefs, Texas

Martin Midstream Partners LP (MMLP), Kilgore, Texas, reported net income of $3.8 million and adjusted EBITDA of $31.7 million for the second quarter ended June 30, 2024, up from $1.1 billion and $25.5 billion, respectively, in last year’s second quarter. For the first six months, net income was $7.1 million and adjusted EBITDA was $62.1 million.

The company’s Sulfur Services segment posted adjusted EBITDA of $10.6 million for the quarter, up $2.6 million from last year reflecting increased fertilizer margins and high sulfur production from the Gulf Coast refineries. The company declared a quarterly cash dividend of $0.005 per common unit.

New York-based investment advisories Nut Tree Capital Management and Caspian Capital on July 29 increased their offer to acquire Martin Midstream to $4.50 per common unit in cash, up 12.5% from an initial offer last month of $4 per common unit. The offer represents a 48% premium over an offer of $3.05 made in May by Martin Resource Management, the owner of the general partner of Martin Midstream.

Martin Resource earlier this month said it had no interest in selling its interests in Martin Midstream or the general partner, or in pursuing any alternative options.