All Posts from March 22, 2024

CVR Energy, Icahn Eye Options for CVR Partners, Possible Refinery Acquisitions

Featured, Nitrogen, U.S., UAN

CVR Energy Inc. is currently considering strategic transactions with its majority owner (66%) Icahn Enterprises LP (IEP) involving nitrogen producing unit CVR Partners LP, according to March 18 filings after markets closed.

CVR Energy, which owns approximately 36.8% of CVR Partners, may opt to buy some or all outstanding publicly held shares of the fertilizer company, or sell CVR Partners. CVR Energy and IEP are “indirectly controlled” by billionaire Carl Icahn, according to the filing.

CVR Partners’ common units are listed on the New York Stock Exchange under the symbol UAN. CVR Energy owns a 100% interest in CVR Partners’ general partner CVR GP LLC. CVR Partners operates nitrogen producing facilities in Coffeyville, Kan., and East Dubuque, Ill.

CVR Partners’ units closed at $74.25 on March 19, up 16.5% from the March 18 close, while CVR Energy’s moved up 1.9% to close at $36.24.

CVR Energy and IEP are also considering the acquisition of additional refining assets. CVR Energy currently operates refineries in Coffeyville and Wynnewood, Okla.

Mark Smith and James Strock, two CVR Energy Independent Directors, have been named to the Board’s Special Committee-Strategic, which was formed to consider, evaluate, and negotiate the potential strategic transactions noted above on behalf of the company.

Itafos Posts 4Q Loss Citing Low Prices, Arraias Impairment; Strategic Review Continues

Brazil, Earnings, Featured, Phosphate, Phosphate Rock, Sulfur, Sulfuric Acid, U.S.

Phosphate maker Itafos posted a $48.6 million loss for the fourth-quarter ending Dec. 31, 2023, compared to year-ago net income of $29.3 million. The company said the performance was primarily due to lower realized prices as a result of softer global market conditions and a $66 million impairment of non-current assets at Arraias, Brazil, partially offset by higher sales volumes and lower input costs.

“During fourth-quarter 2023, we saw prices continue to strengthen off the lows of second-quarter 2023, reflective of increasing demand and tighter US supply fundamentals,” said G. David Delaney, Itafos CEO. “We expect to see conditions continue into 2024. Going forward, the company will now provide guidance associated with our expected sales volumes, capital expenditures, and other relevant financial metrics. This change is consistent with peers in the industry.”

Itafos gave full-year 2024 sales volume guidance of 320,000-340,000 mt P205; SGA expenses guidance of $17-$20 million; maintenance capex of $25-$35 million; and growth capex of $35-$46 million.

Itafos added that it saw an extremely strong fall season, which resulted in improved prices from the summer and a continued tightening of North American phosphate fertilizer supply. The company expects a stable market moving forward due to ongoing tight supply situation coupled with softer crop prices.

Delaney said work continues on the company’s Husky 1/North Dry Ridge capital project, which he said remains on schedule and on budget. The company expects to begin mining activities in fourth-quarter 2025 onward, providing an uninterrupted supply as its Rasmussen Valley Mine reaches the end of its useful life.

Delaney said Itafos continues to explore and evaluate various strategic alternatives to enhance value for shareholders. The process was announced by the Board of Directors in first-quarter 2023 (GM March 17, 2023).

In other news, Itafos said that as of Dec. 31, 2023, it has completed the wind-down process of its Mantaro phosphate mine project in Junin, Peru, which was previously owned by Stonegate Agricom Ltd. (GM July 21, 2017; May 26, 2017).

Fourth-quarter Itafos revenues were $119 million, down from the year-ago $135.2 million, while adjusted EBITDA was $29.5 million, down from $50.1 million.

The Itafos Conda operations in Idaho produced 95,719 mt of P205 during the fourth quarter, up from the year-ago 89,226 mt, with the company citing production efficiencies from improved uptime and better recoveries. Conda generated quarterly adjusted EBITDA of $32.4 million on revenues of $112.4 million, versus the year-ago $54.8 million and $129.3 million, respectively.

Itafos reported that its Arraias operation in Brazil successfully started Direct Application Phosphate Rock (DAPR) production in the fourth quarter by producing 643 mt of P205, compared with zero in the year-ago quarter.

Arraias produced 34,087 mt of sulfuric acid during the quarter, down from year-ago 35,895 mt, primarily due to reduced sulfuric acid and sulfur inventory management.

Arraias generated fourth-quarter adjusted EBITDA of $1.1 million, up from the year-ago $0 million, with the increase primarily due to higher sulfuric acid volume and lower costs, as well as the commencement of DAPR sales.

Company-wide, Itafos remained in the black for full-year 2023, with net income of $3.1 million on revenues of $465.5 million, compared to 2022’s $114.7 million and $593.3 million, respectively. Adjusted EBITDA was $131.8 million, down from $224.8 million.

Full-year Conda production was 349,030 mt P205, up from 2022’s 343,526 mt. Adjusted EBITDA was $148.1 million on revenues of $448.1 million, compared with 2022’s $240.2 million and $571.1 million, respectively.

Full-year Arraias sulfuric acid production was down at 89,075 mt from 2022’s 99,030 mt, with Itafos citing a sulfuric acid plant shutdown for required maintenance in April and May. DAPR production was 5,196 mt for the year, versus zero in 2022.

Arraias generated adjusted EBITDA of $400,000 for the year compared to a $100,000 loss in 2022. Higher acid volumes were cited, along with lower costs and the commencement of DAPR sales.

ABB to Collaborate on Hydrogen City Project in Texas

ADNOC - Abu Dhabi, Blue Ammonia, Clean Ammonia, Featured, Green Ammonia, Green Hydrogen, Japan, Low-Carbon, Natural Gas, Texas

Swiss technology provider ABB is collaborating with Austin-based Green Hydrogen International (GHI) on GHI’s Hydrogen City project to develop a major green hydrogen storage and production hub in south Texas.

Phase 1 would use solar and onshore wind energy to power a 2.2 GW electrolyzer plant to produce 280,000 mt/y of green hydrogen and 1 million mt/y of green ammonia. As part of the Memorandum of Understanding (MOU), ABB’s automation, electrification, and digital technology will be assessed for deployment at GHI’s Hydrogen City project.

ABB said it has already completed a feasibility study to develop an electrical system architecture that optimizes return on investment for the project and supports compliance with EU legislation governing Renewable Fuels of Non-Biological Origin (RFNBO) and the US Inflation Reduction Act (IRA).

The project is centered around a planned 24,000 mt green hydrogen storage facility in the Piedras Pintas Salt Dome located in Duval County. GHI said eventually over 50 caverns can be created at the location, turning the dome into the world’s largest green hydrogen storage hub, similar to the role of Henry Hub plays in the natural gas market.

A 75-mile pipeline would take the green hydrogen to Corpus Christi to an ammonia production facility for conversion and subsequent global export to serve demand in Europe and Asia. GHI is also in discussions with potential offtakers of green hydrogen as a feedstock for sustainable aviation fuel and e-methane production.

Construction is planned to start in 2026 with first production expected in 2030. Hydrogen City is being designed as a phased project, with plans to add additional trains of production as the market for green hydrogen develops.

GHI, which was founded in 2019 by geologist and renewable energy entrepreneur Brian Maxwell, first unveiled plans for Hydrogen City in March 2022. Tokyo-based INPEX Corp., Japan’s largest oil and gas exploration and production company, signed a Joint Study Agreement with GHI in October 2023 to advance the project.

Also last October, INPEX agreed with LSB Industries Inc., Paris-based Air Liquide Group, and Vopak Moda Houston LLC to collaborate on the pre-FEED (Front End Engineering Design) study for the development of a 1.1 million mt/y low-carbon ammonia production and export project on the Houston Ship Channel. If those plans proceed, the project’s first phase is targeted to produce ammonia by the end of 2027, with options for future expansions (GM Oct. 6, 2023). Completion of the pre-FEED is expected in third-quarter 2024 (GM March 8, p. 1).

INPEX and other Japanese companies signed an agreement with Abu Dhabi National Oil Co. (ADNOC) in 2021 to explore potential production in the UAE of blue ammonia. ADNOC had already been shipping blue ammonia to INPEX for use in power generation (GM Aug. 20, 2021).

INPEX said it plans to commercialize three or more projects by around 2030 and aims to produce and supply 100,000 mt/y or more of hydrogen/ammonia.

Reward Terminates Proposed Beyondie SOP Acquisition

Australia, Featured, Sulfate of Potash

Perth-based aspiring sulfate of potash (SOP) producer Reward Minerals Ltd. announced on March 18 that its proposed acquisition of the Beyondie SOP project in Western Australia has been terminated. The company said it was unable to secure sufficient funding to complete the acquisition and have adequate working capital available, despite an “exhaustive effort.”

In a separate ASX release, McGrathNicol, the receivers and managers of Beyondie’s former developer Kalium Lakes Ltd., confirmed that they have executed a termination deed with Reward after the SOP junior advised it was unable to secure sufficient funding for the transaction.

Reward had reached a binding share sale agreement with McGrathNicol in early December on a debt-free basis, free of encumbrances, for a total of A$20 million (approximately $31.1 million at current exchange rates) to acquire the Beyondie SOP project (GM Dec. 8, 2023).

Despite a failed capital raise via a 2-to-1 renounceable entitlement offer in January, through which Reward had hoped to raise A$22.785 million before costs to fund the acquisition (GM Jan. 12, p. 30), the aspiring SOP producer and the managers and receivers had still hoped to hammer out a deal. McGrathNicol said last month that it expected the sale transaction would be completed by mid-March (GM Feb. 23, p. 34).

According to McGrathNicol’s March 18 statement, Kalium Lakes Potash Pty Ltd. and Kalium Lakes Infrastructure Pty. Ltd. are now expected to enter liquidation in the coming days. An earlier attempt by the receivers and managers to sell Beyondie to another Western Australian SOP project developer, Agrimin Ltd., derailed after Agrimin pulled out of the proposed deal last October (GM Oct. 6, 2023).

Kalium Lakes was Australia’s first SOP producer, manufacturing its initial batch of SOP at Beyondie in October 2021, and had been targeting SOP production of 90,000-100,000 mt/y (GM Oct. 8, 2021). The company went into receivership in August 2023, however, after it failed to find further financial support for the continued development of the project (GM Aug. 18, 2023).

The suspension of trading in Reward’s securities on the ASX was lifted on March 18 following the Beyondie announcement. Reward had requested a voluntary trading halt on Feb. 8 pending an announcement on the transaction (GM Feb. 9, p. 32).

Reward in this week’s ASX statement said it intends to continue advancement of its processing technology toward commercialization while “conducting due diligence activities on new projects within the minerals sector for potential acquisition.”

Reward has two other potash projects in Western Australia, including its flagship Kumpupintil Lake Potash (formerly called Lake Disappointment Potash Project) east of Newman, and the Carnarvon Potash Project north of Carnarvon.

Houthis Tell China, Russia Their Ships Won’t be Targeted

China, Featured, Israel, Russia, U.S.

The Yemen-based Houthis have told China and Russia their ships can sail through the Red Sea and Gulf of Aden without being attacked, according to several people with knowledge of the militant group’s discussions, according to a Bloomberg report.

China and Russia reached an understanding following talks between their diplomats in Oman and Mohammed Abdel Salam, one of the Houthis’ top political figures, said the people, who asked not to be named discussing private matters.

In exchange, the two countries may provide political support to the Houthis in bodies such as the United Nations Security Council, according to the people. It’s not entirely clear how that support would be manifested, but it could include blocking more resolutions against the group.

Spokespeople for the governments of China and Russia, as well as the Houthis, including Abdel Salam, did not reply to Bloomberg’s requests for comment.

While the Houthis have already signaled Moscow and Beijing’s assets would not be targeted, the talks underscore the increased nervousness among world powers about the group’s missile and drone attacks in and around the southern Red Sea since mid-November.

The Houthis, an Islamist group, say they’re targeting ships linked to Israel, the US, and the UK. Yet they appear to have misidentified some vessels, and Russia and China may have wanted stronger assurances from the group.

The Houthis this month hit the True Confidence, a bulk-commodities carrier, causing the first deaths since they started their maritime attacks (GM March 8, p. 32). The Houthis said the vessel was American. It used to be owned by Los Angeles-based Oaktree Capital, according to a person with knowledge of the matter, but a new, non-US company recently took it on.

Earlier the Houthis hit the fertilizer-laden Rubymar, causing the crew to abandon ship. The vessel eventually sank (GM March 8, p. 32).

Separately, missiles exploded near a ship hauling Russian oil near Yemen in late January. It happened days after a spokesman for the Houthis told a Russian newspaper that Russian and Chinese merchant ships need not fear attacks.

Ostensibly, the assaults are to put pressure on Israel to stop its war in Gaza against Hamas, though many analysts doubt the Houthis would end their campaign in the event of a cease-fire or permanent peace deal.

The waterways – including the Bab el-Mandeb strait connecting the Red Sea and Gulf of Aden – are crucial for the global economy and normally around 30% of container cargo flows through them. They also handle a large proportion of oil and liquefied natural gas flows.

Hydrofuel Gets Micro Ammonia Production Patent

Ammonia, Canada, Clean Ammonia, Green Ammonia, Hydrogen, Low-Carbon, U.S.

Hydrofuel Canada Inc., Mississauga, Ont., on March 18 announced the issuance of US Patent 11,885,029 “Systems and Methods for Forming Nitrogen-Based Compounds” and the completion of their Micro Ammonia Production System (MAPS 1.0) commercial prototype.

“We are thrilled to announce the issuance of our US patent for MAPS 1.0 and the completion of our commercial prototype,” said Greg Vezina, Chairman and CEO of Hydrofuel Canada. “This is a major milestone and a significant step towards making clean energy and fertilizer more affordable and accessible with MAPS 1.0 units expected to be available by the spring of 2025.”

Vezina said MAPS 2.0 is expected to be released in the summer of 2025, and customers will be able to produce and store green hydrogen in ammonia at a fraction of the cost, making it a game-changer in the clean energy and fertilizer industries. He said the company will soon announce details of its pre-order campaign that will enable customers to place a small deposit on one of the MAPS units for early delivery.

The company is currently in talks with potential partners and investors to bring MAPS 1.0 and 2.0 to the market. The company said the $700,000 MAPS 1.0 version uses externally produced hydrogen (H2) to synthesize with nitrogen from air to make ammonia. If the H2 source is green, so is the NH3 it produces.

The $850,000 MAPS 2.0 combines hydrogen and nitrogen production in a single unit and eliminates the need for separate production processes, which the company says significantly reduces the overall cost of green ammonia and the hydrogen in it to 50% of the cost of hydrogen produced via current electrolysis technologies.

Mabanaft, Pattern Sign Ammonia LOI

Ammonia, Clean Ammonia, Germany, Green Ammonia, Low-Carbon, U.S.

German energy company Mabanaft GmbH & Co KG has signed a Letter of Intent (LOI) to receive up to 150,000 mt/y of green ammonia from US-based Pattern Energy. The ammonia would be produced by Pattern Energy at the Port of Argentia (GM June 9, 2023), in the Canadian province of Newfoundland and Labrador, starting in 2027.

The ammonia would be produced using wind energy and hydroelectricity generated in Canada, and could later be converted to hydrogen for use in German industries.

The green ammonia production would require a new production facility with an estimated production capacity of 400 mt/d. As part of the LOI, Mabanaft also plans to evaluate the opportunity to potentially become a co-investor next to Pattern Energy and share ammonia and infrastructure expertise.

The planned New Energy Gate Hamburg is to become Mabanaft’s first major hub for the import, storage, and processing of fuels from renewable energy sources. In November 2022, Mabanaft announced plans to build an import terminal for green energy in the Port of Hamburg, with the US company Air Products as an anchor customer (GM Nov. 23, 2022).

In the meantime, Pattern Energy reported in December that it had closed on $11 billion in non-recourse financing and had begun full construction of SunZia Transmission and SunZia Wind, which together would be the largest clean energy infrastructure project in US history.

SunZia Transmission is a 550-mile transmission line between central New Mexico and south central Arizona with the capacity to transport 3,000 MW of clean electricity across Western states. It will deliver clean power generated by Pattern Energy’s 3,515 MW SunZia Wind facility, the largest wind project in the Western Hemisphere, which is being constructed across Torrance, Lincoln, and San Miguel Counties in New Mexico.

Canada, Germany Kickstart Hydrogen Trade

Canada, Clean Ammonia, Germany, Hydrogen, Low-Carbon

Canada and Germany have agreed to measures to kickstart the trade of hydrogen, according to Bloomberg. Both nations will contribute €200 million ($217 million) in funding for bilateral hydrogen auctions, German Economy Minister Robert Habeck told reporters in Hamburg after meeting with his Canadian counterpart on March 18. The auctions will fall under a platform known as H2Global, which Germany launched together with the Netherlands.

While hydrogen is at the core of Europe’s plans to eventually wean itself off fossil fuels, there are currently few buyers for the gas as it is expensive to produce and requires infrastructure investments to make its use more viable. The idea behind H2Global is to buy quantities of hydrogen and resell them at a lower price to European buyers via auctions, in the hope that more competitive costs will incentivize industry to invest in systems for the use of hydrogen.

Canada already has an agreement to supply Germany with hydrogen by next year, though there is currently no global market for the gas.

The aim is “to best address premiums as we move to scale the production of hydrogen over a 10-year period,” Canada’s Energy and Natural Resources Minister Jonathan Wilkinson said in an interview. His country may still send its first shipment of hydrogen from ammonia to Germany by the end of next year, though it could take until 2026, he said.

Both sides plan to launch aligned supply and demand side auctions “as early as possible, and preferably before the conclusion of 2024,” according to their Memorandum of Understanding.

Matrix, Geldof Ink MOU on Europe Ammonia Storage

Ammonia, Clean Ammonia, Europe, Low-Carbon, U.S.

Engineering and construction services firm Matrix Service Co., Tulsa, Okla., on March 19 announced that its subsidiary, Matrix PDM Engineering, has signed a Memorandum of Understanding (MOU) with Engicon nv (Geldof), Harelbeke, Belgium, allowing the team to jointly provide total Engineering, Procurement, and Construction (EPC) solutions for ammonia storage across Europe.

“Our relationship with Geldof provides customers across Europe with world-class storage and terminal solutions for ammonia, which is also used as a hydrogen carrier, and brings additional strength to our partnership offerings in technology and construction to meet the increasing global demand for more sustainable energy resources,” said Matrix Service President and CEO John R. Hewitt.

“We hold extensive expertise in the field of cold tank storage solutions and a proven track record in successfully executing ammonia storage projects for the European chemical and fertilizer industry,” said Peter Verrept, Engicon (Geldof) CEO.

“As part of our commitment to supporting the energy transition, we have placed a strong emphasis on the large-scale deployment of ammonia as an energy (hydrogen) carrier across Europe,” Verrept continue. “In pursuit of these ambitious goals, we have forged a strategic partnership with Matrix. By synergizing our collective expertise and strength, we aspire to bring forth groundbreaking projects that will shape the future of energy solutions.”

Fortescue Successfully Tests Ammonia Marine Fuel

Ammonia, Australia, Clean Ammonia, Low-Carbon

Green Energy developer Fortescue, Perth, Western Australia, announced on March 15 that it has successfully conducted the world’s first use of ammonia, in combination with diesel, in the combustion process as a marine fuel onboard the Singapore-flagged ammonia-powered vessel Fortescue Green Pioneer, in the Port of Singapore.

The vessel was loaded with liquid ammonia from the existing ammonia facility at Vopak Banyan Terminal on Jurong Island for the seven-week fuel trial. Fortescue said the trial was conducted with support from the Maritime and Port Authority of Singapore (MPA) government agencies, research institutes, and industry partners.

In completing the fuel trial, the vessel also received flag approval from the Singapore Registry of Ships (SRS) and the “Gas Fuelled Ammonia” notation by classification society DNV to use ammonia, in combination with diesel, as a marine fuel.

The vessel started its journey to becoming the world’s first oceangoing ammonia-powered vessel in 2022, when Fortescue successfully converted a four-stroke engine to run on ammonia, in combination with diesel, at its land-based testing facility in Perth. Following the success of the land-based testing, conversion work commenced on the vessel at Seatrium’s Benoi yard from July 2023.

Two of vessel’s four engines were converted to enable the use of ammonia, combined with diesel in the combustion process, to power the vessel. The two remaining engines onboard will operate on conventional fuels when required.

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