Fertilizer Futures
All Posts from July 26, 2024
CF to Proceed with Carbon Capture/Sequestration Project at Yazoo City; Partners with ExxonMobil
CF Industries Holdings Inc. announced on July 25 that it is moving forward with a carbon capture and sequestration (CCS) project at its Yazoo City, Miss., complex that is expected to reduce CO2 emissions from the facility by up to 500,000 mt/y.
As part of the project, CF has signed a definitive commercial agreement with ExxonMobil for the transport and sequestration in permanent geologic storage of the CO2. Sequestration is expected to start in 2028.
CF said it will invest approximately $100 million to build a CO2 dehydration and compression unit at the complex. Once sequestration by ExxonMobil has commenced, CF expects the project to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per metric ton of CO2 sequestered.
“We are pleased to advance another significant decarbonization project that will keep CF Industries at the forefront of low-carbon ammonia production while also helping us achieve our 2030 emissions intensity reduction goal,” said Tony Will, CF President and CEO. “This decarbonization project also will increase the availability of nitrogen products with a lower-carbon intensity for customers focused on reducing the carbon footprint of their businesses.”
Once sequestration has begun, CF said the Yazoo City complex will be able to manufacture products with a substantially lower carbon intensity than conventional ammonia production sites. Most of the ammonia produced at Yazoo City is upgraded into nitrogen fertilizers such as UAN and ammonium nitrate, or upgraded into diesel exhaust fluid to reduce NOx emissions from diesel trucks.
The Yazoo City project is CF’s second major decarbonization project leveraging CCS technologies, as well as its second CCS project with ExxonMobil. The companies are progressing a CCS project at CF’s Donaldsonville, La., facility that will sequester up to 2 million mt/y of CO2. Sequestration for the Donaldsonville project is expected to begin in 2025.
Yara, ATOME Sign Offtake Agreement for CAN Facility in Paraguay
Yara International ASA has signed a Heads of Terms agreement with UK-based ATOME PLC for all the offtake from ATOME’s renewable calcium ammonium nitrate (CAN) facility under development in Villeta, Paraguay. The facility is expected to make up to 264,000 mt/y of green CAN from 145MW of renewable baseload power starting in 2027.
The announcement comes after ATOME reported in January that it had multiple offtake proposals and was in advanced negotiations for the complete project offtake (GM Jan. 19, p. 25). Front-End Engineering and Design (FEED) study for the Paraguay project was later completed in June (GM June 7, p. 24). A Final Investment Decision (FID) is expected later this year after being postponed from 2023.
According to Yara, the CAN will be exported, marketed, and sold under the YaraBela product line as part of a portfolio called Yara Climate Choice.
“Many of the food companies active in South America have committed to decarbonization targets and our collaboration with them reveals that the decarbonization of the production of fertilizers combined with the use of agronomical best practices can significantly reduce the crops’ carbon footprint,” said Chrystel Monthean, Yara’s EVP Americas.
“Signing the Heads of Terms for the Villeta project is a first step to open the opportunity to further expand our portfolio with fertilizers produced with renewable energy in the Americas,” Monthean added. “The fertilizers from Villeta will become part of a new portfolio called Yara Climate Choice, including fertilizers based upon renewable energy and carbon, capture and storage.”
“The entry into this strategic relationship with global crop nutrition leader Yara is a significant milestone for ATOME on the path to realize our flagship Villeta Project which will be one of the largest renewable fertilizer production facilities in the Western Hemisphere,” said ATOME CEO Olivier Mussat. “Proving significant off-taker interest for our renewable product gives a clear path to the finalization of funding, FID, and the commencement of work onsite at Villeta.”
ATOME said the Heads of Terms agreement with Yara will also help it continue the development of its project pipeline, including a 300MW Yguazu project in Paraguay and a 120MW project in Costa Rica. Both projects are currently negotiating power supply agreements, and Yara will have first look at both projects as part of its relationship with ATOME.
Major Pakistan Fertilizer Producers Explore Merger
Fauji Fertiliser Bin Qasim Ltd. (FFBL) and Fauji Fertiliser Company Ltd. (FFC), two major producers in Pakistan’s fertilizer industry, have announced plans to evaluate a potential merger to eliminate double taxation and create operational synergies, Pakistan’s Express Tribune reported on July 26.
Both companies reportedly held board meetings on July 19, where they gave an in-principle approval to explore a merger scheme. Advisors will be appointed to evaluate the proposed merger, with findings to be presented to the respective boards for consideration.
Currently, FFC holds a 49.9% stake in FFBL, subjecting it to double taxation on dividend income. A horizontal merger would eliminate this issue and generate significant synergies, the Express Tribune reported. The combined entity is projected to dominate the market with a 43% share of Pakistan’s urea market and a 60% share of the country’s DAP market.
FFC has urea capacity of 2.04 million mt/y, while FFBL has 0.55 million mt/y of urea capacity and 0.65 million mt/y of DAP production capacity. Post-merger, the total capacity is expected to be 2.60 million mt/y of urea and 0.65 million mt/y of DAP. FFBL has 1,291 million outstanding shares, while FFC has 1,272 million.
The merged company’s earnings are expected to achieve a three-year forward compound annual growth rate (CAGR) of 49%, with earnings per share (EPS) projected at Rs9.29 in 2024 and Rs11.22 in 2025. Profitability growth is anticipated due to better DAP margins, higher dividend income from subsidiaries like FFBL Power Company Ltd. (FPCL) and Askari Bank Ltd. (AKBL), and reduced finance costs amid lower short-term borrowings, the Express Tribune reported.
Anglo CEO Outlines Challenges to Restructuring Plan
Anglo American PLC laid out the scale of challenges it faces as the company pushes ahead with a radical restructuring plan, after rebuffing a takeover approach from rival BHP Group earlier this year (GM May 31, p. 1).
The company on July 25 pointed to setbacks at its coal and diamond businesses, as well as an expected $1.6 billion writedown at its fertilizer mine in the UK, as it announced first-half earnings results.
Anglo has been forced to accelerate its restructuring after successfully holding off the bid from BHP, the world’s biggest miner. The plan centers around exiting diamond mining by spinning off or selling its De Beers unit, separating platinum, and selling its coal mines. It has also halted development of the Woodsmith fertilizer project in Britain.
“We are advancing at pace,” Chief Executive Officer Duncan Wanblad said on a call with reporters. “We are on track to be substantially done with this process by the end of 2025.”
Yet the miner is facing headwinds in that process. A fire and explosion at its flagship coal mine in Australia has complicated the De Beers sale, while the diamond market continues to languish, deterring potential buyers of the unit.
Selling the coal business was seen internally and by investors as the most easily achievable part of the restructuring, yet it was thrown into doubt by the incident at the Grosvenor mine in Australia at the end of last month. Despite that, Anglo’s Wanblad said that it would still look to sell the entire coal business, including the impacted mine, and would like to see a deal done by the end of the year.
“Almost all of the bidders reconfirmed their interest,” Wanblad said in an interview with Bloomberg TV. “On the back of that reconfirmation of their interest, we decided to carry on and we will include Grosvenor in the package.”
Other issues are complicating the sale of De Beers. The diamond market, which came to a complete halt last year as weak global demand combined with too much supply, has seen early signs of a recovery broadsided by a slump in luxury spending in China. Anglo cut its diamond production on Thursday for the second time this year, in an attempt to deal with the oversupply.
“Diamond markets are particularly soft at the moment, and a lot of that is because what is happening in China,” Wanblad said in the TV interview. “It has all the characteristics of the bottom of the cycle for diamonds.”
Wanblad said a recovery in the diamond market is now expected to be delayed until next year, but that wouldn’t stop the company’s plans to sell De Beers.
The company on Thursday reported underlying earnings of $4.98 billion in the first half of 2024, a 3% drop from a year earlier. Anglo American shares were little changed by 12:21 p.m. in London, after declining earlier.
The miner’s strong performance demonstrates “early success of the cost-savings program,” according to Bloomberg Intelligence metals and mining analyst Grant Sporre. Still, while Anglo’s financial results were positive, there are “relatively high risks associated with the company’s proposed restructuring plan,” said Jefferies analyst Christopher LaFemina.
Egypt Natural Gas Output Near Six-Year Low
Egypt’s natural gas production has dropped to the lowest in more than six years as a scorching summer boosts demand for the fuel, Bloomberg reported. The drop in production has impacted Egypt’s urea facilities, where production has been temporarily idled or curtailed on separate occasions since June.
Egypt’s output in May was near the weakest since February 2018, according to figures from the Joint Organisations Data Initiative. The decline is a sign that Egypt will struggle to replicate the gas export boom it saw two years ago, and is likely to become more reliant on imports of liquefied natural gas.
Once a supplier for Europe, Egypt is no longer able to produce enough gas to keep its own electricity systems afloat during the summer. The most populous Arab nation is now buying large amounts of the fuel to cope with air-conditioning needs as it grapples with blackouts and periods of idled industrial production.
President Abdel-Fattah El-Sisi’s government has promised to end scheduled power cuts that can last for up to three hours a day. The country’s daily power consumption has exceeded 37 gigawatts, up 12% from last year, leaving a deficit of 4 gigawatts, Prime Minister Mostafa Madbouly said. The government will accelerate renewable projects to help bridge the gap and reduce energy imports, he added.
While gas supplies most of Egypt’s grid needs, the government wants to get 58% of its electricity from renewable sources by 2040, up from 20% now. The nation recently received five out of 21 LNG cargoes it sought for the summer and allocated $1.18 billion for extra energy imports. It has said more may be required depending on the severity of the summer heat.
Higher demand from Egypt is one of the factors tightening the global gas market this summer, along with more appetite from some Asian nations and outages at some production facilities. Egypt’s Petroleum Minister Karim Badawi said oil and gas production has dropped by as much as 25% in the past three years.
In addition, production at its massive Zohr gas field has dropped by about a third since 2019, according to Eni SpA, which has stakes in the field. While Egypt hasn’t described any output issues, concerns have been raised that it is declining amid water infiltration problems.
FuelPositive Commissions Modular NH3 System
FuelPositive announced that they have completed the on-farm commissioning of their modular green ammonia production system in Manitoba, Canada. The system was first installed in June on the farm of Tracy and Curtis Hiebert in Sperling, Man. (GM June 21, p. 1).
Manitoba is known for their stringent regulations, and FuelPositive said it had two certifications specific to Manitoba that delayed the commissioning.
“We are excited and prepared to activate ammonia production in our first on-farm system and demonstrate our groundbreaking technology to the world,” said Ian Clifford, FuelPositive Co-Founder and CEO. “Currently, we are awaiting the final go-ahead from the province before proceeding. Unfortunately, our team was inaccurately informed of the completion and timeline of two necessary Manitoba certifications. We have addressed this issue.”
The FuelPositive system is designed to produce pure anhydrous ammonia from air, water, and electricity, effectively eliminating carbon emissions during the production process. The company purchased the technology in 2021 (GM April 9, 2021) and filed for a US patent several months later (GM June 11, 2021).
KBR Blue Ammonia Tech Selected for Oman Plant
KBR announced that its blue ammonia technology will be used by Shell for the Blue Horizons low-carbon hydrogen and ammonia plant in Duqm, Oman. KBR will provide ammonia synthesis loop technology for the 3,000 mt/d ammonia plant to deliver low-carbon intensity ammonia to supply local industrial customers and export blue ammonia overseas.
The project will contribute to Oman’s low-carbon targets in their Vision 2040 plan. Under the Vision 2040 targets, the country wants to produce one million mt/y of renewable hydrogen by 2030 and increase to up to 8.5 million mt/y by 2050.
Houston-based KBR has licensed, engineered, or constructed nearly 260 grassroots ammonia plants worldwide. It recently announced that it will provide license, engineering design, and Front-End Engineering Design (FEED) support services to Fortescue’s green ammonia plant that will be built in Norway (GM April 26, p. 26).
Indian Port Operator Mulls Green Ammonia Plants
JSW Infrastructure Ltd., India’s second-largest port operator, is considering building green hydrogen and ammonia plants at its ports.
Earlier this year, India’s Ministry of Ports, Shipping, and Waterways (MoPSW) identified three key ports – Kandla, Paradip, and Tuticorin – as future export hubs for green hydrogen, ammonia, and methanol within the next seven years, aiming to position India as a major green hydrogen exporter.
“We have been contemplating and exploring opportunities in this sector. We’ve been approached by companies interested in the green hydrogen and ammonia segment, and we are evaluating the potential to enter this market as well,” said Managing Director Arun Maheshwari.
“We do not yet have a specific timeline for this project, as this will be a long-term, capital-intensive endeavor but we do have a robust backend infrastructure, and strategic port locations,” Maheshwari added.
Operating since 1999, JSW Infrastructure is a privately held infrastructure company in India. Its portfolio includes airports, shipyards, townships, roads and rail, inland waterways, and water treatment plants. It currently operates seaports and terminals in the states of Maharashtra and Goa.
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All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
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