CF Industries Forms JV With Jera, Mitsui for $4 Billion Low-Carbon Ammonia Plant

April 8 (Reuters) - CF Industries (CF.N), opens new tab said on Tuesday it has formed a joint venture with Japan's largest power generator, JERA, and trading house Mitsui & Co (8031.T), opens new tab to build one of the world's largest low-carbon ammonia facilities for about $4 billion.

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WHY IS IT IMPORTANT

Former President Joe Biden passed the largest climate change legislation in U.S. history in 2022, meant to kick off a boom in American clean energy development including low-carbon emission products.

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Advertisement · Scroll to continueReport This AdAmmonia producer CF Industries said it is expected to qualify for 45Q tax credit on sequestration of about 2.3 million metric tons of carbon dioxide (CO2) per year.According to JERA, the Japanese government is also expected to provide price support for the difference between ammonia and coal prices for 15 years.Hydrogen and ammonia, which emit no CO2 when burned, are key to Japan's energy security strategy as the country seeks to reduce its reliance on traditional fossil fuels.

CONTEXT

The joint venture will construct an autothermal reforming (ATR) ammonia production facility with a CO2 dehydration and compression unit at CF Industries' Blue Point Complex in Louisiana, to prepare captured CO2 for transportation and sequestration.Advertisement · Scroll to continueReport This AdOccidental's (OXY.N), opens new tab carbon capture firm, 1PointFive, will provide transportation and sequestration of CO2 for the joint venture.Production of low-carbon ammonia is expected to begin in 2029.

BY THE NUMBERS

CF Industries will hold a 40% stake in the joint venture, with JERA owning 35% and Mitsui the remaining 25%.The facility will have an annual production capacity of about 1.4 million tons, which would be the largest ammonia production facility by nameplate capacity in the world, CF Industries said.Each partner will fund the project in proportion to their stake and offtake ammonia accordingly.JERA plans to offtake 490,000 tons and is considering supplying it primarily to its Hekinan thermal power station in central Japan, though specifics are yet to be finalised, Executive Officer Yuichiro Kato told reporters.Markets have bounced after President Trump paused some tariffs, but is the volatility over?"We expect ammonia demand from Europe and other regions for power, industrial, and marine use to emerge at the time of project launch," he said.JERA, jointly owned by Tokyo Electric Power (9501.T), opens new tab and Chubu Electric Power (9502.T), opens new tab, aims to start commercial co-firing of 20% ammonia with coal at two Hekinan units by 2030, requiring about 1 million tons of ammonia annually.Mitsui, Japan's biggest ammonia importer, also sees growing demand in Europe as emissions regulations continue to tighten, a company official said.