CF Industries Holdings, Inc. CF, a leading producer of ammonia, has joined forces with JERA co., Inc. (“JERA”), Japan’s biggest energy producer, to supply up to 500,000 metric tons of clean ammonia per year. The companies signed a memorandum of understanding (MOU) for supplying clean ammonia from the beginning of 2027. The MOU is the result of a supplier comparison and evaluation process for obtaining clean ammonia initiated by JERA last year for the first commercial-scale ammonia co-firing operations worldwide.
The MOU has established a framework to evaluate how CF Industries would best supply clean ammonia to JERA under a long-term offtake agreement. Both companies are considering a range of possible supply options for ammonia, which includes an equity investment for building a greenfield clean ammonia facility in Louisiana and a long-term offtake agreement from CF’s Donaldsonville Complex in Louisiana.
After successfully conducting a pilot test to produce ammonia, JERA has decided to begin formal demonstration projects from its fiscal 2023 at its Hekinan Power Plant for further research. Also, since clean ammonia will require at least 60% less carbon emissions in its production process than traditionally produced ammonia, JERA has decided to use coal along with clean ammonia at its Hekinan Thermal Power Station to reduce carbon dioxide (CO2) emissions from the facility.
CF Industries has entered into industry-leading projects since 2020 to decarbonize its ammonia production network. This has positioned the company to supply large-scale volumes of clean ammonia within the next few years. CF Industries has invested in building a CO2 dehydration and compression facility, enabling it to capture and sequestrate about 2 million tons of CO2 per year at its Donaldsonville Complex beginning in 2025. The company has also started constructing a greenfield clean ammonia facility, backed by a front-end engineering and design study at Ascension Parish, LA. The company will be able to produce up to 20,000 tons of green ammonia after the construction of North America’s first commercial-scale green ammonia capacity at Donaldsonville Complex beginning in 2024.
CF Industries stated that through its production network and disciplined investments, the company has positioned itself to become a leading supplier of clean ammonia. The company also stated its excitement to join forces with JERA, which will enable it to meet the rising requirements of clean ammonia in Japan.
CF Industries’ shares have gained 28.6% in the past year, outperforming industry’s rise of 2.3%.
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The firm sees the supply-demand balance of nitrogen to remain tight into 2025 on a global level, backed by strong agricultural demand and elevated energy prices in Europe and Asia. The company also expects the demand for nitrogen to be driven by the need to replenish global grain stocks. Also, it expects high crop futures prices and healthy farm economics to support high corn and wheat planted acreage in 2023 in North America. CF Industries also sees urea exports from China in the range of 1.5-2 million metric tons for full-year 2022.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote
Zacks Rank & Key Picks
CF currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks to consider in the basic materials space include Commercial Metals Company CMC, Cal-Maine Foods, Inc. CALM and AngloGold Ashanti Limited AU. CMC and CALM both sport a Zacks Rank #1 (Strong Buy), while AU carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commercial Metals’ shares have gained 51.4% in the past year. The Zacks Consensus Estimate for CMC’s current fiscal-year earnings has been revised 19.4% upward in the past 60 days. Commercial Metals beat Zacks Consensus Estimate in all of the last fourth quarters. It delivered a trailing four-quarter earnings surprise of 16.7% on average.
Cal-Maine’s shares have gained 34.2% in the past year. The Zacks Consensus Estimate for CALM’s earnings for the current fiscal has been revised 73.9% upward in the past 60 days. The company has a projected earnings growth rate of 417.7% for the current fiscal year.
Cal-Maine topped Zacks Consensus Estimate in three of the last fourth quarters while missing once. It delivered a trailing four-quarter earnings surprise of 15.3% on average.
AngloGold’s shares have gained 6.3% in the past year. The Zacks Consensus Estimate for AU’s earnings for the current year has been revised 31.7% upward in the past 60 days. The company has a projected earnings growth rate of 25.3% for the current year.
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