CF Industries to purchase Waggaman ammonia production facility in US

CF Industries Holdings, a global manufacturer of hydrogen and nitrogen products, has signed a definitive purchase agreement with Incitec Pivot Limited (IPL) for IPL’s ammonia production complex located in Waggaman, Louisiana, US.

Under the terms of the agreement, CF Industries said it will purchase the Waggaman ammonia plant and related assets for $1.675 billion.

It informed that the companies will allocate approximately $425 million of the purchase price to a long-term ammonia offtake agreement under which CF Industries will supply up to 200,000 tonnes of ammonia per year to IPL’s Dyno Nobel subsidiary.

CF Industries noted it expects to fund the remaining $1.25 billion of the purchase price with cash on hand.

The transaction has been unanimously approved by the boards of directors of both companies and is subject to receipt of certain regulatory approvals and other customary closing conditions, CF Industries stated.

The Waggaman ammonia production complex is situated on an integrated chemicals complex owned by Cornerstone Chemical Company, and according to CF Industries, it has a nameplate capacity of 880,000 tonnes of ammonia annually, and ammonia produced at it is distributed ratably to three customers, including Dyno Nobel, with approximately 75% used in industrial applications.

Commissioned in October 2016, the facility has a 38,500-tonne ammonia storage tank onsite and the ability to load and transport ammonia by NuStar Pipeline, barge, truck, and rail.

As it is located in Jefferson Parish on the Mississippi River, it has the potential for vessel loading capabilities for low-carbon ammonia exports.

To note, the site is 60 miles southeast of CF Industries’ Donaldsonville Complex.

Based on the nature of the medium- to long-term offtake agreements in place with the customers, CF Industries estimated that the plant will generate a gross margin per tonne commensurate with its existing ammonia segment prior to synergies, which the company expects to capture through greater capacity utilisation and operational and logistics optimisation.

Additionally, CF Industries said it anticipates implementing CCS at the site on an accelerated timeline, increasing its network’s low-carbon ammonia production capability, supporting Louisiana’s and the country’s climate goals, and earning 45Q tax credits for sequestered carbon dioxide.

Tony Will, President and CEO of CF Industries, commented: “We are pleased to reach this agreement with IPL that benefits from our industry-leading ammonia production capabilities, deploys our capital efficiently, and provides long-term value for both companies’ shareholders.”

“We believe the Waggaman facility will fit seamlessly into our network, as well as our strategic focus on ammonia as a clean energy source, given its proximity and pipeline connection to our Donaldsonville, Louisiana, Complex, its distribution and logistics flexibility, and its favourable characteristics for the addition of carbon capture and sequestration (CCS) technologies to enable low-carbon ammonia production.”

In February 2023, CF Industries signed a MoU with South Korean chemical company Lotte Chemical Corporation for a joint exploration of clean ammonia production in the US and its long-term offtake into South Korea.