28-02-2023

CF Industries and Lotte Chemical agreement for clean ammonia offtake in South Korea

CF Industries Holdings Inc, the world’s largest producer of ammonia, today announced that it has entered into a memorandum of understanding (MOU) with LOTTE CHEMICAL Corporation, South Korea’s leading chemical company, that will guide the companies in a joint exploration of clean ammonia production and long-term clean ammonia offtake into South Korea.

The MOU establishes a framework for the companies to assess the joint development of and investment in a greenfield clean ammonia production facility in the U.S., including at CF Industries’ Blue Point Complex in Louisiana. The companies believe that the U.S. offers considerable advantages for clean ammonia production, including access to plentiful and low-cost natural gas, the regulatory and legal framework in place, and the geology suitable for permanent carbon sequestration. The prospective ammonia facility would leverage carbon capture and sequestration technologies to reduce CO2 emissions from the ammonia production process to a level that meets or exceeds South Korea’s clean ammonia requirements.

Additionally, the companies will quantify expected clean ammonia demand in South Korea for power generation, bunkering and other sectors, taking into account regulatory and policy requirements, as well as safety and environmental considerations. This workstream will confirm the scale of long-term offtake volume expectations for a potential clean ammonia facility.

“We are pleased to advance our relationship with LOTTE and leverage the world class expertise of both companies to meet the substantial emerging demand for clean ammonia in South Korea,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “We look forward to helping LOTTE and South Korea meet their clean ammonia requirements as we continue to accelerate the world’s transition to clean energy.”

The MOU is part of LOTTE’s efforts to develop a global clean ammonia supply chain to support its hydrogen energy business for global clean energy supply and carbon reduction growth. LOTTE has established a plan to produce and sell 1.2 million tons of clean hydrogen by investing a total of 6 trillion won by 2030. Clean ammonia (NH3) is seen as a safe and efficient hydrogen carrier and storage mechanism.

Jin-koo Hwang, head of hydrogen energy business at LOTTE CHEMICAL, said, “In order to bolster the domestic hydrogen economy, it is important to secure a stable supply of clean hydrogen and ammonia, especially in overseas regions with abundant energy and low geopolitical risks. Through strategic collaboration with CF Industries, which has a long history and business experience, we will secure a production base in the USA and lead the global distribution channel."

Since 2020, CF Industries has advanced industry-leading projects to decarbonize its ammonia production network and position the Company to supply a substantial volume of clean ammonia within the next few years. This includes leveraging carbon capture and sequestration (CCS) technologies at its Donaldsonville Complex where CF Industries is constructing a CO2 dehydration and compression facility to enable the capture and permanent sequestration of up to 2 million tons of CO2 per year, starting in 2025. The Company has also commenced a front-end engineering and design study to construct a greenfield clean ammonia facility utilizing CCS at its Blue Point Complex in Louisiana. Additionally, CF Industries is constructing North America’s first commercial scale green ammonia capacity at its Donaldsonville Complex, enabling up to 20,000 tons of green ammonia production beginning in 2024.