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CF Industries (CF), JERA Execute Joint Development Agreement

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CF Industries Holdings, Inc. (CF - Free Report) stated that it has executed a joint development agreement (JDA) with JERA Co., Inc. to develop greenfield low-carbon ammonia production capacity at CF Industries' Blue Point Complex in Louisiana.

The JDA will guide JERA and CF Industries' review of a joint venture agreement to construct a low-carbon ammonia plant with a capacity of roughly 1.4 million metric tons. JERA is considering acquiring a 48% share in the project, as well as a deal to procure more than 500,000 metric tons of low-carbon ammonia per year to meet Japan's demand for low-carbon fuel.

JERA and CF Industries previously signed a memorandum of understanding to examine the possibility of collaborating on project development, sales and purchases of low-carbon ammonia. JERA and CF Industries plan to make a final investment decision on the planned project within a year, with production beginning in 2028.

CF believes that JERA's projects, which represent the first meaningful volume of what it believes will be substantial global demand for low-carbon ammonia as an energy source, will demonstrate ammonia's significant contribution to meeting the decarbonization goals of difficult-to-abate industries. CF looks forward to collaborating closely with JERA and other stakeholders in Japan as regulatory requirements and government incentives for low-carbon ammonia are completed.

JERA plans to replace coal with low-carbon clean ammonia in its existing thermal coal power facilities to cut CO2 emissions. JERA is now executing the world's first commercial-scale demonstration test of fuel ammonia replacement (20% heating value) at its Hekinan Thermal Power Station.

Shares of CF have gained 4.6% over the past year against a 27.2% decline of its industry.

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CF, on its fourth-quarter call, noted that global nitrogen industry fundamentals indicate a constructive global nitrogen supply-demand balance in the near term and a tightening global nitrogen supply-demand balance in the medium term.

It sees global nitrogen demand to be resilient in the near term on the back of continued strong agriculture applications and recovering industrial demand. Major producing regions remain exposed to challenging production economics due to the cost and availability of natural gas, CF noted.

Zacks Rank & Key Picks

CF currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Ecolab Inc. (ECL - Free Report) .

Denison Mines sports a Zacks Rank #1 (Strong Buy). DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared 98% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have soared 62.8%% in the past year.

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.43 per share, indicating a year-over-year rise of 23.4%. ECL, a Zacks Rank #2 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 1.7%. The company’s shares have rallied roughly 33.4% in the past year.

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