Mark Thomas 2024-11-08 08:29:46
Yara International ASA has shelved plans for the full-scale development of renewable hydrogen projects at its production sites in Porsgrunn, Norway, and Sluiskil, Netherlands, as part of a wider review of the company’s asset portfolio.
The project cancellations follow a separate recent announcement by Yara of the potential permanent closure of an ammonia unit at Tertre, Belgium, with the site to shift its remaining production toward premium nitrate fertilizers and industrial nitrogen chemicals.
Yara has, however, outlined its intent to progress growth projects in markets that meet its requirements for the “highest returns and clear strategic fit,” including a carbon capture and storage project at Sluiskil and US low-carbon ammonia.
Despite posting significantly improved earnings for the third quarter that easily beat analysts’ estimates, the company stated on Oct. 25 in a results presentation that an ongoing prioritization of its portfolio with a focus on “strategic fit, future competitiveness and shareholder returns” had led to the “shelving of low-value projects,” with the firm citing as examples its plans for full-scale green hydrogen production at Porsgrunn and a green hydrogen plant at Sluiskil. In June, Yara began production of green hydrogen and ammonia via a demo plant at Porsgrunn.
Yara’s requirements for growth projects going forward include “strong double-digit returns [and a] funding plan,” with “concrete margin potential driven by firm regulatory changes, such as ETS and the CBAM,” it said.
Yara posted third-quarter EBITDA, excluding one-off items, that rose 47% year over year, to $585 million. Net profit jumped to $286 million from $2 million and beat the analysts’ consensus estimate of $115 million, as provided by S&P Capital IQ. Sales dipped, however, to $3.65 billion from $3.88 billion, missing the consensus of $3.73 billion.
On the proposed closure of the ammonia plant at Tertre, Yara said the facility “is facing challenging market conditions, in combination with high and volatile energy prices and high maintenance costs, resulting in prolonged financial distress over recent years. In addition, more stringent environmental regulations and the need to accelerate decarbonization are increasing the pressure on Tertre’s ammonia production,” it said.
Ammonia would be supplied from other sites to make up to 600,000 metric tons per year of nitrate fertilizers and 250,000 metric tons per year of industrial products, it said.
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