North American clean ammonia producers eyeing exports to Europe

North American clean ammonia producers are eyeing exports to Europe, with project developers taking advantage of US Inflation Reduction Act subsidies and other support to position themselves competitively in the global supply space.

The US Gulf Coast was the lowest cost supply center for renewable ammonia to Europe, with calculated costs of production for delivery to Northwest Europe averaging $1,048/mt in March, the Platts Interactive Ammonia Price Chart shows.

Platts is part of S&P Global Commodity Insights.

Final investment decisions are on the horizon and, with project construction scheduled for later in the year, North American project developers said they could be competitive supplying into Europe.

EverWind Fuels is targeting a final investment decision for the first phase of its Nova Scotia green ammonia plant in Canada in 2024, VP for corporate development Matthew Borys told delegates at the Reuters Hydrogen conference in Amsterdam earlier in April.

"We focus on getting one step closer every day," Borys said.

Construction could start later in 2024, and the company is targeting first operations at its Point Tupper project from 2026, producing 240,000 mt/year of ammonia from green hydrogen, powered by onshore wind and solar.

EverWind has secured offtake agreements with Uniper and E.ON, the company told S&P Global Commodity Insights, and its production will be fully compliant with EU Renewable Fuel of Non-Biological Origin standards.

First Ammonia CEO Joel Moser said his company was targeting FID for its first green ammonia project in Victoria, Texas in the fourth quarter of the year. Production is scheduled to start in 2026, the company said in a statement in October.

The plant will use solid oxide electrolyzers from technology company Topsoe, which First Ammonia said were 30% more efficient than more established systems such as alkaline electrolysis.

Moser said the US Inflation Reduction Act tax credit support was worth the equivalent of around $500/mt for ammonia production, making its product competitive in international markets, with transatlantic freight costs in the region of $50/mt.

But the European market should not see the IRA funding as a threat, he said.

"Far from being a challenge, the IRA supports what's intended to happen here," with imports helping to grow the clean hydrogen economy, Moser said.

He was also confident a lot of the ammonia imports to Europe would be cracked back into hydrogen.

Incumbents poised

Incumbent ammonia traders are poised to take advantage of the anticipated clean ammonia boom, with Yara, OCI and others eyeing dominant market positions.

OCI Global Head of Ammonia Jong Chen Foo said the company expected the US to become a net ammonia exporter in the next three to five years.

It is developing a blue ammonia project in partnership with Linde and ExxonMobil in Texas, with 1.1 million mt/year of clean ammonia production from the first half of 2025.

The partners are eyeing exports, with plans to expand to 2.2 million mt/year of production in the future.

Yara, meanwhile, has a 20% share of global merchant traded ammonia, and is seeking to cement its position.

Yara SVP Product Management & Certification, Vibeke Rasmussen, said just 10% of the 185 million mt/year ammonia market was traded at present, but expects the share to grow to 50% by 2050, even as the ammonia market triples in size.

Rasmussen said that while ammonia infrastructure and shipping exists, it needs to scale massively to meet the expected growth in the market.

She also stressed the need for a global certification framework for clean ammonia, and said the company had its own in-house certification scheme and registry.

The company has signed an offtake agreement for 100,000 mt/year of ammonia from phase 1 of ACME's Oman project.

The Duqm plant is under construction, targeting commissioning by end 2025 or early 2026 and eyeing expansion to 1.2 million mt/year.

Capital cost revision

Platts revised the capital cost inputs higher for its calculated green ammonia prices, resulting in a significant jump in assessments in March.

Price calculations rose by around 30%-40% for renewables-derived hydrogen, with delivered prices to Far East Asia ranging from $1,025/mt from Australia to $1,234/mt from the west coast of Canada. Delivered prices to Northwest Europe ranged from $1,048/mt from the US Gulf to $1,212/mt from east coast Canada.

Green ammonia was indicated at $600-$800/mt for a long-term contract from a 320,000 mt/year plant in Chile, with estimated operations from 2029, market sources told S&P Global.

Blue ammonia was heard offered FOB US Gulf at $320-$330/mt, for 95% carbon capture rate from a 15,000 mt/year capacity plant for shipment from the fourth quarter of 2025.

Another offer for the product was heard at the same level from a 75,000 mt/year plant from 2027.

Low-carbon ammonia prices delivered to Northwest Europe remain the highest globally, averaging $508/mt in March, Platts data showed.

Prices in Asia Pacific were the lowest, at $384/mt, with the US rising the most steeply to $488/mt, up almost 20% from February.