A definitive acquisition agreement for IPL’s ammonia manufacturing facility in Waggaman, Louisiana, US, was signed by CF Industries Holdings and Incitec Pivot Limited. CF Industries Holdings is a global producer of hydrogen and nitrogen products.
According to the terms of the transaction, CF Industries stated it will pay $1.675 billion for the Waggaman ammonia plant and related assets.
Around $425 million of the purchase price, according to the statement, will go into a long-term ammonia offtake contract, as part of which CF Industries will provide up to 200,000 tonnes of ammonia annually to IPL’s Dyno Nobel subsidiary. CF Industries stated that it anticipates using cash on hand to cover the remaining $1.25 billion of the purchase price.
According to CF Industries, the Waggaman ammonia production complex is located on an integrated chemicals complex owned by Cornerstone Chemical Company. It has a nameplate capacity of 880,000 tonnes of ammonia per year and is distributed ratably to three customers, including Dyno Nobel, with about 75% of the ammonia produced there being used in industrial applications.
The facility, which was put into service in October 2016, features a 38,500-tonne ammonia storage tank on site and can load and move ammonia by NuStar Pipeline, barge, truck, and rail. Given that it is situated on the Mississippi River in Jefferson Parish, it may have the ability to load ships for the export of low-carbon ammonia. The site is 60 miles southeast of the Donaldsonville Complex of CF Industries.
CF Industries calculated that the plant will produce a gross margin per tonne comparable to its current ammonia segment before synergies, which the company expects to capture through increased capacity utilization and operational and logistics optimization. This estimate was based on the nature of the medium- to long-term offtake agreements in place with the customers.
Moreover, CF Industries stated that it expects to hasten the implementation of CCS at the location, increase the network’s capacity to produce low-carbon ammonia, aid in Louisiana’s and the nation’s climate goals, and secure 45Q tax credits for carbon dioxide sequestration.