Nutrien executives today said the company had suspended work on its proposed 1.2 million tonne clean ammonia project in Geismar, Louisiana.
The Canada-based fertilizer company said the decision is due to an “increase in expected capital costs compared to our initial estimates, continued uncertainty on the timing of emerging uses for clean ammonia.”
Nutrien last year said the project would cost approximately $2bn to build and achieve a 90% reduction of CO2 emissions. It would have begun construction in 2024 and reached commercial operations in 2027.
On an investor call today, Nutrien CEO Ken Seitz said that estimated costs for the project had climbed between 15% – 20%.
“We believe emerging uses for clean ammonia will provide a long-term growth opportunity for the nitrogen industry, but there continues to be uncertainty on the timing of this demand,” Seitz said in prepared remarks.
Another Nutrien executive, Trevor Williams, said the company built in incentives from the IRA into its investment model, but the added tailwind did not get the company “over the hurdle” on the project’s economics. He added that the halting of work would imply a delay of at least two years for the project.
Discussing a potential pricing premium for clean ammonia, Chief Commercial Officer Mark Thompson said “today the evidence wouldn’t be sufficient to justify the assumption of a premium, at least in the near term, emerging for clean ammonia.”
Nutrien had signed a letter of intent with Mitsubishi Corporation for offtake of up to 40% of expected production from the 1.2 million ton per year plant to deliver to the Asian fuel market, including Japan.
The company also reduced capex plans for smaller investment projects in its retail business and deferred the timing of capital spend on certain nitrogen brownfield projects.
The Hydrogen Source is tracking 12 proposed blue ammonia projects in the US and Canada that have been announced in recent years.
