CF Industries Holdings, Inc. (NYSE:CF) Q4 2022 Earnings Call Transcript

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The cost of carbon, as I’m sure you’re aware in Canada, is already high and it’s going to get a lot higher going forward. So there is really good economics around a potential investment there where we can also dramatically reduce our aggregate emissions profile. And we are continuing to evaluate in other areas as well. The one challenge at a place like Port Neal because the amount of urea and UAN that we’re producing, we’re using most of the process CO2 that we produce. And so it’s fairly low the amount that ultimately gets vented there. And so the prospect of doing a CCS project is small. Verdigris on the other hand does have some reasonable amount of CO2. And we are looking at it across the network for other opportunities, including going after some of our N2O emissions from our nitric acid plants, the N2O side is also really carbon intensive from a CO2 equivalent standpoint.

Chris Bohn : And then just to build on what Tony said, those are the more defined projects that are out there that really the hydrogen production tax credit and the enhancement of the 45Q. So those are already in motion, but there’s others that are related to everything from the hydrogen hubs, the carbon transport incentives that are part of the IRA as well. And those are continuing to evolve and what the scope is and everything like that. But we remain very active in evaluating those as well. But again, as we talked about earlier, a lot of this is really playing to where our strengths are partnering where we don’t have it and participating where we have the highest return on those value chains.

Adam Samuelson: Okay. That’s helpful. And I guess just a separate follow-up on the Billingham plant in the UK. I think the guidance for the full year was 9.5 million tons of gross ammonia production. Does that assume you actually are able to restart ammonia production in the UK? And if not, kind of how long would you be comfortable not running ammonia there before that starts creating issues at the plant?

Chris Bohn : Yes, Adam, I’ll start with first is as we’ve said in the past, the amount of gross margin really associated with the UK business is pretty small on an overall CF basis. Our intention is that when gas prices get into a range where it’s more profitable to produce ammonia there and upgrade it than to import it, we’ll do that. But right now, it’s just a margin play. So I guess from a standpoint of how we’re looking at this, we’re going to be very nimble and flexible, and we will turn the plant back on when we see the margin advantage is better to do that. Right now importing from Donaldsonville is providing an uplift to that price at the Donaldsonville ammonia could get versus just selling it as merchant ammonia out in the market. So we’ll continue to evaluate that, but it will always be margin dependent rather than production volume.

Adam Samuelson: Okay. That’s all. I’ll pass it on. Thank you.

Operator: We will now take a question from Edlain Rodriguez from Credit Suisse. Edlain, please go ahead.

Edlain Rodriguez: Thank you. Good morning, guys. Just a quick one on buyers psychology. Like, what do you think buyers are still wait and see buying pattern when they can clearly hear you saying that they should expect prices to be going up soon, like shouldn’t they be wishing to buy ahead of those higher prices?

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