Giant producer and shipowner Yara international is planning a spin-off for its green ammonia business as it furthers its hydrogen economy ambitions.
The Oslo-listed group said it is evaluating an initial public offering (IPO) for the Yara Clean Ammonia (YCA) operation on the Oslo Stock Exchange.
The deal would be aimed at bringing in minority investors and reflects Yara’s strategic ambition to “enable the hydrogen economy”, the company added.
Yara wants clean ammonia to play a crucial role in zero-emission shipping fuels, power generation, green fertiliser production and other industrial applications.
The group controls a fleet of LPG carriers and the pioneering autonomous container ship, the 120-teu, 3,200-dwt Yara Birkeland (built 2021)
YCA was set up in February last year to focus on green and blue ammonia.
“A potential IPO would raise capital to accelerate the growth of YCA, visualise the value of the business better and support increased management focus — for both YCA and Yara,” the company said.
Svein Tore Holsether, Yara’s chief executive, said the move is a natural next step.
“YCA remains core to Yara’s strategy and Yara will continue to provide long-term backing to YCA as its majority owner and preferred partner,” he added.
“As the world’s largest ammonia distributor, backed by [our] own production assets and logistics infrastructure, Yara and YCA are uniquely positioned to capture value and take a leading position in the clean ammonia market,” the CEO said.
YCA sourced, transported and sold more than 4m tonnes of ammonia in 2021.
Ebitda for the unit was $166m over the last year to 31 March.
Clean ammonia offers a solution to the decarbonisation of hard-to-abate sectors, such as shipping, the group believes.
ABG Sundal Collier and JP Morgan have been retained by Yara to advise on the possible IPO.
The group has already started quoting prices for green ammonia bunkers.
And even though the company is not revealing what these levels are, shipowners appear not to have been too shocked so far at the cost of the low-carbon fuel.
No one falling off their chairs
Christian Berg, YCA’s director of bunkering market development for Scandinavia, told Nor-Shipping’s Maritime Hydrogen Conference in April that the company has gone out to clients with prices.
And the experienced offshore vessel executive said: “At least they didn’t fall off their chair yet.”
A YCA spokeswoman told TradeWinds that the company is involved in many pilot projects and also some commercial schemes for using ammonia as a fuel.
“For some projects, there is an agreement in place for the cost of ammonia and that have been well received from the shipowner and/or cargo owner,” she said.
Ready from 2023
The spokeswoman revealed YCA will have green ammonia ready from 1 July 2023 from the Skrei project at Heroya in Norway.
The date tallies with the timeline of the first pilot projects, like ShipFC.
This involves Finnish engine maker Wartsila and offshore vessel owner Eidesvik Offshore working on a European Union-funded plan to equip the 6,000-dwt PSV Viking Energy (built 2003) with a 2 MW fuel cell running on green ammonia.
This project is receiving €10m ($11.1m) funding from the EU to complete the work, which is planned for late 2023.