Today, Yara International has organized a Capital Markets Day (CMD) for Yara Clean Ammonia. During the event, members of Yara Clean Ammonia's management team presented key features of the company, including its growth strategy and ambitions, as well as financial parameters and goals for the future.

In May 2022, Yara announced that it is evaluating a possible initial public offering of Yara Clean Ammonia on the Oslo Stock Exchange. “While the decision to list Yara Clean Ammonia will be made in due course, Yara is now pleased to host an inaugural CMD for Yara Clean Ammonia to showcase its exciting history,” said Svein Tore Holsether, CEO and President. of Yara. "Yara Clean Ammonia combines a leading midstream business with exceptional growth prospects and a pipeline of value-creating projects."

Key points:

• Clean ammonia represents a huge opportunity that is projected to drive exponential market growth in the long term.
• Yara Clean Ammonia understands the existing cash flows of a market leadership position in a market that is expected to grow significantly, combined with an attractive pipeline of projects with future cash flow potential.
• Yara Clean Ammonia is the number one global ammonia midstream platform with significant barriers to challenging Yara Clean Ammonia.
• Strategic ambition to leverage and scale current platform to capture leading market share across the clean ammonia value chain.
• The scalability of Yara Clean Ammonia's integrated ammonia platform provides a strong starting point for midstream and downstream expansion.
• Future clean ammonia production is supported by an attractive pipeline of projects, with major investment decisions planned for the next three years.
• Yara Clean Ammonia's ambitious growth plan is expected to support profitable growth as the growth of the clean ammonia market accelerates.
• Yara Clean Ammonia benefits from a strong balance sheet and aims to establish a capital structure independent of Yara.

Yara Clean Ammonia, with its presence across the entire ammonia value chain, is uniquely positioned to enable an energy transition where ammonia is expected to play a key role in decarbonising hard-to-reduce sectors. Ammonia is expected to represent a superior low-carbon solution in four major segments: shipping fuel, power generation, agriculture, and as a hydrogen carrier. New applications are expected to be supplied exclusively with clean ammonia (ie blue and green ammonia). Virtually all clean ammonia volumes in new applications are likely to be traded internationally, underpinning the exponential growth in the traded ammonia market, from 18 million tonnes in 2021 to a forecast 238 million tonnes in 2050.

Yara Clean Ammonia aims to leverage its competitive advantage to enable a complex energy transition, connecting upstream projects with new customer applications. The company's competitive advantage is based on three key differentiators that set Yara Clean Ammonia apart. Firstly, Yara Clean Ammonia is clearly the number 1 player in the global ammonia value chain, based on its market share in ammonia trade. Yara Clean Ammonia's asset-backed and integrated platform offers significant scale factors and flexibility related to ammonia terminals and vessels. Active throughout the value chain, from sourcing to sales, the company has a market share of over 20% in the ammonia trade. Second, Yara Clean Ammonia benefits from a multi-decade track record and a growth plan based on attractive projects with future cash flows, backed by earnings and existing cash flows from a growing core business. The company's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the trailing 12 months were $159 million in the first quarter of 2022. Third, strong synergies and long-term support of Yara underpin the scale, integration and global presence of Yara Clean Ammonia. Yara Clean Ammonia will maintain its interconnected and integrated role in managing all ammonia from the Yara production system to optimize ammonia flows to and from Yara plants.

“From this position of strength, Yara Clean Ammonia aims to significantly scale its global leadership position as the world's largest ammonia platform, driving clean ammonia development globally,” said Magnus Krogh Ankarstrand, CEO of Yara Clean Ammonia. “Bold, long-term, reliable and trustworthy; our goal is to partner with like-minded industry leaders to unlock blue and green value chains.” The Company has defined a strategy to scale its integrated midstream platform while expanding into the upstream and downstream segments of the clean ammonia value chain. Integration across the value chain will remain a central pillar going forward, supporting YCA's competitive advantage with clear benefits from scale factors and optimization.

Yara Clean Ammonia seeks to invest up to $400 million to significantly increase its midstream capacity and establish a downstream presence by 2030. The midstream growth plan includes selective investments in terminals and vessels, leveraging the scalability of the Company's existing platform. , as well as co-investments and flexible ownership models.

Yara Clean Ammonia's commercial organization will spearhead the development of new end markets, with a strategy focused on close collaboration with key customers. Access to the existing terminal and the Company's fleet network provide a head start in developing major fueling hubs. This is expected to be complemented by selective investments in mobile sourcing solutions for last mile distribution.

Access to asset-backed production is a critical part of Yara Clean Ammonia's competitive advantage, underpinning its successful position as a global ammonia distributor. While the existing ammonia plants will remain at Yara, Yara Clean Ammonia intends to develop new clean ammonia production, also using Yara's existing asset base. Yara Clean Ammonia is well positioned to succeed in the upstream segment with an attractive portfolio of projects. The portfolio is weighted towards blue projects in North America, where the Company is exploring various opportunities, in addition to light capital conversion of existing Yara production in Europe. The project portfolio is sized to provide asset-supported production of ~2.5 million tonnes of blue and green ammonia by 2030, with additional volumes expected from third-party mining. Yara Clean Ammonia plans to invest US$1.5-1.8 billion in blue ammonia production by 2030. Combined, these projects are expected to contribute ~2.1 million tonnes of blue ammonia by 2030. The HEGRA project in Porsgrunn is likely one of the most competitive green projects in Europe given its connection to a fully renewable grid and existing infrastructure, it may contribute ~0.4 million tonnes of ammonia by the end of the decade. However, a decision to invest in HEGRA is subject to achieving a sufficient level of government support.

Yara Clean Ammonia's growth investments across the value chain support a well-defined set of financial objectives anchored in profitable growth as the clean ammonia market develops. Specifically, Yara Clean Ammonia is targeting stable volume development in conventional applications where the company seeks to maintain its leading >20% market share of the traded ammonia market. Yara Clean Ammonia also aims to extend its market leadership position to the rapidly growing clean ammonia market. Through 2030, the company anticipates having a significantly higher market share in clean ammonia, after which its market share is expected to normalize towards >20% as market growth accelerates. In conventional applications, Yara Clean Ammonia is targeting EBITDA margins of >30 USD/tonne in line with 2020 and 2021 performance. For new clean ammonia applications, the Company is targeting an EBITDA margin ~10 USD/tonne higher than in conventional applications, in a market that is expected to grow significantly. This is driven by optimization for larger scale and to cover additional investments in midstream and mobile sourcing solutions. Finally, upstream investments are subject to a hurdle rate of ≥7% (after-tax real rate of return).

At the beginning of June 2022, Yara announced plans to spin off its clean ammonia business into a separate and wholly-owned Yara subsidiary. Shortly after completing this process, Yara Clean Ammonia is expected to have close to zero net interest bearing debt (excluding leases). Yara Clean Ammonia's balance sheet is further strengthened with a net working capital balance significantly above normal levels given current high ammonia prices. Going forward, Yara Clean Ammonia aims to establish an independent capital structure that is independent of Yara. In the short and medium term, the Company expects to maximize value creation by executing its growth plan. Consequently, Yara Clean Ammonia's current intention is to reinvest the cash flows it may generate.

Yara Clean Ammonia remains central to Yara's strategy and Yara will continue to provide long-term support to Yara Clean Ammonia as its majority owner and partner of choice. Yara remains committed to its BBB rating and capital allocation policy with an average annual capital investment target of $1.2 billion. Therefore, Yara aims to establish a separate capital structure for Yara Clean Ammonia, in which capital expenditures on Yara Clean Ammonia are expected to be financed from other sources, including Yara Clean's existing cash flow generation. Ammonia, the borrowing capacity and the financing of additional potential capital. However, in accordance with IFRS, Yara's reported accounts, in addition to capex related to its $1.2 billion target, will also include 100% of capital expenditures on Yara Clean Ammonia. Yara will provide a breakdown of these capex components as part of its quarterly report.