Yara International Asa · OSL:YAR
Yara International Asa — Yara Clean Ammonia — Investor Day (June 2022)
150 slides from Yara International Asa's investor day presentation, Jun 30, 2022
Slide 1: Capital Markets Day
Capital Markets Day Date: 30 June 2022
Slide 2: Disclaimer
Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, THE UNITED KINGDOM, AUSTRALIA, NEW ZEALAND, CANADA OR JAPAN OR ANY OTHER JURISDICTION OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL OR
Slide 3: Table of contents
Table of contents Section Page number Introduction to YCA 4 Highlights 15 Market outlook 26 Business overview 65 Growth and strategy 92 Financials and financial targets 119 3
Slide 4: Introduction to Yara Clean Ammonia (YCA)
Introduction to Yara Clean Ammonia (YCA) 4
Slide 5: YCA is a leading global ammonia platform well-positioned to capture the market for clean ammonia
YCA is a leading1 global ammonia platform well- positioned to capture the market for clean ammonia YCA in brief Company highlights A key enabler of decarbonization of hard- to-abate industries, connecting upstream projects with new customer applications USD 3.0bn USD 159m >20% Q1 2022 LTM Revenues Q
Slide 6: YCA is the clear #1 in ammonia, built on a global integrated business model backed by Yara
YCA is the clear #1 in ammonia, built on a global integrated business model backed by Yara YCA integrated model YCA Yara Highly flexible upstream portfolio #1 global midstream platform Multiple downstream outlets Offtake Sales Yara and JV ammonia ~4.1mT transported Yara consuming plants Current prod
Slide 7: Clean ammonia offers an attractive solution to decarbonize hard-to-abate sectors
Clean ammonia offers an attractive solution to decarbonize hard-to-abate sectors… Rapid growth in GHG emissions from hard-to-abate industries Ammonia is an attractive solution BnT CO2 p.a. 40 Breakdown of GHG emissions by sector1 Clean ammonia available through existing blue and green production met
Slide 8: A superior clean solution across four sizable segments
… through being a superior clean solution across four sizable segments Shipping fuel Power generation 50% higher energy density than Easier to scale than hydrogen, e- Alternative for countries with Economically favorable over liquid hydrogen1 methanol and synfuel unfavorable renewables conditions ca
Slide 9: Ammonia market expected to grow by >3x supported by the need to decarbonize
Ammonia market expected to grow by >3x supported by the crucial need to decarbonize industries Total ammonia market expected to grow rapidly to 2050E Key market drivers USDbn (real terms¹) >220 Shipping fuel Adoption expected to increase rapidly from 2030E driven by anticipated regulations and custo
Slide 10: Integrated operations across the midstream ammonia value chain
Integrated operations across the midstream ammonia value chain YCA’s midstream definition YCA’s midstream position is defined differently from the use of the same term in some other contexts/sectors Sourcing Transportation In the context of YCA, it refers to a broad set of capabilities (i.e. key com
Slide 11: Clear market leader providing a unique starting point to develop the clean ammonia value chain
Clear market leader today, providing a unique starting point to develop the clean ammonia value chain Key success factors for YCA Yara Clean Ammonia ✓ Reliable, asset-backed supply and attractive offtaker ✓ Deep industry know-how, market insight and track record of safe handling ✓ Specialized fleet
Slide 12: YCA combines a leading business with growth prospects and a value creating project portfolio
YCA combines a leading business with exceptional growth prospects and a value creating project portfolio Ammonia Sales and Logistics (ASL) Clean Ammonia Projects Conventional applications New applications and Production (CAPP) (ASL 1) (ASL 2) Integrated midstream Integrated mid and Upstream producti
Slide 13: Foundation for a partnership between YCA and Yara
Well-established foundation for a continued and mutually beneficial partnership between YCA and Yara Clear scope of separation of ✓ A leading global ammonia production base, exclusively marketed by YCA1 YCA’s assets and business Included in YCA ✓ Large captive ammonia demand, exclusively served by Y
Slide 14: YCA is positioned to become a key enabler of the energy transition
YCA is positioned to become a key enabler of the energy transition By successfully delivering on its business plan, YCA expects to achieve 3mT 4mT 70% CO2 equivalents CO2 equivalents Reduction of existing Avoided emissions Reduction in GHG intensity emissions from ammonia of future conversion and ne
Slide 15: Highlights
Highlights PE —- S & Yara Clean Ammonia 15
Slide 16: Key highlights
Key highlights Clean ammonia represents a massive opportunity on top of a 1 structurally robust market for conventional ammonia Supportive ammonia market dynamics expected to significantly 2 increase cross-regional trading activity The #1 global ammonia midstream platform1 with significant barriers
Slide 17: Significant expected ammonia demand driven by conventional and new applications
Ammonia market opportunity 1 Significant expected ammonia demand driven by a mix of conventional and new applications Ammonia market growth to 2050E 2050E ammonia demand by application 2050E ammonia supply by type mT 470 8% 4% 30% 238 238 43% 49% 184 48 39% 232 27% New Clean applications ammonia Agr
Slide 18: Decoupling captive consumption will increase the importance of YCA's midstream position
Ammonia market dynamics 2 Decoupling historical pattern of captive consumption will increase the importance of YCA’s midstream position Global traded ammonia volumes are expected to grow exponentially 2021 2050E ✓ supply and demand centers Geographically separated ~10% ~50% Driven by production cost
Slide 19: Blue ammonia will be the key immediate focus before green improves
Ammonia market dynamics 2 Blue ammonia will be the key immediate focus before relative competitiveness of green ammonia improves Blue ammonia Green ammonia “Low-carbon” cost leader throughout the long-term; Brief Green ammonia projects could breach the blue cost curve competitive access to natural r
Slide 20: YCA has an established global network with access to asset-backed supply
#1 global ammonia midstream platform 3 YCA has an established global network with access to asset-backed supply Overview of YCA’s global footprint YCA has a differentiated model Producers w. inhouse YCA Trader freight Asset- backed supply Network/ terminal access Optimization opportunities Market in
Slide 21: Growth supported by solid upstream projects
Robust project portfolio 4 Growth supported by solid upstream projects, building on YCA’s leading1 midstream position Blue ammonia Green ammonia Key success factors Early mover strategy where government support Robust pipeline with solid project economics and will be required – anticipated lower cos
Slide 22: Attractive financial profile from existing midstream operations
Business model 5 Attractive financial profile, providing earnings and cash flows from existing midstream operations Key metrics (USDm) 2019 2020 2021 Q1 ‘22 LTM Robust unit margins and stable volume development Revenue 1,248 1,015 2,292 3,009 EBITDA 107 116 124 159 Operating income 78 82 85 117 Capi
Slide 23: Predictable and scalable economic model with value creation potential
Business model 5 YCA benefits from a predictable and scalable economic model with strong value creation potential Margin Volume YCA EBITDA margin: Key volume Key margin drivers >30 USD/tonne characteristics1 Historically stable around Scale and scalability Offtake and supply 4mT2 YCA today access Of
Slide 24: Experienced management team with almost 200 years of combined industry experience
Management and organization 6 Experienced management team with almost 200 years of combined industry experience Magnus Krogh Hallgeir Storvik Lise Winther Murali Vibeke Ankarstrand Srinivasan Rasmussen Projects & Product Mgmt. CEO CFO Commercial Technology & Certification ▪ 15 years of international
Slide 25: Key highlights
Key highlights Clean ammonia represents a massive opportunity on top of a 1 structurally robust market for conventional ammonia Supportive ammonia market dynamics expected to significantly 2 increase cross-regional trading activity The #1 global ammonia midstream platform1 with significant barriers
Slide 26: Market outlook
Market outlook 1 Market opportunity 2 Conventional market 3 Demand development 4 Supply side economics 26
Slide 27: Snapshot of the clean ammonia market opportunity
1 Market opportunity Snapshot of the clean ammonia market opportunity Grey ammonia Blue ammonia Green ammonia An important input for the agriculture and Key enabler for decarbonization and new Long-term fully renewable option, but will industrial end-markets segments as the low-carbon cost leader re
Slide 28: Building blocks needed for the clean ammonia opportunity to reach its potential
1 Market opportunity Several building blocks needed to fit together for the clean ammonia opportunity to reach its full potential Regulatory environment Market Technology Infrastructure A global adoption of “fair” CO2 The technologies required to prices or subsidies supporting The required infrastru
Slide 29: Regulatory pull and push factors expected to support clean ammonia
1 Market opportunity A combination of regulatory “pull” and “push” factors expected to support the development of clean ammonia Regulatory “pull” Regulatory “push” EU Green Deal and EU Emissions Trading System Country-level support Country-specific CO2 taxation Hydrogen Roadmap (ETS) EU Green Deal t
Slide 30: EU ETS prices increased sharply, supporting transition towards clean ammonia
1 Market opportunity EU ETS prices increased sharply in the last year, supporting transition towards clean ammonia application Current and anticipated EU ETS carbon price Main drivers and regulatory dynamics USD/t CO21 140 Arkwright 2050: ▪ EU ETS saw a significant price surge in 2021/2022 driven by
Slide 31: Different colors indicate different production processes and carbon intensity
1 Market opportunity Different “colors” indicate different production processes for hydrogen and related carbon intensity Input/feedstock Hydrogen production Ammonia production4 Feedstock H2 from SMR5 or ATR5 Grey ammonia Grey ammonia H CO2 emissions1: N 1.9-2t CO2/t NH32 H H CO2 Storage CCS Blue am
Slide 32: Significant growth opportunity driven by the clean ammonia market
1 Market opportunity Significant growth opportunity in ammonia driven by the development of the clean ammonia market ~50% of 2050 demand is projected to come from new applications, with shipping fuel as the main contributor Total (in USDbn)1 69 93 144 224 Total (in mT) 184 203 294 470 36 Hydrogen ca
Slide 33: Future ammonia market expected to rely on cross-regional transportation
1 Market opportunity Future ammonia market expected to rely heavily on cross-regional transportation Traded ammonia volumes are expected to grow substantially… …driven by regional differences ~10% ~10% ~12% ~19% ~32% ~43% ~51% Traded ammonia volumes mT 470 379 238 294 163 233 93 Capacity for Infrast
Slide 34: Ammonia market is highly specialized, fitting YCA's competitive edge
1 Market opportunity The ammonia market is highly specialized/complex, providing a strong fit with YCA’s competitive edge Merchant ammonia market requires a … which is expected to remain high in the YCA uniquely positioned across key high degree of specialization… coming years success criteria Compl
Slide 35: Market outlook
Market outlook 1 Market opportunity 2 Conventional market 3 Demand development 4 Supply side economics 35
Slide 36: Gross ammonia market primarily serves captive fertilizer production
2 Conventional market The gross ammonia market primarily serves captive production of urea and other fertilizer products Market structure dominated by captive consumption Fertilizer markets consumes the majority of ammonia 2021A (mT) 2021A (mT) 200 185 150 132 175 125 150 100 125 100 75 53 75 50 50
Slide 37: Main trade patterns in the merchant market
2 Conventional market Main trade patterns in the merchant market driven by geographical spread of net exporters and importers Top 10 importers represent almost 70% of traded volumes Top 10 exporters represent almost 85% of traded volumes Top 10 importers, 2021A (mT) Top 10 exporters, 2021A (mT) 5 5
Slide 38: Historical volume and price drivers in the merchant ammonia market
2 Conventional market Historical volume and price drivers in the merchant ammonia market Long-term volume and price development Key drivers mT USD/t Stalled volume development over the last decade 22 600 International trade (LHS) Yuzhny fob (RHS) ▪ Gross ammonia production grew at a CAGR of ~1.5% be
Slide 39: Supply and demand outlook indicates structural support
2 Conventional market Supply and demand outlook indicates structural support for a robust market over the next few years Historical and projected supply/demand balance1 Tight market that will take time to normalize mT Limited number of merchant ammonia plants in the pipeline 3 ▪ Ma’aden’s new 1.1mT
Slide 40: Market outlook
Market outlook 1 Market opportunity 2 Conventional market 3 Demand development 4 Supply side economics 40
Slide 41: Demand from new applications expected to come exclusively from clean ammonia
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Demand from new applications is expected to come exclusively from clean ammonia Demand focused on key applications Shipping fuel ▪ Ammonia is the most promising scalable clean fuel solution Today ▪ Regulation
Slide 42: Ammonia as shipping fuel expected to create a USD 87bn market by 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Rapid growth in the use of ammonia as a shipping fuel is expected to create a USD 87bn market by 2050 Ammonia demand outlook in the shipping fuel segment Key drivers Ammonia fueled <0.1 0.9 3.7 7.8 12.8 18.3
Slide 43: IMO targets and regulations drive demand for low-carbon fuels
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development IMO targets and guidelines together with regional and national regulations drive demand for low-carbon fuels Regulatory influence Regulatory influence IMO targets IMO guidelines Regional (EU) National Individ
Slide 44: IMO targets to reduce GHG emissions by 40% and 50% by 2030 and 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development The IMO has set targets to reduce GHG emissions by 40% and 50% by 2030 and 2050, respectively Current decarbonization toolbox IMO CO2 emission reduction targets CO2 emissions (mT) Business as usual IMO target
Slide 45: Maritime transport likely to be included in the EU ETS from 2024
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 4 Demand development 3 Maritime transport likely to be included in the EU ETS from 2024, introducing a carbon quota for the sector Key milestones Draft law (22 June 2022) ✓ July 2021: The legislation was first introduced by the E
Slide 46: Ammonia is the most promising solution for clean fuel in deep-sea shipping
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Ammonia is the most promising solution for clean fuel in deep-sea shipping Comparison of shipping fuel alternatives Hydrogen E-Methanol Ammonia E-Methanol Overall assessment as a clean fuel ▪ E-Methanol is no
Slide 47: Fuel cost parity between ammonia and MGO requires CO2 pricing of USD ~250 per tonne
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 4 Demand development 3 Fuel cost parity between ammonia and MGO requires CO2 pricing of USD ~250 per tonne1 Shipping fuel cost comparison Cost comparison between Ammonia and MGO requires several aspects: Shipping fuel cost compar
Slide 48: Ammonia fueled engines expected ready from 2024–2025
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 4 Demand development 3 Ammonia fueled engines expected to be ready from 2024–2025 with commercialization in 2028–2029 Timeline for expected availability of ammonia as a shipping fuel 2022 2025 2030 2035 Technological readiness 20
Slide 49: Ammonia co-firing can support a USD 10bn market in Asia by 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Ammonia co-firing in power generation can support the emergence of a USD 10bn market in Asia by 2050 Ammonia demand outlook in the power generation segment Key drivers mT ▪ Provides cleaner power generation i
Slide 50: Countries with high cost of renewables and high coal share most relevant for co-firing
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Countries with high cost of renewables and high share of coal are most relevant for ammonia co-firing Indicative evaluation of co-firing opportunities Benefits of ammonia co-firing High Provides an alternativ
Slide 51: Japan, Taiwan and South Korea key demand centers for ammonia power generation
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Japan, Taiwan and South Korea are key potential demand centers for ammonia in power generation Main potential countries Demand development mT ▪ Japan has clear targets for ammonia co-firing ▪ By co-firing wit
Slide 52: Conventional applications support a USD 111bn market by 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Demand from conventional applications is expected to support a traded and captive market of USD 111bn by 2050 Ammonia demand outlook in the agriculture/industrial segment Key drivers mT ▪ Conventional applica
Slide 53: Green ammonia can provide up to 30% CO2 reduction at ~1% marginal cost increase
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Green ammonia has a strong business case of providing up to 30% CO2 reduction at a ~1% marginal cost increase Food companies are recognizing the need to Fertilizer accounts for a very large share of CO2 Impac
Slide 54: Ammonia as hydrogen carrier expected to emerge as a USD 17bn market by 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development The use of ammonia as a hydrogen carrier is expected to emerge as a USD 17bn market by 2050 Ammonia demand outlook in the hydrogen carrier segment Key drivers Global hydrogen demand 20-45 30-45 45-70 70-80 ▪
Slide 55: Ammonia provides an important link for deep-sea transportation of hydrogen
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Ammonia will provide an important link for deep-sea transportation of hydrogen Geographically separated supply and demand centers Alternatives for hydrogen transport Hydrogen production cost from solar PV and
Slide 56: Ammonia market expected to be USD 224bn in 2050
Shipping fuel Power generation Agriculture/Industrial Hydrogen carrier 3 Demand development Ammonia market expected to be USD 224bn in 2050 driven by strong mega trends across four different end-use applications ~50% expected to Total ammonia demand (2050E) be traded 182mT 20mT 232mT 36mT 470mT USD
Slide 57: Market outlook
Market outlook 1 Market opportunity 2 Conventional market 3 Demand development 4 Supply side economics 57
Slide 58: Blue ammonia will reach scale first, but green expected to surpass
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics Blue ammonia will reach scale first, but green expected to eventually surpass blue volumes Ammonia volumes mT 470 Green 379 Blue - for new applications 201 Blue - for conventional applications 294 124 Grey 233 54 203 39 48 191 11 31 184
Slide 59: Blue ammonia cost competitive with grey by 2035; green over time
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics Blue ammonia to be cost competitive with grey by 2035 and green ammonia becoming cost competitive over time Ammonia production cost Key assumptions and trends 1,200 Ammonia production cost (LCOA) USD/t (2021 real prices) 2 ▪ Blue ammoni
Slide 60: Regional competitiveness of blue ammonia
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics Differences in regional competitiveness of blue ammonia driven by gas, CO2 storage costs and incentive mechanisms Relative regional competitiveness Scoring on key cost drivers Sweet spot for blue hydrogen – lowest gas prices and only 16
Slide 61: US 45Q tax credit supports economics of blue ammonia
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics In the US, the 45Q tax credit is already in place, supporting economics of blue ammonia production Equipment placed in service before Feb-2018 Equipment placed in service on Feb-2018 or later USD/t of CO2 captured and sequestered Geolog
Slide 62: Cost of green ammonia expected to fall ~50% by 2040
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics Cost of green ammonia expected to fall ~50% by 2040 from improvements across the value chain Green ammonia production cost by 2040 Key drivers Ammonia production cost (LCOA) USD/t Electricity ▪ Power prices expected to fall costs ▪ Cost
Slide 63: Regional competitiveness for green ammonia
Grey ammonia Blue ammonia Green ammonia 4 Supply side economics Regional competitiveness for green ammonia is shaped by renewables cost and distribution cost into end markets Relative regional competitiveness Scoring on key cost drivers Middle Very favorable renewables cost and potential to build 3.
Slide 64: Summary of the market outlook
Summary of the market outlook Demand: Demand expected to increase significantly in the future Driven by usage of clean ammonia in key industries: shipping fuel, power generation, agriculture/industrial and hydrogen carrier These end-markets are expected to create demand of USD 224bn1, or 470mT, for
Slide 65: Business overview
Business overview 1 Introduction to YCA 2 Deep-dive on the current YCA platform 3 Business model 4 Competitive dynamics and positioning 65
Slide 66: Snapshot of the current YCA platform
1 Introduction to YCA Snapshot of the current YCA platform Footprint Key highlights ▪ Leading global ammonia footprint with 4.1mT >20% USD 159m physical presence in almost 40 countries, Sales volume Market share of merchant/ EBITDA including key trading hubs Q1 2022 LTM traded ammonia in 20211 LTM Q
Slide 67: YCA combines a leading business with growth prospects and project portfolio
1 Introduction to YCA YCA combines a leading business with exceptional growth prospects and a value creating project portfolio Ammonia Sales and Logistics (ASL) Clean Ammonia Projects and Production (CAPP) Conventional applications (ASL 1) New applications (ASL 2) Shipping fuel Direct investments in
Slide 68: YCA, as part of Yara, has a long history as a leading player
1 Introduction to YCA YCA, as part of Yara, has a long history as a leading1 player in the ammonia value chain Establishment of Yara and Building ammonia scale and Carving out YCA and beginning of ammonia developing the midstream investing in clean ammonia operations position 1905 Norsk Hydro founde
Slide 69: Lean organizational setup rigged for growth and vertical expansion
1 Introduction to YCA Lean organizational setup rigged for growth and vertical expansion Organizational setup Key highlights 8 • Highly competent organization with significant industry experience and employees with long tenure from Yara Management and administration • Employees are located across Eu
Slide 70: Business overview
Business overview 1 Introduction to YCA 2 Deep-dive on the current YCA platform 3 Business model 4 Competitive dynamics and positioning 70
Slide 71: YCA is fully integrated across the ammonia midstream segment
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial YCA is fully integrated across the ammonia terminals activities midstream segment End-to-end operations across the midstream value chain Selected scale benefits for YCA A Sourcing and planning ✓ Diversificati
Slide 72: Dynamic planning ensures efficient operations and flexibility
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial Dynamic planning approach ensures efficient terminals activities operations and high level of flexibility Business logic Long-term planning Operational planning ▪ Yara’s asset-backed Production facility produ
Slide 73: Attractive value proposition to suppliers and consumers
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial Attractive value proposition to both suppliers terminals activities and consumers Suppliers (upstream) Consumers (downstream) ✓ predictable and lower risk offtake commitments ✓ providing security of supply to
Slide 74: YCA acts as preferred offtake partner for Yara and third-party producers
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial YCA acts as preferred offtake partner for Yara terminals activities and third-party producers Yara ammonia production Yara JV partner production External ammonia production Typical locations Typical locations
Slide 75: Majority of volumes sourced under term contracts
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial Majority of volumes sourced under term contracts, terminals activities with selective use of spot market for short-term balancing ~90% of total volumes (2021) ~10% of total volumes (2021) Term contracts Spot
Slide 76: Sourcing example: Sluiskil
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial Sourcing example (1/2): YCA handles ~200kT terminals activities ammonia per year from Sluiskil Sluiskil: Yara plant with 1.9mT Ammonia capacity Overview of Sluiskil’s vessel loading/terminal setup 1929 ~1.9mT
Slide 77: Sourcing example: Pilbara
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial Sourcing example (2/2): YCA serves the Asian terminals activities market with ~600kT export from Pilbara1 Strategically located, covering the Asian market Key highlights Broad coverage of the Asian market thr
Slide 78: YCA is a reliable supplier to Yara and third-party consumers
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial YCA is a reliable supplier of ammonia to Yara terminals activities and third-party consumers Sales to Yara Sales to third-party consumers Porsgrunn Rostock Fertilizer companies Industrial companies Type of ~1
Slide 79: YCA has access to Yara owned terminals in key regions
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial YCA has access to Yara owned terminals in key terminals activities regions YCA has access to Yara terminals in key regions YCA handles inventory management for Yara Evergreen agreement2 with Yara governing al
Slide 80: YCA has a fleet of 12 owned and leased vessels
A Sourcing and 2 Deep-dive on the current YCA platform planning C Shipping and B Commercial YCA has a fleet of 12 owned and leased vessels terminals activities to support its midstream operations Overview of YCA’s fleet of owned and leased vessels Key highlights Owned vessels 12 dedicated vessels wi
Slide 81: Business overview
Business overview 1 Introduction to YCA 2 Deep-dive on the current YCA platform 3 Business model 4 Competitive dynamics and positioning 81
Slide 82: Integrated midstream business model driven by volume and margin
3 Business model Attractive and integrated midstream business model driven by volume and margin Volume Margin Predictable volumes and trading patterns under Robust margin on midstream volumes normal conditions Commercial services Ship-owning operations Global ammonia optimization EBITDA Source: Comp
Slide 83: Predictable global trade flows, with strong YCA presence
3 Business model Volume Margin Predictable global trade flows, with strong YCA presence in key regions Overview of the YCA’s global network and trade flows Key trade routes Hull Europe: Mostly import from Europe Brunsbuttel Trinidad to US gulf coast and coupled with third-party sourcing 1 delivered
Slide 84: Relatively stable volume development underpinned by contracts
3 Business model Volume Margin Relatively stable underlying volume development underpinned by contracts YCA sales volume development Typical drivers of volume fluctuations1 mT 5.0mT Structural changes in connection 1 with closure of plants 3.5mT 2 Construction of new plants Start-up of Yara’s JV in
Slide 85: Well-established pricing mechanisms at both ends
3 Business model Volume Margin Well-established pricing mechanisms at both ends (i.e. sourcing and sales) Illustrative margin build-up ILLUSTRATIVE A Producer price YCA generally sources from producers with negotiated prices linked to ammonia market reference prices B Consumer price YCA generally se
Slide 86: Scale effects and optimization support robust margins
3 Business model Volume Margin Scale effects and optimization support robust margins for YCA Illustrative margin build-up ILLUSTRATIVE Direct costs related to freight, such as charter rates and fuel in addition to other COGS incurred C in operations E Limited through YCA’s high level of operational
Slide 87: Business overview
Business overview 1 Introduction to YCA 2 Deep-dive on the current YCA platform 3 Business model 4 Competitive dynamics and positioning 87
Slide 88: Capabilities required to succeed across the midstream value chain
4 Competitive dynamics and positioning A clear set of capabilities is required to succeed across the midstream ammonia value chain Key success criteria Reliability of supply Operational know-how Customer relationships Global infrastructure and network Efficient financing Track record of safe operati
Slide 89: YCA has a leading integrated midstream ammonia platform
4 Competitive dynamics and positioning YCA has a leading1 integrated midstream ammonia platform… Project execution and Sourcing, optimization Global distribution, Ammonia fuel Customers production2 and shipping storage and sales bunkering3 (existing MoUs) Integrated part of Yara Specialized skills a
Slide 90: A differentiated approach and a clear #1 position
4 Competitive dynamics and positioning …with a differentiated approach and a clear #1 position Est. traded volumes Number of vessels Company1 Number of terminals Asset-backed supply Global platform3 (mT) (owned + leased) YCA >4 182 12 ✓ ✓ 2-2.5 0 9 (✓) 1-2 6 0 ✓ 1-2 4 4 ✓ (✓) 1-2 1 7 ✓ 1-2 4 4
Slide 91: Summary of the current YCA platform
Summary of the current YCA platform Market position: The #1 midstream player with >20% market share1, global footprint and integrated platform Infrastructure: Global network of 12 vessels and 18 strategically located terminals2, with deep-sea connection to key hubs Value proposition: A trusted partn
Slide 92: Growth and strategy
Growth and strategy 1 Ambition and clean ammonia strategy 2 Deep-dives across the value chain 3 Summary perspectives 92
Slide 93: YCA's strategic ambition
1 Ambition and clean ammonia strategy YCA’s strategic ambition YCA aims to significantly grow its leading1 global position as the world’s largest ammonia platform, driving the development of clean ammonia globally: Enabling the energy transition by connecting low-carbon energy > sources to food, fue
Slide 94: YCA's strategy builds on existing success factors and competitive edge
1 Ambition and clean ammonia strategy YCA’s strategy builds on existing success factors and competitive edge Key success factors YCA’s competitive edge YCA’s competitive edge Integrated Reliable and asset-backed supply Upstream Downstream midstream Handled by Yara today – Current presence Leverage c
Slide 95: Three-pronged strategy to capture a leading position in clean ammonia
1 Ambition and clean ammonia strategy Three-pronged strategy to capture a leading position in the clean ammonia market Scale integrated midstream platform while expanding into upstream and downstream segments Integrated midstream Scaled based on today’s setup Upstream Downstream ✓ Utilize existing s
Slide 96: Growth and strategy
Growth and strategy 1 Ambition and clean ammonia strategy 2 Deep-dives across the value chain 3 Summary perspectives 96
Slide 97: Integrated midstream platform requires less than proportional capex to scale
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Integrated midstream platform requires less than proportional capex to scale Key assets Current platform Scalability Synergies Organization and systems 100’s of years of ▪ Existing capabilities in place that can handle comb
Slide 98: Value accretive growth plan builds on existing infrastructure and co-investments
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Value accretive growth plan builds on existing infrastructure and co-investments with partners Terminals Vessels Bunkering solutions YCA’s mid- and down- stream investment principles ✓ Selective capacity investments to scal
Slide 99: Clear prioritization of key end-use applications
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier Clear prioritization of key end-use applications, leveraging YCA’s partnerships and market access Timing Development and roll-out to 2030 After 2030 Shi
Slide 100: YCA will focus on commercial operations in the downstream segment
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier YCA will primarily focus on commercial operations in the downstream segment Key principles of YCA’s downstream focus YCA investments Commercial operatio
Slide 101: Phased bunkering strategy with selective last-mile investments
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier Phased bunkering strategy with selective investments in last-mile solutions YCA’s existing terminal and vessel network provide coverage of major bunkeri
Slide 102: Partnering with industry leaders to decarbonize shipping
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier Partnering with industry leaders to decarbonize the shipping industry Coalition with in the Castor Initiative Agreement with Feb ‘21 Sept ‘21/Apr ‘22 Th
Slide 103: MoU with NorSea for ammonia bunkering supply chain
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier MoU with NorSea to establish a new, secure supply chain for ammonia bunkering Overview of the NorSea network Key highlights ▪ NorSea and YCA have signed
Slide 104: Partnering with industrial leaders in Japan
Integrated midstream Shipping fuel Power generation 2 Deep-dives across the value chain Upstream Downstream Agriculture/Industrial Hydrogen carrier Partnering with industrial leaders in Japan to develop local demand and infrastructure MoU with (Power ) MoU with (Industrial ) May ‘21 Nov ‘21 Yara and
Slide 105: YCA's value chain involvement and investment approach to upstream projects
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream YCA’s value chain involvement and investment approach to upstream projects Sources Key success factors Input/feedstock Hydrogen production Ammonia production1 ✓ Competitive gas supply Feedstock H2 from SMR3 or ATR3 Grey amm
Slide 106: Upstream roadmap builds on a flexible approach
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Upstream roadmap builds on a flexible approach to select and develop the most robust projects YCA’s upstream investment principles Upstream investment roadmap ✓ Upstream perimeter: Hydrogen Short-term Mid-term Long-term pro
Slide 107: Project structures with varying commercial and capital exposure
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Mix of different project structures with varying levels of commercial and capital exposure for YCA Blue ammonia project structures and YCA involvement Green ammonia project structures and YCA involvement Model 1: Model 2: M
Slide 108: YCA and Yara cooperation in clean ammonia production and sourcing
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream YCA and Yara will cooperate extensively in developing clean ammonia production and sourcing Governance structure/framework Key principles YCA will be Yara’s preferred supplier of clean ammonia and/or clean ammonia ✓ certifi
Slide 109: Project pipeline to 2030 weighted towards blue projects in North America
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Project pipeline to 2030 weighted towards blue projects in North America Framework Indic. start of Type Project names in place Volume (kT)1 Type YCA capex production Grey to blue (CCS) North America ✓ ~600 Offtake - 2026 –
Slide 110: YCA plans to invest in a large-scale new blue ammonia project in the US
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream YCA plans to invest in a large-scale new blue ammonia project located in the US Key highlights EBITDA build-up Volume ~1,100kT1 Blue B premium Indicative start 2028-2030 of production A Investment for TBA USD 1.5 – 1.8bn2 Y
Slide 111: Long-term offtake of blue ammonia from CCS additions to grey assets
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream YCA seeks to secure long-term offtake of blue ammonia from CCS additions to grey assets Grey to blue CCS: Blue offtake and costs of CCS1 Sluiskil CCS: Blue offtake with shared margin capture1 TBA YCA offtake volume ~600kT2
Slide 112: HEGRA project: a competitive green project in a European context
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream YCA’s HEGRA project represents a competitive green project in a European context Overview of HEGRA (Yara Herøya plant) Strategic rationale HEGRA can create a substantial impact: ✓ One of the largest decarbonization opportun
Slide 113: Robust certification schemes to enable transition
Integrated midstream 2 Deep-dives across the value chain Upstream Downstream Robust certification schemes required to enable transition and expected to strengthen YCA’s edge Clear rationale for certification Yara’s certification scheme is based on multi- Benefits for customers and the schemes site m
Slide 114: Growth and strategy
Growth and strategy 1 Ambition and clean ammonia strategy 2 Deep-dives across the value chain 3 Summary perspectives 114
Slide 115: Three-pronged strategy to capture profitable growth opportunities
3 Summary perspectives Three-pronged strategy to capture profitable growth opportunities as the clean ammonia market develops ILLUSTRATIVE ASL Stable EBITDA 2021 Grow with the market for Expand into new applications ASL EBITDA Expand into clean ammonia conventional applications (ASL 2, mid- and down
Slide 116: Integration across the value chain remains an important pillar
3 Summary perspectives Integration across the value chain has clear benefits and will remain an important pillar going forward YCA value chain presence Selected YCA integration benefits Integrated Upstream Midstream Downstream Logic Value creation Integrated business coupled with a certification Sup
Slide 117: Growth investments of USD 2.0–2.3bn plus HEGRA by 2030
3 Summary perspectives Growth investments of USD 2.0 – 2.3bn1 + HEGRA2 to capture leading share in clean ammonia by 2030 Integrated midstream Upstream Downstream Investments in blue and green ammonia Capacity investments to scale platform to Selective investments in targeted end- production capacity
Slide 118: Benchmarking YCA's positioning vs. adjacent industry groups
3 Summary perspectives Benchmarking YCA’s positioning vs. adjacent industry groups and value chains Industrial companies Clean energy companies Shipping Industrial gas Chemical Renewable Hydrogen «Commodity YCA LNG freight suppliers distributors developers solutions shipping» Value chain integration
Slide 119: Financials and financial targets
Financials and financial targets 1 Historical financials 2 Financial targets 119
Slide 120: Financial performance is a consequence of business attractiveness and competitive edges
1 Historical financials Financial performance is normally a consequence of business attractiveness and competitive edges Few businesses are expected to be more attractive than ammonia going forward if expected growth materializes Key competitive edges Asset-backed Access to Optimization Business Glo
Slide 121: Combined financials vs. segment financials
1 Historical financials Combined financials shows somewhat lower results vs. segment financials due to the following factors EBITDA impact Basis of preparation Q1 2022 LTM Segment financials as presented for Yara’s Clean Ammonia segment, reflecting core Yara segment financials activities of YCA toda
Slide 122: YCA's reporting structure is based on 2 reporting segments
1 Historical financials YCA’s reporting structure is based on 2 reporting segments Ammonia Sales and Logistics (ASL) Clean Ammonia Projects and Production (CAPP) 170 EBITDA, USDm EBITDA, USDm 133 122 110 2019 2020 2021 Q1 2022 LTM 2019 2020 2021 Q1 2022 LTM -3 -6 -10 -11 ▪ CAPP segment reflects YCA’
Slide 123: Strong historical financial performance with positive EBITDA momentum
1 Historical financials Strong historical financial performance with positive EBITDA momentum Income statement and selected APMs1 Comments USDm 20192 2020 2021 Q1 2022 LTM ▪ All revenue currently generated in the ASL Revenue and other income 1,248 1,015 2,292 3,009 segment Finished goods sold and co
Slide 124: YCA's EBITDA is impacted by movements in ammonia prices
1 Historical financials YCA’s EBITDA is impacted by movements in ammonia prices Robust business with attractive Fluctuation in ammonia prices and lag-impact on YCA’s EBITDA/t1 earnings even at low ammonia prices, EBITDA per NH3 FOB Black illustrated by the “EBITDA margin tonne (USD) Sea price (USD/t
Slide 125: EBITDA sensitivity to changes in ammonia price and sales volumes
1 Historical financials EBITDA sensitivity to changes in ammonia price and sales volumes Type of sensitivity Scenario Illustrative EBITDA impact Basis Underlying price USD 100/t in NH3 ~USD 12m sensitivity Annual market price (Positive impact) (“Direct price effect”) Price Short-term USD 100/t in NH
Slide 126: CAPP primarily comprised of upstream project and admin costs
1 Historical financials As of today, CAPP is primarily comprised of costs related to upstream projects and admin/HQ Other operating expenses (CAPP) Comments USDm ▪ CAPP segment includes costs related to early- stage upstream projects as well as certain group 11 administration costs ▪ Early phase pro
Slide 127: Limited seasonal volume variance
1 Historical financials Limited seasonal volume variance as EBITDA fluctuations mainly reflect changing ammonia prices Quarterly snapshot 26% 26% 27% 26% 23% 24% 24% 24% Volume (% of full year) 2020 2021 2020 2021 2020 2021 2020 2021 Q1 Q2 Q3 Q4 35% 29% 31% 27% 22% 22% 22% EBITDA1 12% (% of full yea
Slide 128: No net interest bearing debt and working capital above normalized levels
1 Historical financials No net interest bearing debt and working capital significantly above normalized levels Balance sheet Comments USDm 2019 2020 2021 Q1 2022 PPE and right-of-use assets Intangible assets 55 55 55 55 Property, plant and equipment 240 227 221 218 ▪ Fixed assets mainly comprise YCA
Slide 129: Strong cash generation impacted by NWC build-up
1 Historical financials Generally strong cash generation is currently impacted by NWC build-up from high ammonia prices Key cash flow items Comments USDm 2019 2020 2021 Q1 2022 LTM ▪ Operating cash flow pre change in net Income before tax 80 81 88 126 working capital has increased gradually Deprecia
Slide 130: Financials and financial targets
Financials and financial targets 1 Historical financials 2 Financial targets 130
Slide 131: Segment financial targets: ASL (1/2)
2 Financial targets Segment financial targets Ammonia Sales and Logistics (ASL) (1/2) Conventional applications (ASL 1) New applications (ASL 2) Considerably higher driven by YCA’s upstream projects (~2.5mT)1 2 >20% Stable >20% YCA market share in traded ammonia 2021 Mid to long term Mid term Long t
Slide 132: Segment financial targets: ASL (2/2)
2 Financial targets Segment financial targets Ammonia Sales and Logistics (ASL) (2/2) Conventional applications (ASL 1) New applications (ASL 2) >30 Stable Profitability (EBITDA USD/tonne) 2021 Mid to long term Mid term Long term (Up to 2030) (After 2030) For new applications (i.e. excluding the fer
Slide 133: Segment financial targets: CAPP
2 Financial targets Segment financial targets Clean Ammonia Projects and Production (CAPP) Selected upstream projects (to 2030) Ambitions and targets Framework Volume Indic. start of Type Project names in place (kT)1 Type YCA capex production Attractive returns Grey to blue (CCS) North America ✓ ~60
Slide 134: Group financial targets and outlook
2 Financial targets Group financial targets and outlook ▪ Ammonia Sales and Logistics (ASL 1 and 2): YCA expects to invest up to USD 400m in infrastructure related to mid- and downstream until 20301 Capex ▪ Clean Ammonia Projects and Production (CAPP): Current project pipeline with total capex of US
Slide 135: Summary of YCA's historical financials and targets
Summary of YCA’s historical financials and targets 2 reporting segments: ASL has driven robust historical performance while CAPP is currently a cost center that is expected to contribute to future earnings ASL: Performance driven by sales volumes as well as both “direct” and “temporary” earnings eff
Slide 136: Appendix – Market outlook
Appendix – Market outlook 1 Demand side perspectives 2 Supply side perspectives 136
Slide 137: Adoption pace expected to increase rapidly after first vessels in 2024
Shipping fuel Power generation Fertilizer Hydrogen carrier Adoption pace expected to increase rapidly after introduction of the first vessels in 2024 30% of the global fleet expected to be ammonia fuelled by 2050 Ammonia newbuilds and retrofits per year Ammonia fleet development Number of ammonia fu
Slide 138: Ammonia blend-in rate expected to start at ~20%
Shipping fuel Power generation Fertilizer Hydrogen carrier Ammonia blend-in rate expected to start at ~20% Improved infrastructure, tighter regulations and improved economics are expected to gradually drive the blend-in rate upwards to ~70% in 2050 Ammonia blend-in rate Comments Average share of amm
Slide 139: Ammonia is the best zero emission shipping fuel
Shipping fuel Power generation Fertilizer Hydrogen carrier Ammonia is the best “zero emission” shipping fuel Fuel CO2 intensity Engine efficiency CO2 intensity (“well to wake”) Figures in kg CO2/GJ combustion, 2035E Combustion engines, 2035E Figures in kg CO2/GJ propulsion, 2035E 93.8 93.8 90% 159.8
Slide 140: Overview of fuel cost parity between MGO and blue ammonia
Shipping fuel Power generation Fertilizer Hydrogen carrier Overview of fuel cost parity between MGO and blue ammonia Historical average 2020-2021 Current market prices Future assumptions Blue MGO vs. Blue MGO vs. Blue MGO vs. CO2 tax MGO Blue MGO Blue MGO Blue (USD/t) (USD/GJ) ammonia (USD/GJ) ammon
Slide 141: Hydrogen carrier demand outlook methodology
Shipping fuel Power generation Fertilizer Hydrogen carrier Hydrogen carrier demand outlook methodology % of hydrogen demand Ammonia as a hydrogen Hydrogen demand (mT) % traded as ammonia (2050E) from traded imports (2050E) carrier demand (mT) Pipeline EU Liquefied hydrogen Japan 50-60% Ammonia 36 EU
Slide 142: Appendix – market outlook
Appendix – market outlook 1 Demand side perspectives 2 Supply side perspectives 142
Slide 143: Grey and blue ammonia production costs
Grey and blue ammonia production costs Long-term production cost (LCOA) USD/t in 2021 real terms Key assumptions ▪ Traditional grey production using steam Conventional production Blue production with CCS methane reforming (SMR) based on natural gas ▪ Long-term grey marginal cost based on North Ameri
Slide 144: Green ammonia production cost
Green ammonia production cost Current production cost (LCOA) of new-build with FID in 2021, USD/t in 2021 real terms Key assumptions Green hydrogen Green ammonia ▪ Green production based on electrolysis with renewable energy sources 1,055 USD/t ▪ Production in Middle East or similar country Plant op
Slide 145: Overview of key assumptions for blue and green ammonia cost
Overview of key assumptions for blue and green ammonia cost Ammonia production cost LCOA USD/t NH3 Blue ammonia Green ammonia (average) 1,055 895 742 647 580 475 478 480 480 479 2021E 2025E 2030E 2035E 2040E CO2 price (global) 0 USD/ton CO2 25 USD/ton CO2 50 USD/ton CO2 62.5 USD/ton CO2 75 USD/ton C
Slide 146: Hydrogen production costs excluding ammonia synthesis
Hydrogen production costs excluding ammonia synthesis Hydrogen production cost (LCOH) USD/kg 6 5 4 3 2 Global blue base case 1 Global grey base case 0 2020A 2025E 2030E 2035E 2040E 2045E 2050E Green ammonia 4.0 3.2 2.7 2.4 2.2 2.0 outlook range Global grey 1.1 1.3 1.4 1.5 1.7 1.8 base case Global bl
Slide 147: The ammonia production process in detail
The ammonia production process in detail 1 CO2 Fossil fuel “Conventional” applications Renewable energy source ~80% 80% Steam methane reforming (SMR) Fertilizers Without carbon capture and storage (CCS) Natural gas reacts with steam in presence of a H2 Natural gas catalyst yielding hydrogen 10% and
Slide 148: Appendix – financials and financial targets
Appendix – financials and financial targets 148
Slide 149: Income statement
Income statement USDm 2019 2020 2021 Q1 2022 LTM Revenue from contracts with customers 1,247 1,014 2,291 3,008 Other income 0 2 1 1 Revenue and other income 1,248 1,015 2,292 3,009 Finished goods sold and consumables used (1,133) (884) (2,149) (2,828) Payroll and related costs (5) (6) (6) (6) Deprec
Slide 150: Illustrative model for new blue asset in North America
Illustrative model for new blue asset in North America Selected company assumptions Illustrative model: Calculating EBITDA run-rate basis (USDm) – 100% basis1 Volume ~1,100kT (100%) Revenue Volume (mT) x( Grey NH3 price (USD/t) + Blue premium (USD/t) ) - Variable costs Volume (mT) x( Gas price (USD/