Pure-play developer ATOME Energy expects to reach FID on its Villeta green ammonia and fertiliser project in Paraguay later this after agreeing the heads of terms for a major long-term offtake deal with fertiliser group Yara International.

Under the terms—which are expected to lead to a definitive contract before the end of the year and represent the world’s largest green fertiliser deal—Yara will buy the 145MW Villeta project’s entire 264,000t/yr output of green calcium ammonium nitrate (CAN), a fertiliser product.

“The entry into this strategic relationship with global crop nutrition leader Yara is a significant milestone for ATOME on the path to realise our flagship Villeta Project, which will be one of the largest renewable fertiliser production facilities in the Western Hemisphere,” said Olivier Mussat, CEO of ATOME, which list in London via an IPO in 2021.

“Proving significant off-taker interest for our renewable product gives a clear path to the finalisation of funding, FID and the commencement of work onsite at Villeta” Mussat, Atome

“Proving significant offtaker interest for our renewable product gives a clear path to the finalisation of funding, FID and the commencement of work onsite at Villeta,” he added.

Villeta’s first phase, which is sited on the River Paraguay in a tax-free industrial zone 35km from the capital city Asuncion, is expected to cost about $345m, according to analysts.

Funding will be a mix of debt and equity. The debt portion is covered  nearly three times over by “solid expressions of interest”, according to ATOME. In terms of equity financing, the company is in “substantive and encouraging discussions with international players. Among ATOME’s strategic investors is US services company Baker Hughes, which bought a 6.6% stake in the firm last year.

The agreement with Yara provides the confidence for ATOME to accelerate the development of its project pipeline, including the 300MW Yguazu project in Paraguay and the 120MW Costa Rica projects, Mussat said.

ATOME did not reveal details of the proposed pricing or contract duration set out under the terms of the deal with Yara. However, it said the contract will include a “price protection mechanism” for ATOME, based on current market prices and a “premium upside sharing formula”. This implies that prices paid by Yara over the term of the contract can fluctuate in line with the wider spot market for CAN and the green premium buyers are willing to pay. 

CAN do strategy

The deal with Yara justifies a change of strategy by ATOME, which had originally positioned Villeta as a pure green ammonia supplier to the agriculture sector.  The company decided to expand the scope of phase one of Villeta beyond green ammonia to CAN production after talking to potential offtakers.

ATOMEs engagement with the agriculture and fertiliser sectors was boosted by the hiring of Terje Bakken, former head of supply and trade at Yara and head of sales and marketing at Eurochem—both companies that are among the world’s largest fertiliser producers.

ATOME concluded that demand for CAN would be higher, and that it would command a clearer green premium in the market, Mussat told Hydrogen Economist in a recent interview.

Yara, which is 43% owned by the Norwegian government, will aim the CAN from Villeta primarily at the fast-growing Latin American fertiliser markets.

“The fertilisers from Villeta will become part of a new portfolio called Yara Climate Choice, including fertilisers based upon renewable energy and CCS. The project's in-land location could open logistical advantages for some of our growing markets in Mercosur,” said Chrystel Monthean, EVP Americas at Yara.

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Author: Stuart Penson