CF Industries Holdings, Inc. (CF) Earnings Call Transcript & Summary

Well, good morning, everyone. My name is P.J. Juvekar, and it's great to have our ag companies here at the Industrials Conference. This is the first time we are hosting ag companies here. We always hosted them in New York at our Chemicals Conference. But this is a great setting, better weather. So I will welcome CF Industries. And from there, we have COO, Bert Frost; and CFO, Chris Bohn. Welcome.

Thank you.

Thank you.

So it's been very volatile energy market. Natural gas prices have been going up and down. Recently, they have come down significantly in Europe. Can you just talk about, I guess, the relative advantage that U.S. has still continuing, but given the volatility, has the cost curve flattened. Have you seen any European capacity start up?

So I'll go first because Chris and I work together for our gas procurement. We have a gas committee. And obviously, we follow this every day, every hour because it's a significant portion of our input costs to our production. And what you're seeing today in the United States is amazing that you are today trading, I think, at $2.10, $2.12, but in the interior in Oklahoma, for example, where we have 2 plants, it's below $2. And so when you look at the structural situation of gas globally, let's say, you're a Middle East producer and you have an internal transfer price of $4, which is what some of the estimates are. But if not $4 because you have to get that product to Iowa or Illinois. And so the cost to put that on a vessel today is $40, let's say. And then you go into NOLA, discharge, you have a cost to put on a barge and ship it up and then cost to discharge and then store or sell to a retailer. And so that cost represented in gas of $40, $10, $20, let's say, is $60 to $80. We'll divide it by 26 MMBtus or 25 MMBtus, that's at least $3 of gas value to get to where we are. So if we're in the middle of the Midwest, paying $2 per MMBtu, we have a structural advantage that's significant to anywhere in the world. But gas has collapsed from where -- probably if we would have been here a year ago, we would have been talking about $50 to $80 MMBtu gas in Europe. That is today $15 to $20. So if we're at $2 and they are at $15 to $20, this is the competitive advantage that we have producing and moving the majority of our tons in North America. That gas spread is -- the arbitrage of either products or gas has been as low as 0 and as high as, as I said last year, $80. So we believe that moving forward in the absence of Russian supplied gas, which will not be in the near-term future, just limits on movement due to the pipelines, you're going to see these type of probably expansions of the average. And I do think, going forward, as you're competing for LNG as the Chinese economy ramps up, and the tons that are committed to Asia, which were diverted to Europe start moving to Asia, you'll probably see that either hold or even expand as we go into winter '24 -- '23,'24. And so we're positive of our position and where we have -- how we can extract that value for the company.

Yes. I think the only thing I would add is that with China opening and also even some discussions of Australia with their LNG putting price caps on because of what the domestic consumer is paying there, is just going to tighten the overall global LNG market, which really you're not seeing the new builds until the end of '25, '26. So as you begin to see more demand consumption, as Bert said, our expectation is that, that spread may widen from where it is today. And again, that gives us a competitive advantage with the North American natural gas. I think the other thing is, as you look at the European TTF even for this summer, it's pretty much flat for the remaining part of the year around that $15 to $20 that Bert mentioned. And what it's kind of saying is there's no risk premium of the reset that will happen in fall where you can only fill storage so high and you get it to 100%, you can't put any more in it. And then it's what happens next winter. So there's really no risk premium in any type of infrastructure or gas movement concern in Europe right now that I think is slightly unrealistic going forward.

Great. So I know we have some industrial investors as well. So for them, CF is the largest producer of nitrogen products, urea -- ammonia, urea, UAN. So can you talk about what was the fall application by growers this past fall? I know it was a long application season here with the weather. And then what do you expect this coming spring in terms of application? And then I asked you on the call last week, how much urea does U.S. need to import in between now and the planting season?

So when you look at fall applications, it's a nitrogen phosphate and potash application period. But on nitrogen, it's principally an ammonia application. And because we had the historic terminals that we leverage so we're able to pipe product into the Midwest, and we have an expanded terminal system that's unique to CF, and then we can rail in from our Medicine Hat, Alberta plant into one of those terminals and also distribute in the pipeline. That gives us the ability to know kind of what -- how much has gone down and in what cadence and where that activity has taken place. So fall for us was a very good fall but not a record fall. Actually, 2021 was bigger. And so we're anticipating that several hundred thousand tons of ammonia, which represents 0.5 million to 1 million tons of additional urea or UAN to transition to spring. That, in addition to going from 88 million acres of corn last year to 92 million, 93 million acres of corn and we've had the same dynamic taking place in wheat, adding probably 5 million additional acres of wheat is an increase in overall consumption. Then you layer in the price of corn at $6 to $7 [ weight at ], let's say, $7.50 to $8.50. It's a very attractive economic opportunity for a farmer anywhere in the Midwest. And the difference between last year and this year is soil moisture. So last year, we entered into a drought. We went through a drought. And I could tell you on our farm, a lot of that corn that was planted on dry land looked like weeds. We're not there today. And then you're going to fertilize pastures as well, which didn't really happen again because of the drought. So we're structurally positive demand, consumption and the transition of fall to spring additional demand moving. So then it goes to how many imports are needed, and it's several million tons and we are tracking vessels for February arrivals and March arrivals into NOLA and then have to move up into the Midwest. And I think there will be enough to satisfy demand. And -- but you're seeing pricing starting to move in anticipation of those -- that product not being needed in New Orleans, but then being needed in Iowa and Illinois and North Dakota wherever you're going to plant crops. So that's the situation we're in. We're probably here at the end of February. Texas has already started to move, and we're probably weeks away from peak demand.

So when you look at the retailers, how much inventory do they have? Do they have a bare minimum? And are they building inventories? How much inventory do farmers have? Can you talk about sort of the inventory through the supply chain, let's say, for urea?

Well, one of the main questions we get is, why has urea fallen so much? Why has pricing fall in? There are several reasons for that additional supply coming on in the market. But as this purchasing delay and deferral is probably a main culprit and it's global. And there are countries that are unable to purchase because of the expensive price that urea was $800 in March, April, May of last year, falling to $600, but still very expensive in some local currencies. Today or going through today, the retail and farmer section has really delayed those purchases in North America. So a lot of inventory has -- sat with the producer or the importer. And we believe there is -- if you were to bell curve around the average historical movement, there's going to be a more pronounced curve, where a lot of product has to be purchased and moved logistically. And when you throw in the railroad issues we've had over the years, I don't want to bash the railroads too much, but like to every day, is how are we going to move these tons in an economical manner that meets those needs. So we believe inventory is lower than historical at the retail level and especially at the farm level.

And I think the other thing on that, PJ, is generally our system, the network that Bert described you earlier, with our distribution network and also being able to move on all 5 modes of transportation, it's generally in the past when we've seen times where there's either a condensed application season or some river issues or rail issues that we're able to still get the product to where it needs to be. And that generally means a higher premium as a result of that. That's a good point.

So urea has fallen down to like 300, I saw on print for 1 day, even below that, but I guess it has bounced back. But you mentioned Tier 1 countries have stopped buying and -- or importing and then is kind of a buyer strike that happened because prices were falling, nobody wants to buy. How do you think that situation plays out as we approach spring?

We are commodity and commodities -- some commodities can be deferred, some commodities can be delayed and some cannot. And food is one of those that can't be. We're going to eat and -- or livestock are going to eat and that product has to be in the system on a ratable basis. And I think for fertilizer, that just is the -- you anticipate those moves to satisfy the need of food. And we have seen that deferral and delayed purchasing but it's only for a period until you have to plan and there are optimal times globally and farmers understand that. And so I don't think there's more delay that can take place without suffering of yield. And again, all of us are economic beams, and those who are farmers, are looking at their economic opportunity and opportunity cost. And I believe that they will pursue especially in this market with the prices for their products that they produce are so positive. But if you look where urea pricing is today, it's much more affordable than what Bert described Tier 2 and 3 back in the fall. So you should see some entry back in that as well and especially given what Bert mentioned $6 to $7 corn.

So affordability has improved a lot?

Significantly.

Yes.

Now let's talk about China, which has been a traditional exporter of urea. They reduced their exports last year, could they go back up this year? And what's your expectation for their exports?

And I think that's the question from the investor side of what other risks are out there and how do we quantify or look at that? And that's a logical question. China today, we estimate has probably 76 million tons of production capacity. They're the largest producer, the largest consumer and had been a very big export participant in previous years. But when you take that 76 million of static capacity had taken off a lot of capacity and multiply it by an average operating rate, you get to 55 million to 57 million tons of available product, and that's kind of where they've been operating. Their internal consumption is 50 million to 52 million tons. And so that's how -- so when you do the math, that's how we get to our expected export volume because there some of these plants that were built for export of 2.5 million to 3.5 million tons, and that's a movable number. The Chinese government did impose export restrictions, and I think that was a very good move, one an inflationary control move. When the world went to $800, they were staying at $400. So it kept fertilizer very available to the internal -- to the Chinese farmer. But today, where the world prices and Egypt just got priced today, let's say, $380 to $400, the internal price in China is $400. So it's an economic disincentive when your internal market is paying more than the external market and they're approaching their spring season just like we are, and we'll need those tons. So probably more to analyze and looking at like the June, July, do they maintain the governmental restrictions? I believe they will. And then how many tons come out. We're comfortable in that range.

Isn't it also true that they make most of their urea from coal and anthracite coal, which is very polluting and they're trying to cut back on pollution. So with that in mind, do you see in the future that they'll export less and less?

That would be the -- looking at it logically and environmentally as well as there is no benefit to produce -- to import an energy good, produce an energy good and export it at 0 value, but you have a negative value with pollution and water consumption and they're water short. So that would be the calculus I would make as a politician or even an enterprise that, that is not a benefit to the country. But they have still done that. So we'll have to wait and see. They actually do have 20% to 25% of their urea production is gas. The rest is anthracite and thermal.

Right. Now one question before I move to your green ammonia and blue ammonia projects, is on precision ag. Five years ago, people really started about precision ag and how that is going to cut down on fertilizer usage because farmers are going to exactly map what they need, where they need it. Have you seen an impact of precision ag on fertilizer consumption in case -- in your case, in urea?

So precision ag, and it's a very popular question -- it's a very popular question, but you have to look at it in the totality of what is precision ag. And so when you're looking at -- again, you start with soil moisture profile, when is -- and temperature of the soil, when is the optimal time to plant, then what is the seed selection, what is the crop I'm going to plan? And what is the population density that I want and then what are the nutrients that I need to make that crop as profitable as possible without waste? And it's like you have a teenage child in your home. Are you going to deny them food because you think, well, I need to control what they're eating or are you going to help them to grow to mature into an adult? Plants, the same way. It's got a growth profile and it needs nutrients at certain times to make that happen to the yield that you expect to receive. And so globally, I lived in Brazil and Argentina for 11 years and not the advent of precision ag, but I still -- we're still very active in those markets. And this has been a global phenomenon and again, Tier 1 agriculture countries of optimizing these goods. But in that time, you've seen Brazil grow from -- when I left in '08 to today, 26 million tons of fertilizer to 44 million tons of fertilizer, and guess what's happened to yields? Explosion of soybean and second crop corn. So the world is looking at these things, and we're satisfying food demand in a very economic way. So when we look at these things, we see as a positive. Precision ag is a very good thing. And then you roll in what I didn't talk about was equipment and applications and timing, all could be again reduce waste, create a good that's valued at a cost that's lower. And then you throw in biologicals and some of the other things. That's still kind of out there. It's not as proven as some of the publications what have you believe, but people are trying to make positive steps, but you still need nitrogen, phosphate and potash and good seed technology as the starting point.

Now let's move on to a very popular topic, which is blue and green ammonia. Some of the investors may be new, so can you take a minute and explain your blue ammonia projects at Donaldsonville and Yazoo City and then green ammonia at Donaldsonville?

So we have quite a few projects going on related to clean energy, the first being a green ammonia plant at Donaldsonville, Louisiana. So Donaldsonville is our largest plant, produces about 45% of our gross ammonia. So at this particular plant, we're putting in electrolyzers and we will produce starting towards the end of this year, beginning of next year, 20,000 tons of green ammonia. Additionally, at the Donaldsonville facility, we have worked on a project with a partner, Exxon Mobil in creating blue ammonia. And if you think of blue ammonia, blue ammonia is taking a conventional ammonia plant capturing the CO2 and then dehydrating it, compressing it, putting it, transporting it and sequestering it down forever. And that particular project, we partnered with Exxon on because of their ability to, one, get a Class VI permit for the sequestration of it, but also the transport partners that they have and themselves included to transport that CO2. And if you think of an ammonia plant, ammonia plant is already capturing CO2. So there's really not a large investment from our side in order to capture the CO2 that we're sequestering. And with the Inflation Reduction Act, with the 45Q enhancement, we've seen that go on a sequestered ton of CO2 from $50 to $85 per ton. So that project, given that we have the asset base already in place, partnered with someone else really on the capital needed to sequester it allows us to have a significant return there. And we'll start out sequestering about 2 million tons of CO2 annually, and that will begin somewhere in the 2025 range. And then additionally, taking that same technology and sort of partnership structures we're looking throughout the rest of our network, a lot of our plants are net long CO2. And as a result of that, that's providing some opportunities with the 45Q enhancement that we have. So those are the 2 primary projects going on, both of which we're receiving quite a bit of interest from a demand side. And we recently made an announcement with JERA, who's a Japanese largest utility company in which they are looking to do a RFP for up to 500,000 tons of blue ammonia as they're testing using ammonia as a fuel source to lower the carbon intensity of their coal plants in Asia.

Would JERA offtake in the U.S. and they fire that blue ammonia with coal or some other fuel to make lower carbon electricity?

Yes, it would be co-fired right now, they're testing on their units that they're doing is with 20% ammonia and then the remaining amount of that being coal to see what is the carbon intensity reduction by doing that, what are the boilers required, CapEx required. And then the thought is that would expand out. The testing is beginning this year, and I think it will run through next year. But these are areas that why we get excited. Bert's talked a lot about the agricultural and the increased kind of growing demand of nitrogen in that. This is complete incremental demand that is formulating first in Asia, but what we're starting to see more is in Europe, given some of the geopolitical events and Russian energy supply is starting to look at ammonia as a source of fuel as well. So a lot more inquiries from that particular area. And a little different. There's a lot of announcements about new plants coming on. But what's different this go around versus last time, call it, in 2012, is a lot of the partnering here is with end consumers or other companies like a Mitsui, JERA, we've made the announcement that we're evaluating some things. So I think it's really just solidifying the strategy we put in place almost 3 years ago. With carbon today in Europe exceeding EUR 100 per tonne, and the forward curve estimated for that cost, incorporating a low or 0 carbon ammonia is exciting for what that can mean for emissions.

So I'm just saying taking blue ammonia here, refrigerating it, transporting it to Japan, how does that compete in terms of price with LNG or any other alternative materials?

Yes. From an LNG standpoint, given just on transport alone, it's going to be more expensive to bring low carbon ammonia than LNG from Australia to Japan or even from Russia because Japan is still getting LNG from Russia. I think what they're looking at is a longer-term portfolio management of their energy. If you look at Japan and many other Asian countries, they're trying to diversify that portfolio away from oil or having oil be a part of it, having LNG be a part of it and having coal and ammonia be a part of it as well.

I always get questions from investors about returns on these blue and green projects. And I think Tony Will, your CEO had said that even before 45Q, these projects were profitable. So now with the new rules and IRA, they're more profitable. What kind of returns should investors expect?

Yes. So just to set the context why they're more profitable for CF than other companies. As I said earlier, we already captured pneumonia production about 2/3 of our CO2. And as a result of that, that capital, which is several hundreds of millions of dollars already exist in our ammonia plant. So we don't have to make that investment. The investment we have to make is just dehydrating it and compressing it, which at Donaldsonville for 2 million tons annually, that's about a $200 million investment. And then we partnered where we don't have the expertise or the core competency or the CapEx would be significant, and that's where we partnered with Exxon. So I think as we look at these projects, the reason why they're so profitable is we're being very disciplined in where we play in this. We understand our asset base, we understand our competencies and where we need to extend beyond that, we'll partner with others who have that infrastructure in place. So it's already in place and their returns are good as well. So the returns that we're seeing even prior to the enhancement here were significant on the 45Q. But now moving it, if you think we had a positive return at $50 per metric ton, and now it's $85, you can only imagine what that did to the return profile.

But what needs to happen for U.S. farmers to start using more either blue or green fertilizers, ammonia, urea?

We're working on that today.

Is that -- does the government have to mandate something? Or do they have to incentivize something?

So it's an interesting proposition. And today, when we talk to farmers and retailers, they're like, "Great, we would love to have your blue and green products, but we're not going to pay a dime for it more than conventional." And I understand that, just like you choose your gas station and what gas you put in your car, it's all these are economic decisions. But what we're working on is the longer term, as Chris mentioned, with our blue and green initiatives, there are multiple parallel paths that we're pursuing. So Chris just went over the economic analysis for why to invest. When we look at what we have set in motion with -- on the demand side of that equation with not only the Japanese and the South Koreans now working with European groups, parallel to that will be for fertilizer and industrial uses for different scope emissions. We're already having on the industrial side that conversation on how we can help our industrial customers. This is about 20% to 25% of our portfolio improve their scope emissions. But on the agricultural side, whether it's corn for ethanol or corn for feed, we believe with not only 0 carbon or low-carbon ammonia or UAN, we're able to significantly improve the output. And then when -- I think when CO2 on the field becomes something that's desirable and then you look at the California emissions, their regulations for low-carbon fuels, there are several paths we can pursue that will be profitable and will be beneficial, whether it's an outright CO2 beneficial or economic beneficial or both.

And then you look at your Verdigris plant or Medicine Hat plant or the U.K. plant, what needs to happen to get these projects in those plants?

Yes. I think the reason why we chose Donaldsonville first is, obviously, in the Gulf Coast, very well understanding of the geological pours and what -- where to put the CO2 there. As we look to expand, there's a couple of different things. Medicine Hat provides an opportunity because a lot of the oil and gas exploration up there, as does Yazoo City. So those are probably the next 2 projects. Looking in Oklahoma, we're evaluating that with other groups, but that's probably below those other 2.

And how about the U.K.? Is there appetite there?

I mean the U.K., if you look at really globally what's happened here, the U.K., Canada, the rest of Europe has sort of used the stick mentality. As Bert said, we're going to increase carbon cost until you either don't produce anymore or you come up with something technologically that can offset that. Where the U.S. use the different approach, and it was really the carried approach. And you can see where all the announcements for blue ammonia projects and really clean energy projects are onshoring to the U.S. because of that [ carrot ] and the incentives that are in place there. So until you start to see some of that activity, I think, in those particular geographic regions, you're probably going to stay closer to North America, which is an advantage for us because that's where primarily our asset base is. I think you're hearing both the EU and Canada begin to understand that maybe a [ carrot ] works better with the private sector to really get them to move fast than sort of just taxing them to that.

Great. And so what do you think is your total CapEx spending for all of your blue and green projects on the Gulf Coast?

Yes. Well, again, going just back to how we're walking into these is in a very disciplined approach, meaning we're evaluating where we have the strengths and then where we need those strengths we'll partner. So you've seen that with JERA, Mitsui and Exxon, and there'll be others that I'm certain we'll be announcing as time goes on here. So the actual CapEx is pretty modest that we're putting in this. Like I said, for blue, we already captured the CO2 at all our sites, and we'll partner with the transport experts for that. The 45Q allows us to do that. With green, we're learning a lot about what electrolyzers can do. But really for green to take off, what you need is basically efficiency in the electrolyzers, you need renewable infrastructure to expand here in the U.S. and then you need probably even more incentives whether that be from the government or other areas from that respect.

So total CapEx, do you think it's...

Probably around -- this year, we're saying $500 million to $550 million. Some of that will grow if we get to the FID on the Mitsui CF blue plant, where you would see that our interest in that is about 50%. So if a plant is $2 billion, $2.5 billion, you'd start to see that sort of in the '25 through 2027 time frame.

Okay. And then just sticking to financials. What leverage, Chris, are you comfortable with? And can you just sort of discuss your use of cash flow? You've been buying back a lot of stock at these levels?

Yes. So we had set out a target a couple of years ago that we believe $3 billion of gross debt was really where we wanted to operate. Given that we're a cyclical company, we felt that, that was good for all seasons no matter where we were in the cycle. So that still remains our goal. We're at $3 billion today. So we're not looking to take out any more debt right now. I think what that allows us to do is with the substantial free cash flow we're generating right now is to, one, invest in these projects that we've discussed over the last 20 minutes here but additionally, is to return a substantial amount to shareholders. So if you look back to 2022, we returned just under $1.7 billion worth of cash back to shareholders. So about 60% of our free cash flow, we returned directly back to shareholders. So we continue to see that as being 1 of the strong legs as to our capital allocation philosophy over and above having these high-return projects that we're implementing right now.

And then if your Mitsui project gets FID and you start spending more there, are you willing to take on more debt to fund these...

Yes. I personally do not believe we'll need to if you look at where we see our market going with a lot of the things that Bert talked about, but then incremental demand coming in and how we're partnering with some of the larger CapEx projects. We think that, that will all be able to be provided out of cash on hand, along with continuing pretty substantial share repurchases and dividends to shareholders.

One question we're asking to all the companies at this conference is what are your top 2, 3 either innovations, mega trends happening outside of your company or structural changes that you think will affect your industry for next 5 years? I would think it's blue and green ammonia.

I would say it's blue and green ammonia. And I think it goes to the demand centers we talked about here with co-combustion and using it as ammonia as an energy source. But I think then the next phase of that is really the tests that are going on in marine fuel for low-carbon ammonia to meet the IMO standards. And then additionally, Bert talked about low-carbon ethanol, that being looked at with sustainable aviation fuel. So there's almost a nice dovetail from the constant CAGR we get on agricultural and the industrial book that we have today of the 1.5% to 2%, but then adding in this incremental demand. And that's why some people say, okay, there's a lot of supply projects that are announced. We actually are supportive of that because in order to develop these new demand centers, you do need global supply and that's why we're moving forward with our feed study on our project in Louisiana with Mitsui.

I think Chris touched on the structurals for CF and our industry. In terms of megatrends, it's demographics. When I look at China, India, and the United States and Europe and demographically where in terms of birth rates and population aging and then needs as that curve changes with age, it's going to be an interesting next 10 years. And then you layer in the onshoring that we believe is going to take place industrially in the United States. It's an exciting time to be in the U.S. producing -- accessing this gas, adding these assets and supplying different resources to the world, whether that's food or fuel that we can do both and do them profitably.

Great. And one last question, Chris, you mentioned marine fuels. There's another company that is working on a big project in Saudi Arabia, potentially using green ammonia for marine fuels. Are you having discussions with marine companies about your ammonia?

Yes. So we are. We belong to the Maersk Moller Mc-Kinney foundation where we're providing some technical expertise primarily on the safety aspects of ammonia and working with our engineering teams on that. But additionally, you have primarily MAN and Wartsila looking at ammonia technology and engines for marine fuel and any assistance we can provide them, we're also doing. So I said, there's some pretty unique demand centers that may not be in this particular decade, but we'll be building as we go forward.

Great. Well, that's a logical point to stop here, and we will see if we have any questions from the audience. Let me repeat that question for people on the webcast. The question is on Russia and what is happening with their exports? And is that a benefit to you?

Russia is a substantial player in all of fertilizer and agriculture. They are commodity-driven economy. And so when the invasion took place, there was a -- not necessarily a transformation, but a transition of logistics, who would and wouldn't buy those products and where they couldn't be consumed. So Russia is today or has been a 2 million to 3 million tons, I think -- I don't know of the Togliatti pipeline, ammonia exporter that is not operating. So that's a pipeline that goes from the interior of Russia to the Black Sea, and a lot of that ammonia was supplied to the Mediterranean to the phosphate producers in Tunisia and Morocco as well as exported around the world, also out of the Baltics coming into Europe. So ammonia, urea, UAN and ammonium nitrate, the principal nitrogen products have been constrained and moved to different markets. So Europe used to be a big consumer that's now going to the United States, Brazil and other ancillary countries. For phosphate and potash, you can talk to those folks. But Belarusian potash has been constrained through sanctions. Most of the Russian product is making it out. Sanctions today, they're there, but they're not as strong as -- they're not strong enough to limit the movement of those products. And agriculturally, for wheat, sunflower, oils, they're still a major exporter. And then obviously, Ukraine is constrained today and will be.

So a question there.

Yes, a quick question on just the comment you made about farmers being unwilling to pay for blue or green fertilizer. Why would the cost be higher for the farmer? Because in a way, you can just transfer if you want to, the IRA subsidies over to the farmer, still build the plant, expand capacity, pick up market share. You just won't make as much money, but you'll make a little bit more, right? So is there a thought process here, which says we'll do the blue and green projects for greater market share, greater density, et cetera, and price to the farmer at the same level because the IRA subsidy would allow you to do that if you wanted to.

I'll take it first. Okay. It depends on your point of view on how you approach that question. The market is the market, and you cannot -- CF Industries nor any other producer can say, "I'm going to charge the farmer more." It's a commodity. Our good is just like any other producer's good, and the market will determine that price and supply and demand will determine that. So if there is greater demand in one segment for that blue and green ammonia, it will go to that segment. We fully intend to support our farmer friends globally because we're a global supplier, and we participate in all the major markets. I think last year, we exported to 20 plus different countries, whether that be Europe, Australia, Argentina, Brazil, Mexico, wherever, and those prices are determined locally. The thing -- the one aspect that I really appreciate about CF Industries and I've said this internally and externally, decarbonization is good for all seasons. We are pursuing a decarbonized position in the company that positions us as a long-term producer and participant in a cleaner product. Where that goes, that will be determined by the market. And I'd also say the investment incentives that we're getting are allowing us to continue to expand supply. And as I said, we're supportive of all supply being built because we think the demand for clean ammonia and low-carbon ammonia is going to be even greater going forward. So anything we can do to foster that, that's what we're looking to do and some of those incentives provide the benefits that we need in order to make those projects FID positive.

I think the question was a good one, that people are struggling. How much of the benefit from IRA, not just you but other companies, the producers who will keep versus how much they will give to their customers. There's a company, Plug Power, they basically are planning to give away 50% of the benefit to their customers, they come out and said that. So just -- I guess people are still wondering. It's not -- nobody knows exactly how and where this is going to end up, how much of the benefit people will -- companies will keep versus how much of that will go to customers. Do you have any early thoughts on that?

Sure. We're not there yet. And so if you asked me 2 years ago, 3 years ago when we began this journey, that whole spectrum was unknown. Would there be demand for this product? We're being market leaders of going out and investing investor capital in new assets and new ideas that benefit everybody. So there is one benefit of social. There's one benefit environmental and then there's benefit economic that will be derived, whether that's a farmer or an industrial user. We're going to make these products and they're going to be successful. We just don't know where they're going to be successful.

Right. Great. With that, I want to thank both of you for your time. Excellent presentation. Thank you very much.

Thank you, P.J.

Thanks.