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Perspectives: Low carbon solutions for agriculture and industry
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Ahmed El-Hoshy, CEO of Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, joins Zoë Knight, HSBC’s Global Head of Sustainability Research and Integration, to share insights on low carbon solutions for agriculture, including the huge potential for ammonia in the energy transition.
Watch or listen to the podcast to find out more.
This episode was recorded on the sidelines of the HSBC Gulf Cooperation Council (GCC) Exchanges Conference in London on 18 June 2025.
Read more about the GCC conference here https://www.business.hsbc.com/en-gb/campaigns/hsbc-gulf-cooperation-council-conference-gcc
Disclaimer: Views of external guest speakers do not represent those of HSBC.
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Transcript
Introduction to HSBC Global Viewpoint Podcast
00:00:01
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:13
Speaker
Make sure you're subscribed to stay up to date with new episodes. Thanks for listening, and now onto today's show.
Meet Zoe Knight and Ahmed Al-Hoshi
00:00:22
Speaker
Thank you for joining this episode of HSBC's Perspective Series. I'm Zoe Knight and I'm the Global Head of Sustainability Research at HSBC Global Investment Research.
00:00:34
Speaker
And I'm joined today by Ahmed Al-Hoshi, CEO of Fertiglobe. Fertiglobe is the world's largest seaborne exporter of urea and ammonia combined, the largest nitrogen fertilizer producer in the Middle East and North Africa, and ADNOX low-carbon ammonia platform.
Significance of GCC Conference and Fertiglobe's Listing
00:00:52
Speaker
We're recording this on the sidelines of the GCC conference in London, and we're going to discuss low-carbon solutions for the agriculture and industrial sectors. So first off, Ahmed, thank you for joining us. yeah Thanks for having me, Zoe.
00:01:06
Speaker
Why are you here at the GCC conference? Why is it so good for you to join? Yeah, so this isn't my first conference here. Fertiglobe has been listed since 2021 on the Abu Dhabi Stock Exchange. We found this conference to be you know a great one to be at to get the right investors. It gets a lot of attention from the very well-informed investing community.
00:01:25
Speaker
And it has a lot of our peers. I think it has companies from you you know the seven GCC exchanges all in under one roof, a good opportunity to exchange ideas at lunch or dinners and everything like that.
00:01:37
Speaker
So it's one of the ones that we try not to miss.
Overview of Fertiglobe's Grow 2030 Strategy
00:01:39
Speaker
So tell us a little bit more about Fertiglobe and the 2030 Grow strategy and how that came about. Yeah, so Fertiglobe, as you said, is a large seaborne exporter of ammonia and urea.
00:01:51
Speaker
What the Grow 2030 strategy is basically something that we announced to the capital markets last month in our first investor day in in our new form. And when I say our new form is that Fertiglobe started as a joint venture between a company called OCI, which I used to be at, which is a Dutch fertilizer company and chemicals company.
00:02:12
Speaker
and ADNOC, created a large, ah merged kind of the North African assets of OCI, the Abu Dhabi assets of ADNOC to create this large platform. In October 2024, OCI sold its stake in that joint venture to ADNOC, taking ADNOC stake from 36% up to 86%, with the balance 14% listed on the um with the balance fourteen percent listed on the adx What we promised to do for the market, and I actually ended up resigning from OCI to join ADNOC and Vertigo full-time at that point, we ended up um you know confirming the market is that we're going to give a refresh strategy update to to the market in May of this year.
00:02:51
Speaker
which we which we did.
Four Strategic Pillars of Fertiglobe
00:02:53
Speaker
And um really the key the key message there was how are we going to grow our business from you know about a $630 million EBITDA last year to you know north of a billion dollars by 2030. So kind of a five to six year period, um you know built on four strategic pillars enabled by this new AdNoc ownership.
00:03:13
Speaker
ah The four strategic pillars are one, manufacturing and operating excellence. So you know really focus on costs, taking advantage of the fact that we have a very young asset base that has significant upside in terms of asset utilization and energy efficiency is bringing down you know ghg per GHG emissions per ton or natural gas consumption per ton.
00:03:38
Speaker
That alone is a huge part that's a lot of self-help work to add something like $165, $175 million dollars of EBITDA. The second pillar is customer proximity, which really means getting closer to that end user, disintermediating traders and intermediaries, ah being able to generate a higher netback or higher return for our product.
00:04:00
Speaker
And that's really what Vertigo is about. We've been really taking market share away from traders over the last few years. And we announced actually the day before our Capital Markets Day that we've expanded downstream into Australia with a downstream acquisition, a key premium market for us, um and a high ah ROIC investment even on a cash-on-cash basis that we focus on.
Expansion Plans into New Markets
00:04:20
Speaker
The third pillar is nitrogen product expansion. What that means is that we are leaders in the nitrogen fertilizer and product space. um where can we leverage our existing leadership in that space to get into new products? And one product we showcase at the Capital Markets Day is one that people here in the UK would be familiar with called diesel exhaust fluid, if they have a diesel car, or AdBlue.
00:04:43
Speaker
This is a kind of a wonder product that is a urea derivative, that you just add urea and water, it gets sprayed into the exhaust of cars, and it eliminate almost eliminates nitrous oxide and particulates emissions, which isn't greenhouse gas, like in our future ozone layer type emissions, it's that local emission. It's pollution, it's pollution it's the it's the asthma, it's the lung cancer, it's the smog, it's the local stuff. And it's the stuff that all governments care about, even ones that don't care about the the environment.
00:05:10
Speaker
They care about their local environment a lot more than they do you know at sometimes with this GHG emission. So that's a product that we are leaning heavily into in Abu Dhabi, where we're actually now, as part of Adnok, working to change the law in Abu Dhabi to actually require its usage to follow the European and U.S. s markets that have been there for over a decade.
00:05:30
Speaker
um And also in Egypt, we're going to start producing it and exporting it into Europe as well. So another way where we're leveraging leadership in the urea space to get into new verticals that aren't fertilizer linked that could generate a good premium over
Low Carbon Ammonia Growth Strategy
00:05:44
Speaker
the product.
00:05:44
Speaker
And the fourth and kind of one of the interesting ones is the the fourth pillar is what we call disciplined low carbon ammonia growth. Discipline being the key word. And discipline is due to the let's say whiplash we've seen on the ESG and sustainability side the last few years. We went from going extremely in one direction where you know ESG created you know companies trading on revenues rather than trading on cash flows or pre-revenues even.
00:06:10
Speaker
to the opposite where ESG becomes actually something that could be considered a negative. And from our approach, we think ammonia, where we have leadership in that space, is a key winner in the energy transition.
00:06:22
Speaker
But it's a matter of when, not if. And we will be disciplined in our capital outlay and focus on shareholder value creation as we attack, you know, go into that market. And I think there...
00:06:34
Speaker
we're We're showing about 70 million dollars of EBITDA growth off of very low capex project we're doing in the UAE to add um a million tons of low carbon ammonia and our Egypt green ammonia project which is a showcase project we've done with the Egyptian government where we will export green ammonia into the European markets where we won an award with the German government called H2 Global to to place that low carbon or green ammonia.
00:07:01
Speaker
um So, you know, bringing that together, that was the strategy that we shared with the market. ah And we spent a goose amount of time going going through each of those pillars where a big part was on the manufacturing side, what we can do internally to help ourselves.
00:07:16
Speaker
And we spent some time also talking about just this new life under Adnok, being
Benefits from ADNOC's Ownership
00:07:22
Speaker
86% owned versus 36%. And I can tell you it's night or day. I think we went from being like a you know late stepchild to being the actual child, right, kind of thing. And so we we saw um from almost overnight, we had ratings upgrades across the board by having Adnok becoming a ah majority shareholder.
00:07:41
Speaker
Adnok's finance department has helped us refinance with all our banks, repriced our debt down 60 bips, saved us you know in total all that together $10 million dollars of interest savings without us really doing much at all.
00:07:53
Speaker
um And then also ADNOC has kind of recognized that as an 86% subsidiary, effectively, it should consolidate all its so ammonia activities within us because we are global leaders in ammonia.
00:08:05
Speaker
Pre-October of last year, you know, ADNOC had its own ammonia desk and it's going to have its own ammonia traders. So now we've now consolidated that within our business, which we think, so you know, is really much more powerful for us to consolidate those efforts, you know, as and being the vehicle there.
00:08:20
Speaker
Well, that's some really impressive work and very coherent in terms of the strategy that you've put forward and the ambition that you're setting. One of the pieces of work that we've just done in terms of thinking about and how investors might view the sustainability landscape going forward is to make more of a case that the funding for transition is going to come from industries that have historically been perceived as quite high energy and quite high fossil use. and And that's a shift that we're looking to see. And clearly the UAE did a really great job at raising awareness of what oil and gas and others can do through the COP28 mechanism and establishing the Oil and Gas Decarbonisation Charter and the Industry Transition Alliance and all of those initiatives.
00:09:02
Speaker
And clearly having ADNOC as the now that you're front and centre in mind, um it's been incredibly helpful.
Regulatory Impact and Strategic Response
00:09:11
Speaker
um Outside of the UAE, how is the regulatory environment impacting the markets that you're serving? You talked about acquiring in Australia.
00:09:19
Speaker
um what What else is there to to think about on that front? Regulatory-wise, I think being in our industry, ammonia and urea, our focus with lot of volatility in the past was really driven by commodity prices. What is European natural gas? What is oil doing? What's corn doing? All of these different elements.
00:09:37
Speaker
But there's an added kind of area of focus and complexity now, which is the regulatory side. And it can be night and day, right? You see, um you know, one senator in West Virginia was, you know, going to be the, you know, the do or die person for the Inflation Reduction Act, which was, you know,
00:09:52
Speaker
basically you know signed into law in August of 2022, I believe. And then you know then you have Trump come in the White House and go in the completeat other direction where we're seeing a lot of the key mechanisms and programs going in the other direction.
00:10:06
Speaker
And so you're seeing quite but binary outcomes. You see a lot of um a lot of the electorals, a lot of elections in Europe also going a bit more right wing versus left wing in the past. You're seeing obviously going a bit more central in in Canada. and In general, there's this this this this difference where it's going to affect how is CO2 going to be priced, right?
00:10:28
Speaker
um And in the ammonia, if we're going down the energy transition and we see the advantages of it, that's something we have to keep an eye on. And our focus with this strategy coming out is that we cannot predict the future, right? We can't predict party prices and we cannot predict who's going to win the 2028 US election or what's going to happen in Europe.
00:10:47
Speaker
um But what we can do is try to be ready for the different scenarios in the world and be comfortable with it.
Ammonia as a Clean Energy Solution
00:10:52
Speaker
So just because we've seen right-wing moves in some direction and there could be delays in implementation on ah subsidy programs or the sticks associated with CO2 pricing globally doesn't mean that we're going to put our head in the sand and wait till the next cycle because we think that would be foolish.
00:11:06
Speaker
That's the approach we took ah even in 2019 as Fertiglobe's creation and my time at OCI as well is, you know, just because the EPA wasn't really focused on the environment from 2016 to 2020 in the United States didn't mean that we put our head in the sands and just ignore, you know, the opportunity to decarbonize and do all those things. So Our focus needs to be that in different scenario outcomes, we should be okay from regulatory perspective, make sure we have that license to operate long term.
00:11:34
Speaker
We know direction where fossil fuels are going. And we see that in our case as an opportunity because ammonia doesn't have carbon in it. So ammonia is NH3. If we can make that NH3 in a low carbon way, we can deliver deliver that hydrogen when combusted without creating carbon.
00:11:50
Speaker
Unlike hydrocarbons, diesel, LNG, all of these other fuels. So delivering that ammonia, that hydrogen via ammonia, we think is a mechanism. Is it economic today if there's no price for CO2? Absolutely not.
00:12:02
Speaker
But if we can keep working on making it cheaper and keep working on our value chains and being in the right place, then when that switch happens, when that marine fuel is gonna eventually you know switch and that that new ship is gonna have ammonia as ah as a fuel or from a power perspective, you're going to start using ammonia to decarbonize power in East Asia,
00:12:21
Speaker
you know, we'll be there for that. And so that's our approach. What that does also mean is that regulatory-wise, we're not going to take, if we will build it and they will come mentality. And that's where I think
Adapting to Market Signals for Ammonia
00:12:32
Speaker
that there's a bit of that healthiness that comes with this this whiplash and kind of that that swing back of the pendulum that at least, you know, there were there are quite a few...
00:12:42
Speaker
phony companies quite frankly out there. There's a hydrogen conference every other day for the last three years, right? And that was a great business to be in if you're doing hydrogen conferences. But at the end of the day, now when people actually have to sign and put pen to paper, you know, we we think that there's more realism, more practicality in there.
00:13:00
Speaker
They're thinking, how are you going to pay for it? And we think we're very well positioned with the Abu Dhabi support, with, you know, Dr. Sultan is our chairman who was the head of COP28. that kind of being a name brand going into the key energy consumers, those hard debate sectors that are buying the hydrocarbons from ADNOC today, being able to offer that low carbon ammonia in the future is Fertiglobe, we think will be a big advantage.
00:13:23
Speaker
It's a really big advantage, isn't it? Having that ecosystem connectivity that ADNOC offers and hosting the COP offers in many ways of bringing bringing consumers potential consumers to the UAE as well as pushing the
Challenges in Sustainability Funding
00:13:38
Speaker
strategy out. So it's so It's a really impressive approach. What would make you go faster? Is it a market shift or is it a corporate shift? is Is it something that's in your control, outside of your control? We go to where the market tells us to go, right? And so it sounds a bit, that's what we end up doing, but it sounds a bit like, maybe a bit simplistic, but we take a bit of a pragmatic approach. Today, for example, we're a five plus million ton urea producer.
00:14:07
Speaker
We, if the price is high in the US, we'll go to the US. s If the price is not high in the US, we're not going to go to the US, right? We will literally move those vessels in the other direction. We actually haven't been selling much urea at all into the US because the US has been the fastest growing buyer of Russian fertilizer in the last three years post Russia-Ukraine.
00:14:23
Speaker
So they have lower prices there. We're shifting elsewhere. When you're saying what would drive us to go into low carbon or accelerate, effectively it needs to be more carrots or more sticks or a combination thereof because there's no incentive to move. um you know when i Previously in the prior life when I was OCI, we would have um we produced a low carbon methanol, a green methanol or a biomethanol.
00:14:44
Speaker
um We had some big methanol consumers in Europe that had lofty targets to say we're going to reduce GHG emissions by 30% 2030. okay great here's our low carbon methanol will you pay for it and they say you know this is 2x the price of grain it's like yeah but that's the cost for it well we'll buy one cargo we'll do a press release but that's it we're not going to do anything long term and we don't want to do something we we're not going to do something unless we can pass it on to our customers because they're just going to buy chinese later and then i'm not going to be able to sell to that auto company in the end because i bought your low carbon product
00:15:19
Speaker
So really, you know there's all gonna be a lot of talk until you have you know those required you know energy, low carbon blending into energy requirements for fuels.
00:15:30
Speaker
If you're gonna have CO2 pricing that's there and people say now it's 70 euros a ton, I think it's gonna be 100 euros a ton, there's a forward market on it, you know those types of things.
00:15:41
Speaker
And really, the gap is big. I mean, the disadvantage of buying a low carbon ammonia, especially green, right, or you know that that big price cost for green, if you're going to buy that,
00:15:52
Speaker
it's very hard for you to compete with fossil fuels that are but ubiquitous if you don't have some sort of subsidy plus some sort of stick. So I don't see anything just where we are right now. I don't see anything that's very much accelerating it, but what it has done is caused us to shift a bit more towards blue versus green, right? Which is carbon capture and sequestration off of gas derived hydrogen.
00:16:13
Speaker
because it is much cheaper and it's more proven technology green for us is a very tough one to do because it's electrolysis which isn't proven at scale and it's very costly and what's helped us accelerate the project in egypt is that subsidy that offtake from the german government which is guaranteeing us a price for us to kind of aim at to say if we can do it below that price then we'll you know we'll go downstream and go with that So we we as a but but as financial institutions need to do more at finding offtakers for you? I think, and i mean i think and that's been the case for the last few years, but I think one one other thing that would help would be if you're thinking, as if if you know governments are thinking across all, they need to kind of say, where is the lowest hanging fruit?
00:16:56
Speaker
Like don't just go for, for example, direct air capture of CO2, which is extremely expensive for a ton of CO2. you know, if you can decarbonize an existing ammonia plant, that's going to be easier than building something in the desert. So you need to kind of look and see, you know, you look at all your ways to reduce CO2 and you put them on a chart and you say, what's the cheapest way to do this?
00:17:15
Speaker
And let's focus on those and either allocate capital and or give CO2 kind of sticks and a combination thereof to get there. I
Conclusion and Podcast Subscription
00:17:24
Speaker
think we've run out of time for our conversation today, which I'm very disappointed about because I think we could have gone on all day.
00:17:29
Speaker
um But it just leaves me to say thank you very much for joining us, Ahmed. And I hope you have a successful conference tomorrow. Yeah, thank you very much. Thank you. Thanks, Zoe. Thank you for joining us at HSBC Global Viewpoint.
00:17:43
Speaker
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