"Today nobody finances a green hydrogen megaproject without a guarantee of who is going to buy that gas, it is unfeasible"

• PAULA MARIA

  Madrid

Updated Sunday, January 15, 2023-00:29

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Javier Goñi, president and CEO of Fertiberia

, prefers figures to rhetoric.

After more than two decades at the firm, he maintains a safe distance from the media and is critical of high-profile announcements when they are not backed by facts.

He receives ACTUALIDAD ECONÓMICA in his office, where he accumulates endless hours at the head of a company that employs more than 3,000 workers.

With the position, Goñi took on the challenge of transforming a fertilizer giant into a diversified group aligned with the new demands in terms of sustainability.

The company has managed to weather the current energy crisis with minimal impact.

The manager reviews the damage caused by the difficult situation caused by the war in Ukraine.

He approaches the company's achievements with diplomacy, but prefers to focus on the challenges that lie ahead.

As the only guideline for the interview, he states: "I prefer not to value how others do it,

".

To what extent has the energy crisis impacted the company's day-to-day activities? Gas and electricity prices have seen increases that have never been seen in history.

Of course we have noticed it, but what this crisis has done is ratify that the road map we had was heading in the right direction.

It has been almost two years since Fertiberia announced its commitment to clean fuels. Where have you noticed the greatest blow? We visualize the company in several areas, the first

, where we transform gas into ammonia, and

, where we transform ammonia into nutritional solutions and other derivatives.

It was in the second where the blow was felt.

We have had to stop intermittently, trying to avoid gas price spikes, such as those in the first half of December.

The key has been to operate the assets with flexibility, at the moment we see or anticipate that prices are going to rise above acceptable levels, we stop our production activity and replace it with ammonia that we import from third parties at better prices.

The objective is to achieve a balance between production and viability, in order to shield our manufacturing structure.

What has been your main concern? In this context of crisis, our first concern has been to continue supplying our customers.

We are a large producer and a disruption to supply chains could have a very significant impact on our customers.

We are very satisfied.

In the Spanish market there has been no shortage of fertilizers, which was a very important concern for months.

This summer, in Europe, almost

of the ammonia production capacity and almost 35% of the fertilizer and nutritional solutions capacity were stopped.

Meanwhile, Fertiberia's production levels have been around

of our capacity.

Obviously there have been situations that are unsustainable.

Producing ammonia in Europe with a megawatt of gas at 250 euros is one of them.

When these circumstances have occurred, we have no choice but to stop. What percentage of your costs are occupied by energy? It depends on the products.

In the case of ammonia, almost

.

If you go downstream, to more sophisticated value-added products, energy accounts for

or

of the total cost, which is still a very high percentage.

The price of gas has been multiplied by seven, that is the reality with which we have to deal.

We can adapt, but we cannot perform miracles. They have lived a year pending the minute and the result of energy prices... Monitoring of the energy market has been continuous.

And in that we have played our cards relatively well.

The industrial power of Fertiberia is what has guaranteed the supply, thanks to a very flexible and diversified model.

Companies that have a lower production capacity in relation to their energy consumption, as in France or Ireland, have suffered much more.

Obviously,

.

Doing otherwise is impossible. What capacity does the group have to transfer this additional cost to the customer? We have room to offer at certain price levels, but it depends on demand and their situation.

There is no doubt that the values ​​of agricultural products have skyrocketed globally.

International cereal prices in 2022 were practically at levels that were double those of the previous year.

The fact that these products are worth more is also what has allowed producers to pay more for our products. How do you assess the measures that the Government has taken to support large energy-intensive industry? We positively value the actions taken to alleviate the blow to electro-intensive consumers, of which we are also a part, we are satisfied there.

But in terms of the measures adopted to help the gas-intensive industry, despite our high consumption, we were not included among the beneficiaries, so we have not received any help from the Administration. On December 27, the Executive approved new measures to deal with the economic effects of the war in Ukraine... The fertilizer sector has not been included among the recipients of the aid package for electro-intensive products.

Despite the fact that Fertiberia, for example, is one of the largest national consumers of gas for use in the production of ammonia.

The list of sectors may be modified in the coming months, we trust that we will finally be included.

The energy crisis has also served to accelerate the commitment to the renewable transition. At what point is the company's green transformation? The objective is to reach a fully decarbonized Fertiberia.

We have a transformation plan to gradually replace all the natural gas we consume with green hydrogen generated from renewable energy.

We have launched a new line of products that we have called

, which are fertilizers with no carbon footprint.

There is enormous interest in Europe because that is the future of agriculture, industry and society.

And that is where we want to be leaders, show the world that this is possible and become a decarbonization success story, and we want to do it by doing, not by promising.

We are working on it, in fact, right now the largest installed production capacity in Europe for green ammonia is in our enclave in Puertollano (Castilla-La Mancha). What role is Fertiberia playing in the green hydrogen boom in Spain? ?Our company already has such a high consumption of ammonia and green hydrogen that we have become the facilitators of the large-scale projects of these clean fuels that are known in our country.

Today there is a reality.

Everyone wants to produce green hydrogen, but few people know what to do with that hydrogen.

I don't know of cars, planes, or ships that run on hydrogen.

But Fertiberia is today a consumer of more than 100,000 tons of renewable hydrogen.

We can play a very important role as

(buyer of energy). Green hydrogen has become the new El Dorado of the energy sector. Million-dollar plans based on this clean fuel are announced every day. Is there a bubble around the new energy vector? Hydrogen is a future winning bet.

I do not dare nor do I want to comment on the announcements of others or on their projects.

What I do want is for Fertiberia's plans to be solid and based on real actions.

We already set an example when we announced the first production of green ammonia in Puertollano.

There it is and we are thinking about future expansions.

The projects we are managing have faces and eyes, consortiums formed,

(capital) already established, there are advisers and developers and there are hectares of land already reserved... in short, there is concretion. How do you differentiate the wheat from the chaff? One thing is clear.

A hydrogen project of hundreds or billions of investment without a guarantee of who is going to buy that renewable gas becomes an unfinanceable project.

When the promoter goes to the bank to request financing, unless there is an

Of course, the project is not viable.

Fertiberia accounts for 30% of the hydrogen consumption in this country, we are the ones that guarantee with our current consumption the viability of large alliances and projects that, in the future, can also be oriented towards new areas of growth and applications of these fuels. Will you Will the hydrogen rush slow down? The hydrogen industry is undergoing a transformation in terms of its strategic approach.

Initially there were a lot of hydrogen announcements focused on new uses for hydrogen, those have a clear market risk, you can't know how fast it will develop and are therefore much more difficult to execute and finance.

I am a firm defender that the first stage of the development of hydrogen is going to be the substitution of fossil fuels,

especially in industries that are traditionally difficult to decarbonise.

Europe and the US are already experiencing this turn.

It is a much safer way to move forward. Have you been optimistic? I am very optimistic.

After that first stage, many more will come.

I think that the revolution that is going to come in mobility is going to be very important, airplanes that work with ammonia are being tested, there are companies that in 2024 plan to charter ships that work with green ammonia.

Japan, for example, is already introducing green ammonia into its electricity generation mix, it is a country that is showing a great appetite to sign purchase contracts for this fuel.

This is going to happen, but now we are facing another reality: the projects are expensive and they have to be financed.

Financing costs are rising and investors demand certainty.

The first success stories will come from the industry. What new trends are driving environmental concern in the food industry? Sustainability is not just cutting the carbon footprint and that has led us to deploy all our innovation power.

The goal is that everything added to the food, almost in its entirety, can be absorbed by the plant.

Before there was another model that was to develop a formula and apply it equally.

But an olive tree, a tomato and an ear of wheat have nothing to do with it.

Now the process is more demanding, the fertilizer must be adapted to each crop.

That is sustainability in our world.

Fertiberia's portfolio has gone from around fifteen or twenty products to around 500 in just a few years.

We have the greenest portfolio in the industry and that has helped us grow in foreign markets.

In Scandinavia alone we have doubled sales. This social change represents a challenge for a sector that has traditionally been perceived as one of the most polluting. Perhaps this perception is due to a lack of disclosure by the industry itself.

A data.

To produce the same amount of agricultural products in Europe without fertilizers, at least two thirds of all the forests on the continent would have to be cut down. How does it affect investment plans? Since the acquisition of the group by Triton Partners, some time ago three years, we have doubled our investment rate.

From around 20 or 30 million a year to, in the last two years, rising to 60 million euros.

It is a major financial effort,

but we start from a solid balance sheet that allows us to do so. And in the case of large green hydrogen and ammonia projects? We envision that this high investment rate will be maintained because the company is growing.

In the case of large hydrogen projects, until 2024 what we have are development phases and the

(capital investment) that they will need at that stage is lower.

From then on, the capital needs will be greater, but each consortium will independently raise its own financing channels, which will be very large.

But each consortium will define its financing structures.

Fertiberia is going to review its strategic plan in the first quarter of 2023 and from there we will assess. These changes increase the demand for personnel... We need engineers, technicians, project developers, scientific profiles... We are bringing talent to the company in the framework of our projects, but we are also leveraging ourselves in agreements with universities.

Fertiberia finances the prize for agronomic research with the best economic endowment in Europe.

That is also betting on talent.

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