Hello, and welcome to today's OCI. I'd like to pass the call over to Sarah Rajani, Vice President of Investor Relations and Communications. Sarah, please go ahead.
Thank you. Good afternoon, good morning to our audience in the Americas. Thank you for joining the OCI Global Q3 2023 conference call. With me today are Ahmed El-Hoshy, our Chief Executive Officer, and Hassan Badrawi, our Chief Financial Officer. On this call, we will review OCI's key operational events and financial highlights for the quarter, followed by a discussion of OCI's outlook and strategic review. As usual, at the end of the call, we will wrap up with Q&A. The results, press release, and presentation are available on our website at ociglobal.com. We will be referring to slides in the results presentation during this call. I would like to remind you that any forward-looking statements made on this call involve risks, and the actual results could differ materially from those statements. With that, let me hand over to Ahmed.
Thank you, Sarah, and it's great having you on the OCI team. For listeners on the call, Sarah Rajani recently was appointed as Global-
Apologies, ladies and gentlemen, for the slight connection issue. We'll be back with you in just one moment's time. Apologies for the inconvenience.
Yeah, sorry for the slight connection issue, but I was just thanking Sarah for the introduction and welcoming Sarah and Jong Chen to the team, who are Global VP of IR and Communications and the IR respectively, and they've just recently joined us. I also was extending my gratitude to Hans for leading the IR function at OCI for the last decade and wishing him well for his next role, which is a leadership role within the OCI team. So as always, I'm starting with safety, which is our top priority. Our 12 month rolling recordable incident rate was 0.34% incidents per 200,000 man-hours at the end of September 2023. This continues to be well below industry averages, but unfortunately represents a small increase from the previous quarter.
We continue to work tirelessly on operational and process safety, and strive for zero injuries, and believe that every industry injury is avoidable throughout the organization. We also believe this is a key indication for overall manufacturing excellence. We're starting to see signs of recovery in our nitrogen end markets, following the extensive market headwinds that we experienced through most of the first half of this year. Healthier pricing is signaling the return of demand in a tightening supply environment and a shift away from the demand deferrals and new capacity concentration that marked the latter part of 2022 and the of 2023. Since reaching trough levels in June and early Q3, ammonia and urea prices are now up 150% and 35%, respectively.
As is expected during the quieter summer months, there is often a lag effect of several weeks and sometimes up to two months between average realized pricing and moves in the benchmark indices. The effect this year was exacerbated on account of a strong order book at the beginning of the quarter and the loss of tons from IFCO's turnaround, which commenced in September. Consequently, Q3 did not fully benefit from the recent benchmark price increases. However, we expect these gains to become apparent in Q4, underpinned by a strong order book for our nitrogen products, namely ammonia and urea, through year-end. Moving to methanol. Although prices remained challenged during the quarter, hitting a low during the summer months, global methanol pricing has rebounded more than 40% over the last couple of months.
Positive supply-side dynamics are translating into higher European and U.S. prices, while China pricing is seeing improvement driven by higher MTO utilization rates, underpinned by steady growth across other demand sectors. We remain positive on both methanol fundamentals and future medium-term demand, driven by the accelerating delivery of methanol-fueled ships within a positively evolving regulatory landscape. These are trends that OCI is well-placed to exploit, given our strategic and competitive positioning and the sizable potential of our green methanol business in the biofuels market, as well as our leading global position in low-carbon methanol production. We will share more about our hydrogen fuels transition initiatives and progress later on this call. In short, we're on target to increase our green and low-carbon ammonia and methanol portfolio from around 200,000 metric tons of combined production capacity today to circa 1.7 million tons by 2025.
We're further pleased to see significant commercial interest in our clean ammonia project, Texas Blue, where we're engaged in active discussions for long-term product offtakes and potential equity participation. Finally, you will note the comments on the strategic review in today's announcement, which we will come to at the end of this call. I'll now hand it over to Hassan to walk you through some of the key highlights of our financial performance during the quarter. Hassan?
Thank you, Ahmed . We'll start by turning to slide seven of our results presentation for a summary of our financial results. We reported consolidated revenues of $1.1 billion, an adjusted EBITDA of $242 million, and an adjusted net loss of $95 million for the third quarter. These results were lower compared to results achieved in the same quarter last year, and the reduction was driven by lower selling prices compared to the significantly higher prices we experienced in 2022, which could not be offset by the higher sales volumes. Noting that nitrogen prices in Q3 were circa 60% lower compared to the same quarter last year, methanol prices were also lower than last year and compared to the previous quarter, with spot prices experiencing the steepest decline.
The impact of lower pricing compared to the record year last year translated to just under $1 billion of lower adjusted EBITDA in the quarter. The direct impact of lower natural gas prices in Q3 compared to last year amounted to $476 million. We know that we realized hedge losses of $35 million during the quarter, bringing the total realized losses in July to September for the nine months to $181 million. Based on the current forward curve, we expect less than $20 million of additional realized hedge losses in Q4. We noted in our previous results call that the natural gas hedges are near-term front-loaded. We therefore note that the mark-to-market on that on the basis of mark-to-market of the current forward curves for 2024 onwards, these hedge losses would be substantially lower.
Sales of own produced volumes continued to improve year-on-year, notwithstanding made a major plant turnaround in Iowa or IFCO, and some unexpected outages at Natg asoline and in the Middle East. Own produced volumes in Q3 increased 8% year-on-year, reflecting also demand recovery. Part of the Q3 results last year included a positive EUA sales of $56 million versus none contributed to the third quarter of this year. Turning to slide eight, we recorded operating free cash outflow of $3 million in the quarter, bringing the total for the nine months to a + $359 million.
Consolidated free cash outflow was similarly an outflow of $3 million in the quarter, as the delta usually reflects between the two cash flow figures, usually reflects minorities leakage, for which there was none recorded during the quarter. However, on the point of minority interest, the distribution of Sorfert's dividend did take place in Q4, with our Algerian, Algerian sovereign partner, Sonatrach, receiving $813 million in dividends and super écrémage attributable to the record results of 2022, with Fertiglobe consequently receiving $182 million of dividends. As a result, this leakage figure will appear as part of the minorities leakage in Q4 results as previously guided.
Additionally, Fertiglobe has declared a $275 million dividend payable in Q4, of which 50% is attributable to minorities, including our partner, ADNOC, and the free float, which also appears as minority distributions. This will result in almost $1 billion of minorities in Q4. Based on the 2023 results year to date, we expect this figure to be significantly lower in 2024. On financing, we know that Fertiglobe has today completed an agreement with a group of its core relationship banks on the terms of a new $500 million term facility, which was 1.9 x oversubscribed. The proceeds will be used to refinance short-term borrowings, further improving Fertiglobe's maturity profile and liquidity. The company remains well within the investment grade zone, with significant access to liquidity going into 2024.
Rating agencies reaffirmed both Fertiglobe's and OCI's investment grade status as recently as August, and with consolidated debt levels of 1 to 1.5 x as of 30 September 2023, OCI continues to have access to ample liquidity going into the next year. Turning to our operating segments, with a few highlights to note. Our European nitrogen business returned to positive EBITDA territory, recording $60 million of adjusted EBITDA. We know that deliveries of own-produced volumes in the segment increased 13% year-on-year, as demand fared better in Europe. We continued to import ammonia through our terminal in Rotterdam to support downstream production. Adjusted EBITDA was negatively impacted, however, in the quarter by $25 million due to shutdowns and plant turnarounds.
However, we look forward to improved results in the coming quarters, post these turnaround activities. Our U.S. nitrogen business recorded an adjusted EBITDA of $36 million in Q3 versus $161 million the same quarter last year, and $99 million in the second quarter of 2023. The Q3 decline can be attributed primarily to the extended major turnaround at IFCO, which impacted the month of September and is extended into Q4. This, in addition to the lower average selling prices for all products quarter on quarter and the negative realized gas hedging results within the segment, contribute, just explain the figures. The production downtime, due to the major turnaround in IFCO, had a financial impact of circa $34 million in the quarter.
Fertiglobe's own produced sales volume this quarter were 8% higher compared to Q3 last year, primarily due to a 10% increase in own-produced sales volumes, urea sales volume year on year. Fertiglobe's Q3 2023 adjusted EBITDA was $199 million, reflecting healthy free cash flow conversion. Operating free cash flow was $126 million before dividends to minorities. As Ahmed noted in his opening remarks, our realized prices in the quarter do not reflect all the recent moves in the benchmark indices due to various positioning of the order book. However, we expect these price gains to become more apparent in the coming quarter.
In methanol, notwithstanding a 35% year-on-year increase in own-produced methanol sales volumes in the third quarter, the business was negatively impacted during that period by lower selling prices compared to the same quarter last year and the previous quarter, as mentioned previously, as well as some realized gas hedging losses housed within this segment as well. Turning to guidance, some guidance on CapEx. Our maintenance CapEx for the full year 2023 is expected to exceed $350 million, as per the guidance we provided during our Q2 results call, which reflects some timing of invoicing payments related to 2022 turnarounds and some big IFCO investments that have been made. Our guidance for maintenance CapEx for 2024 is closer to $275 million.
We continue to focus on manufacturing improvement as a potential key contributor for up to our future results, and we expect a meaningful step down in maintenance CapEx in outer years. Our full-year growth CapEx guidance for 2023 remains up to $450 million, as previously guided, and we now share our guidance for 2024 at circa $600 million, driven by the build-out of our Texas Blue Clean Ammonia facility as we approach operation in early 2025. The guidance also includes other attractive growth CapEx initiatives, including the U.S. nitrogen landfill in Texas, the completion of the new Star Pipeline connection, the Rotterdam terminal expansion work, and continued progress on TA'ZIZ , our low carbon, Fertiglobe's low carbon project in ODA.
On capital returns, the company paid a cash dividend of EUR 0.85 in October, equivalent to around just under $200 million. This brings the calendar year 2023 distributions to approximately $1 billion and a total of $2 billion since the start of our capital repayment program last year. We reiterate that we will continue to target a balanced capital allocation policy, maintaining our IG credit profile, investing in select energy transition growth initiatives, and returning capital to shareholders. With that, I'd like to hand back to Ahmed for further commentary on the market backdrop to our results and some of the ongoing strategic initiatives. Ahmed?
Thanks, Hassan. As highlighted earlier, Q3 saw a turning point in nitrogen prices and demand amidst rapidly tightening markets. The 2023, 2022-2023 fertilizer application season concluded with record-low inventory levels in North America and Europe, and as I said earlier, trough pricing reflecting the market dynamics in the first half of this year. Encouragingly, urea and ammonia prices have subsequently increased materially, as I discussed earlier. I believe prices are returning to more normalized level. We believe prices are returning to more normalized levels, supported by a robust supply and demand profile and healthy agricultural fundamentals over the medium to long term. You can see this visually on slide six and further in the appendix of the investor presentation.
Demand for fertilizers recovered across regions and products during the quarter, notwithstanding the usual summer lull for fertilizers as farmers benefited from low prices and strong farm economics. This is further evidenced by our strong order book, looking ahead to our year-end and ongoing low inventory levels in several regions, including North America. Chinese exports remained constrained, and we're seeing positive dynamics for some of the main importing regions. We saw record sales in India in July to August, with the Indian tender activity stepping up during the last few months. India saw 5.1 million tons of imports between January of this year and the end of October, with a further 1.7 million tons from the most recent tender, with shipments through December 20th of this year.
We expect further tenders as India's demand profile remains robust, with around 2 million additional tons needed between now and March of next year. Brazilian urea arrivals have been lagging for the greater part of the year and by as much as 1 million tons. Some of this gap was closed over the course of Q3, but imports are still around 400,000 tons below last year's levels, a shortfall that will likely be needed to be made up during the peak demand months of November to February 2024.
No major large-scale greenfield urea additions are expected in the remainder of this year or in 2024, with limited additions at high risk only between 2025 and 2027, generating a meaningfully tighter, global supply and demand market with a gap of approximately 4 million tons of supply lagging demand, signifying, like I said, a tight market even before some of the shutdowns, which we're anticipating and starting to see more of in Europe. Furthermore, the extreme heat this summer resulted in curtailments in various locations as gas usage was prioritized for energy consumption for power and for air conditioning due to the hot weather, and that's redirected away from industrial, industrial production, including ammonia. There have been more recent curtailments in Egypt, reflecting the latest geopolitical events, a situation we continue to monitor closely.
That said, we experienced minimal disruption of less than 2,000 tons over the last month and a bit, which is just above 1% of monthly production, since the seventh of October, with all plants now running at or very close to normal rates. While recent supply disruptions has no doubt benefited ammonia pricing after lagging urea for most of the quarter, it is possible that we see some volatility in ammonia pricing over the next few months as this capacity starts coming back online. That said, high marginal costs in the EU and the demand-driven environment just described is expected to act as an offset from such volatility. A rebound in industrial demand, when it materializes, will also be incremental to the recovery we're seeing in the agricultural end markets.
While overall industrial demand remains soft and currently below historical levels, there have been pockets of optimism. For example, a substantial increase of ammonia imports into China. In the medium term, there are significant potential incremental ammonia demand from the new clean energy applications that we discussed earlier, including power generation and marine fuels. For power in Japan and Korea, those markets alone for co-firing could result in up to 9 million tons of ammonia demand on an annual basis by 2030, compared to a 20 million ton merchant market today. Similarly, the marine fuel market as of today, there are, in that market, there are 227 vessels on order or operational that are ammonia-ready for an ammonia engine.
This could translate into ammonia bunkering demand of over 6.5 million tons in the medium term, and that demand would start utilizing, in our belief, existing infrastructure for the most part, that we enjoy it and have today. Finally, cost curve economics should start putting more pressure on producers once again. European gas forwards until 2025 are implying ammonia cash cost support levels, excluding CO₂ charges of $605 per ton, and if you include CO₂ charges, $770 per ton, which will result in temporary or further permanent closures of marginal European production if pricing remains below cost for a sustained period.
We're already seeing this played out as we've talked about shutdowns in the past, and as evidenced by the shutdown we just heard about this week in France, where a fertilizer major is planning to stop nitrates and NPK production in France. Fortunately, at our facility in OCI Nitrogen, we enjoy economies of scale with the second-largest fertilizer plants in Western Europe, key importing capabilities, a diversified product mix, and last but not least, continue to have one of the best gas conversion to ammonia in the world. As a reminder, OCI's U.S. operations and Fertiglobe account for over 91% of our gas consolidated consumption in Q3, and they enjoy first quartile position on the cost curve on production and distribution economics. Turning to methanol.
Key methanol markets continue to be weak in Q3, but spot methanol prices have recently recovered, supported by higher oil prices, reduction in supply availability in the Americas and Europe, and improved MTO rates in China, which reached the highest levels in over a year. Rising coal prices in China also provide a higher cash cost floor, despite the weak industrial demand we've been seeing. The spot price recovery has continued into Q4 for the U.S. and Europe, with seasonal winter strength in Chinese coal production driven by power generation, supportive of both Chinese and broader Asian methanol pricing. Despite the continued macroeconomic challenges, medium and long-term methanol market fundamentals remain positive, driven by three key factors: One, limited new methanol greenfield supply additions. Two, methanol as a fuel continues to grow for road use and transportation, for blending to decarbonize, for example.
And three, most importantly, demand for methanol as a marine fuel is accelerating exponentially, and at current diesel prices, we're seeing strong demand for not just green methanol, but even gray methanol, where many of the ships on the water, which are dual fuel, are starting to burn gray methanol because it burns more cleanly than diesel and is cheaper. We also expect further incremental demand for methanol dual-fuel retrofit projects as they come to the market. Turning to slide 11 in the presentation, incremental demand for the maritime sector today is expected to reach approximately 7 million tons per annum from the mid- to late 2020s, based on current new orders of more than 230 new vessels. In terms of the container vessel, dual-fuel proposal and order book, methanol continues to outperform L&G quarter on quarter as the leading decarbonization fuel.
That leads me to our next topic, our energy transition-focused growth initiatives and goals to decarbonize energy-intensive industries and create value. We continue to make huge strides in this area, with several announcements in the past two months demonstrating OCI's global leadership in supplying and trading renewable and low-carbon fuels. Our 1.1 million ton Texas Blue Clean Ammonia project remains on track to commence production in early 2025. We're currently in advanced discussions regarding long-term offtakes and potential equity participation, reflecting strong commercial interest and an increasing appetite from strategics to pay a premium to secure long-term low-carbon ammonia, given regulatory scores.
Critically, any further expansion at this site will benefit from enhanced project economics, with cost benefits deriving from an early mover advantage, as well as the ability to leverage existing infrastructure and utilities, which, as we've said before, have been sized for a second line. With this in mind, and against the backdrop of a positively evolving regulatory environment, we are prudently evaluating a second line at the site to capitalize upon anticipated demand, taking our clean ammonia production capacity and clean fuels capacity in total to 2.8 million tons and increasing low-carbon fuels as a percentage of OCI's overall mix. However, the focus today is on the offtakes for and the equity in and completion execution of line one.
In September, we announced the green hydrogen supply agreement with New Fortress Energy, which allows OCI to scale up its green ammonia production capacity by about 80,000 metric tons per year in 2025 and can reach 160,000 metric tons per year in 2026. To put this in perspective, this represents almost half of OCI's current production capacity in Texas. This green hydrogen can also be used to make a low-carbon methanol or an e-methanol. We also announced the doubling of our world-leading green methanol production capacity to 400,000 metric tons per year. This will come from a mix of renewable feedstocks, including renewable natural gas, green hydrogen, as I just mentioned, and other over-the-fence feedstock partnerships.
This includes new supply agreements for renewable natural gas that will provide over 100,000 tons of green or biomethanol annually, and the securing of waste and development rights from the city of Beaumont, allowing us to obtain biogas from a landfill that we're developing. This will, this will be OCI's first upstream RNG or renewable natural gas production facility, with production expected to start in the first quarter of 2025. As you are aware, the first-ever green methanol container vessel owned by A.P. Møller-Mærsk successfully made its maiden voyage from Korea to Copenhagen, arriving in port in September.
This vessel was successfully fueled with OCI HyFuels green methanol, and we expect to leverage this success and visibility with further green methanol sales to the marine sector as we expand our marine business, and obviously take that into the low-carbon ammonia business for the marine, for marine applications later in the decade. Finally, you have heard me talk about the recent issues in the green methanol space, but to provide some additional context, we encourage to see regulatory matters moving in the right direction to support and incentivize this market as a demand activator, as evidenced by the RFNBO targets, Renewable Fuels of Non-Biological Origins, set by RED III for 2030.
Number one, a 42% RFNBO hydrogen use target for industrial installations in EU member states, and number two, a combined share of advanced biofuels and RFNBO in transportation of 5.5% in 2030, with a minimum for RFNBO of 1% in transportation. This market is real, and it's tangible and accelerating, and moreover, we at OCI are extremely well-positioned strategically and competitively to create value from these regulatory developments in the medium term. Finally, a brief update on the strategic review. Following a constructive dialogue with Inclusive Capital, OCI has hired financial advisors to explore potential asset monetization opportunities with a view to bridging the gap between the combined value of the individual assets in the company's portfolio and the holding company discount.
As a result of this process, the company is engaged in active discussions with a focus on attractive propositions. Let me conclude with extending my thanks to the entire OCI and Fertiglobe teams for their contributions and achievement this quarter. With that, we'll open up the line for questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star followed by one. If you've joined us via the webcast today, please do submit a written question. Our first question today comes from the line of Christian Faitz from Kepler Cheuvreux. Please go ahead. Your line is now open.
Yes, thank you. Good afternoon, Ahmed, Hassan, and Sarah. A couple of questions, please. First of all, can you elucidate the rationale behind the search for an equity partner for the Beaumont Blue Ammonia project? Second question, could you give us any scheduled maintenance outages you plan for Q4 that we should be aware of? And then also, can you please go in further detail about the minority leakage you expect in Q4? Thank you. Thank you again.
Sure, absolutely. I can start with question two. Unfortunately, you know, we don't give information on planned outages for competitive purposes. But going to question one and why we were, you know, why we're evaluating an equity investment potential. So there are a couple of reasons, but number one, you know, obviously we're well advanced on the project, and we expect the mechanical completion towards the end of next year, and it's become line of sight, and we're still the only FID Blue Ammonia project in the United States, that's a new build.
With the incentives that are being provided for the utility space or the power space in Japan and Korea, there is, for some of the offtakers, many of the offtakers, a requirement to have an equity participation in the upstream production of that low-carbon ammonia. So that's part of the reason, is that, as part of the offtake, you know, this is kind of a quid pro quo where there'll need to be an equity participation. In addition, you know, these investors could come with lower return requirements than what, you know, we may be looking at. So, that's something that could allow for a higher premium for, for the transfer of equity in that project, particularly because it's more well-developed.
The other reason is also it does allow, when we look at our overall balance sheet and our target towards maintaining, you know, a strong dividend, continuing to grow the business, as well as maintaining an investment-grade profile. This allows us to, you know, leverage our investment and potentially look and grow our business over time, when you bring in some equity participants as a support there too. So that's some of the reasoning behind why we've taken a lot of these active discussions seriously, and we've shared that with the market here. On your third question, I'll maybe hand it over to Hassan.
Yeah, sure. On the minorities leakage, we... I think we explained, we tried, we tried to explain during the call, during the first part of the call, that we are experiencing an extraordinary minority leakage related to the distribution of dividends from Sonatrach Algeria, which is a subsidiary of Fertiglobe, that has to do with the Super Écrémage or Super Dividend attributable to the state oil and gas partner, Sonatrach, for record profits achieved in 2022. Algeria typically, or the subsidiary in Algeria, typically pays an annual dividend, and so sort of a single annual dividend per year, typically around September, October. This year, it fell in the month of October, and as a result of the record profits achieved in 2022, the figure is pretty high.
So about just over $800 million or exactly $850 million is received by Sonatrach. That, in addition to the fact that Fertiglobe already declared as part of the results earlier to date, a $275 million dividend to shareholders, of which half then appears as further leakage, hence sort of explaining the number of around $1 billion of leakage in Q4. Obviously, this results in a little bit of uptick in our leverage, but we expect that to normalize as our performance improves going forward. And also with the expected collateral benefit of equity participation in Texas Blue, that also has a positive effect on our balance sheet going forward. Now, going back to your maintenance CapEx question, just to maybe help clarify.
As I have mentioned, we don't give exact guidance on planned turnarounds across our portfolio, but we did highlight that our guidance for maintenance CapEx for this year has not changed, which is in excess, just in excess of $350 million. Although, that tends to be impacted specifically in Q4 by timing of invoicing and cycles, so that number could fluctuate a little bit. However, our guidance for next year, which we are shared for the first time now, is around $275 million, and we expect this number really to get to step down further in outer years as our manufacturing improvement plan sort of comes to begins to bear fruit and we need to spend less on some on our various sites.
I think this number will step down quite meaningfully in 2025 on what so maybe I'll stop pause there.
Very helpful. Thank you very much, Ahmed and Hassan.
The next question today comes from the line of Aron Ceccarelli from Berenberg. Please go ahead. Your line is now open.
Hi, good afternoon. Thanks for taking my question. I have two. The first one is on the outlook for the nitrogen market. I think the picture is pretty clear on the supply side, while on the demand side, we are seeing grain stocks-to-use ratio restoring now close to five-year average, which usually has an inversely impact to corn prices. So we should see pressure on corn prices in the short term. How confident are you that on the demand side, we're going to remain on a strong foot in Q4 and Q1 next year? The second question is on the comments you made on asset monetization.
I think the company has always been very open on unlocking values, and this is something you've been talking for quite some time now. So what has really changed today with this statement, or is it just a way to stress this again? But I mean, we are still on track with the previous comments. Thank you.
Yeah. So on the demand side, I mean, I think, I mentioned a little bit in the prepared remarks, but, first of all, you know, we're, we're seeing healthy demand. The farm economics are still strong and above the ten-year average, despite an increase in the stocks-to-use ratio. And the stocks-to-use ratio, as you mentioned, is still below the ten-year average. So when we see what's in front of us this season, if you're talking about Q4, Q1, we see still a robust application of nitrogen. We think there was a bit of under application last year. There's always the risk of weather effects on, you know, what comes to the market. And, you know, we're, we're...
Despite the run-up we've seen on urea pricing and ammonia pricing and nitrates pricing in the last few months, you know, the farmers still very much incentivized to buy and put in the ground. So, you know, we're seeing good demand here. There's obviously sometimes pockets where it goes up and down in terms of how much liquidity is in the market. But, you know, we're, you know, like we said, we see Brazil picking up here the next few months. We have very solid ammonia application here in the United States in November for fall ammonia, and I think there's gonna be some probably farmers going on allocation because not all terminals have availability there. And, you know, I think that bodes well for spring ammonia, it bodes well for spring nitrates.
So, you know, overall, given nitrogen needs to apply, be applied every year so that you can bring up a lot of these, you know, grains, even rice, where we've seen a bit of a tick-up in price. You know, we're seeing, seeing pretty solid demand. So that's where we stand at this point, and, you know, it's well received because the industrial market has continued to be quite weak. And, you know, the ag has really picked up a lot of that slack, and, you know, we think looks quite good. On your second question, maybe Hassan, you wanted to take that?
Yeah, sure. I mean, on the second question, obviously, at this juncture, we can't really share more information than what we have included in our press release and the remarks made by Ahmed earlier in the call. I would add, the only thing we can add is that we do expect to provide further updates before year-end, and that we have good interest in the active discussions. We will do that.
Thank you. Maybe just a clarification on your interest expenses. I saw your interest expenses picked up quite significantly in, in Q3. Is this the kind of run rate we should think about for Q4 as well?
There's a little bit, yeah. I mean, there's a little bit of fluctuation in the interest because, due to some usage, some utilization of our RCF, so in the second half of the year, which is captured in our overall net debt figures and the, and, and leverage figures that we communicated earlier. ... so-
Stop run rate basically.
Thank you very much.
The next question today comes from the line of Faisal Azmeh from Goldman Sachs. Please go ahead. Your line is now open.
Thank you for the opportunity to ask questions. Just maybe two from my side. The first is just in relation to the net debt position that the company has. As we think about the minority outflow by the end of the year and the minimum dividend requirement or the minimum dividend payment that we've modeled so far, which is $400 million. Is there a level at which you might consider to cut the dividend, if it compromises the investment grade rating? And maybe to ask this in another way, should you reach a certain level, do you envision yourself cutting the dividend?
Or do you feel comfortable at these levels in today's prices, where you can maintain the dividend while kind of maintaining as well the investment grade rating? That's my first question. Just my second question is just relating to prices. We've seen prices kind of come off a bit recently. Is that largely a function of how you feel demand kind of breaks down at a certain level? Or do you feel it's just due to the fluctuation in gas prices? Thank you.
Yeah. On your question of leverage, like as—I mean, we've reiterated on the previous call, and I believe I tried to do so earlier in this call, that we continue to try to balance our accretive growth, capital allocation, with our target to remain investment grade and our ability to repay capital. Obviously, with the—given that there is an ongoing strategic review, and including the strong interest in equity participation in Texas Blue, I believe these are all factors that will play into how we approach capital allocation in the future.
Yeah. Faisal, on your second question on pricing, I mean, I wouldn't read too much into kind of the day-to-day or weekly pricing. A lot of it is sentiment driven. You see kind of gas going up and down in Europe. That drives a bit of sentiment. You know, we see just, you know, how many tons go into the India urea tender, et cetera. But, you know, you're coming to that time of year that, you know, November, you know, you usually see ammonia start running a little bit in the Midwest. Towards the year-end, there's sometimes some softness. I think it's hard to read into, you know, week to week.
I mean, we saw actually, you know, prices come up a bit on urea yesterday in the U.S., but on ammonia, they've come down a little bit with some of the new supply, the supply coming back into the market. Net net, you know, we kind of step back from the noise. We still feel very good about the S&Ds for nitrogen, you know, over the next few months and quarters. Because as I said on the, you know, the earlier question, we still see a very big push for demand to increase grain stocks and strong farmer incentives to do so.
We don't see any real supply coming online for the next couple of years for urea, with quite questionable supply being added in 2025 through 2027, with risks around that in the locations that they're at, which you'll see in the investor presentation.
All right. Thank you.
The next question today comes from the line of Rikin Patel from BNP Paribas. Please go ahead. Your line is now open.
Hello. Thanks for taking my questions and for the presentation. I had a couple. Firstly on the portfolio review. I know you can't say much, but is today's statement an indication that you're no longer considering shifting the listing to either the Middle East or the U.S.? And then secondly, we've heard in the last couple of weeks that gas supplies have been restricted to urea plants in Egypt. I'm just curious if at all that has impacted your operations and what else you're seeing in the markets on that front? And then just finally on the maintenance schedule. So I saw that your European plants were also put into a plant turnaround in Q2.
I'm just curious what the thinking was there, given, I suppose demands seemed like it was coming back during the quarter. So I'm curious whether it was planned both in the upstream and the downstream, or whether there was something sort of last minute, which meant that you had to run those lines at a lower rate. Thanks a lot.
Yeah. So, you know, to answer each of your questions one by one, on the listing, no, that's something we're still obviously considering, but just given the strategic review, that takes precedence. Because, you know, with the overall look of the portfolio, we think is an important, decision-making factor with regards to where the listing takes place. So that is still, open, but would be subsequent to the update that we're gonna provide on strategic review. Number two, you had a question on, production in Egypt. We actually, said it briefly during the prepared remarks. So actually had no, effect really on urea, production in Egypt. We lost 2,000 tons of ammonia.
Since October 7th. And so, you know, less, you know, well less than 1% of annual capacity, and we're running basically at or very close to capacity in Egypt right now. So I'd say a negligible effect on us. I just wanna remind you also, we're one of the largest exporters from Egypt, and one of the larger dollar generators in Egypt. So we have that benefit, and this only affected one of our two plants, that ammonia settlement. On your third question with regards to maintenance, no, this, this was a planned maintenance.
As you recall, our OCI Nitrogen facility in the Netherlands is a couple of ammonia lines, which we've been running in general for the last two years with just one of two lines, you know, because of the high gas pricing and importing a lot of the ammonia. And then we have downstream, we have nitric acid and urea lines to make CAN, UAN, melamine, and then in the next few months, CAN + S and AdBlue or DEF. So we're massively increasing our product footprint. This was a planned turnaround in the middle of the year for our urea plant, which prevented us from making melamine, and where we're also undertaking a turnaround. And it also prevented us from making UAN for a period of time.
So that's part of why, you know, we, we ended up not having, as much production in, our plant. And we actually, once I think urea was back up, while melamine was still finishing the turnaround, we made UAN, and basically took some, some of the nitric acid that's used to make CAN. So it resulted in less CAN production, a bit more UAN production. We're sorry to go into all the details on it, but that's kind of... You know, we're looking to always maximize the product mix, and, this was a prescheduled turnaround that we executed over the summer, which, was reflected in our maintenance guidance, as well as, you know, some of those lower volumes.
Okay, thanks a lot. That's helpful.
Mm-hmm.
As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. Or if you have joined us via the webcast, please do submit a written question. The next question today comes from the line of Charlie Bentley from Jefferies. Please go ahead. Your line is now open.
Hello, this is Charlie Bentley from Jefferies. So, just a couple on CapEx. So, Hassan, you said the $600 million is the growth—is that the growth CapEx for next year? Can you just, one, confirm that, and two, just in terms of the split of CapEx between Texas Blue and anything for TA'ZIZ? And then, just kind of incrementally to that, is that—should we think of that as the kind of peak of CapEx, depending on how you choose to fund the rest of the project, the TA'ZIZ project? And then just a final one, just operationally, I mean, one of your peers has indicated the European season starting relatively slowly. Just any thoughts on how things are going from your perspective? Thanks.
Yeah, maybe I'll take the two first, the first two questions, then I'll, and Ahmed can, address the third question. Correct on the growth CapEx, that, this is the first time we give, more specific guidance for 2024, in the area of $600 million. Obviously, given the target to, to commission our Texas Blue 1.1 million ton facility in early 2025, it means that the bulk or the focus of the CapEx is in 2024, as we, ramp up, as work on the site is ramped up and we, and we continue to progress, swiftly and on schedule, on the project.
Based on the current profile, current profile of projects in the system, you are also correct that this is a—this will be construed as a peak year for us, based on the projects that are FID and that we've announced so far. I would say, I would also share that, naturally, the lion's share of this $600 million growth CapEx really pertains to Texas Blue.
Just to kind of remind you on the TA'ZIZ project, you know, that's a project that has kind of four key attributes, although we consolidate 100% of the CapEx. One, it's a vertical. Two, we own a minority stake in that, so we're not paying for all that equity. Three, we're gonna be putting leverage on it on a non-consolidated basis because we have a minority stake in it, so that's gonna reduce how much we have to put in. Four, it's a back-end ammonia plant. And five, it's being built in Abu Dhabi, which has cheaper construction costs. So kind of for all of the above reasons, you know, that plant, despite being a million+ tons, we don't anticipate ever going over double digit in terms of spending on that plant for CapEx.
For some of these other projects, NuStar, the OCI expansion for the terminal in Rotterdam, the landfill, all of these are projects that have a relatively quick payback. And, you know, that, along with, as Hassan said, the lion's share, which is the Texas Blue project, is comprising this, this larger, CapEx spend for growth next year. On your question with regards to the, you know, slower European start, we've seen, you know, that buyers are probably about 20% less covered as farmers this year versus last year. So there has been a little bit of deferral of buying and trying to time the market. So we've seen a little bit of that. And we think that, you know, the stocks aren't at, at the same levels as they were some of these prior years.
Now, the key thing to point out is we think that this ends up being one of those periods where some of the smaller plants are being tested. Like I mentioned this week, you know, French plants shutting down NPK and nitrates, that's a pretty significant event. I think also that one area that we talked about in the last call, which I think we're gonna start seeing more of, is depending the nitrates positioning in Europe, is that the duties on ammonia and urea tariffs came back in the summer, so in June. Those had kind of taken a six to nine-month holiday. So having those back, it ends up being a little bit more of a protection against nitrate prices in Europe.
We think that it makes sense to still plant, you know, heavily here in Q2. So, you know, we think that sometimes there's a seasonal lull in November and should see a little bit of buying back in December and early next year. And our product mix, adding sulfur to our nitrate production, we think is gonna be great because that is usually applied earlier in the season, and we're gonna be doing that later this quarter.
Fantastic. Thanks, guys.
Thank you. There are no additional audio questions waiting, so I'd like to pass it back to the management team for any written questions.
Thanks for the webcast. We have a question from Mohammed Farik. "Can we have some more color, with regards to progress on the ground, for Texas Blue, please?
Sure. So we tried to add, Mohammed, some details in the investor presentation this morning. But, you know, if you were to drive by the site, you'll see that we've gone quite vertical with steel structure. We're getting some major pieces of equipment delivered in the next couple of months. You know, the piling is basically almost done fully, you know, including both not just the storage tanks, but also the ISBL and OSBL of the plant. You know, things are making good progress there. You know, we have underground piping that's really moved forward quite quickly, and we're wrapping that up soon as well.
you know, as a reminder, you know, we did take this decision to really add in a lot of those utilities for pipe racks, underground piping, utilities to serve that potential second line in the future, which, you know, in our opinion, means that the next plant to be built in the U.S. should be our line two, just given how attractive, you know, that proposition would be in the future.
And then we have one other question from the webcast from Ruth Bell, Reuters Review. "You stated in the press release that you want to bridge the gap between current value and combined value. If you agree with the undervaluation, why would you not consider commencing a significant buyback program?
I mean, that's always a possibility as well. That's something that we look at, but in terms of returning capital to shareholders between share buybacks as well as dividends. But that's definitely in the cards, but as Hassan mentioned, you know, we'll probably give an update to the strategic review and ahead of any next distribution in whatever form it takes.
Thank you. There are no further questions on the webcast.
Thank you.
Okay. Thank you, Sarah.
Thank you for today's question and answer session, so I'd like to pass it back for any closing remarks.
Thanks. Thanks, all, for joining the call, and we'll see you on the next one.
This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.