OKLAHOMA CITY - LSB Industries, Inc. (NYSE: LXU), a chemical manufacturing company, has announced a five-year agreement to supply Freeport Minerals Corporation with up to 150,000 short tons of low-carbon ammonium nitrate solution (ANS) annually. This supply, originating from LSB's El Dorado, Arkansas facility, is set to begin on January 1, 2025.
The low-carbon ANS is a product of LSB’s collaboration with Lapis Energy on a carbon capture and sequestration initiative. The project aims to capture and permanently store over 450,000 metric tons of CO2 each year from the ammonia production at El Dorado. This process is anticipated to yield over 375,000 tons of low-carbon ammonia, which can be sold directly or further processed into other low-carbon nitrogen products like ANS.
Operations for the carbon sequestration project are expected to start in 2026, subject to the Environmental Protection Agency (EPA) approving the Class VI permit application submitted by LSB and Lapis. The companies anticipate receiving this approval in the latter half of 2025.
Mark Behrman, President and CEO of LSB, stated that the agreement with Freeport is a significant milestone in the company's goal to become a leader in the global energy transition. He emphasized the importance of low-carbon nitrogen products in the decarbonization efforts of industrial and mining customers.
Freeport will utilize the low-carbon ANS from LSB for its copper mining operations in the United States, aligning with its net-zero aspiration.
LSB Industries, headquartered in Oklahoma City, Oklahoma, is focused on producing low and no-carbon products for various markets, including agriculture, industrial, mining, and potentially energy in the future. The company operates manufacturing facilities in Alabama, Arkansas, Oklahoma, and Texas.
This new business venture is based on a press release statement from LSB Industries, Inc.
InvestingPro Insights
As LSB Industries, Inc. (NYSE: LXU) forges ahead with its commitment to low-carbon product manufacturing, the company's financial metrics and market performance offer additional insight into its investment potential. LSB's management has been actively engaging in share buybacks, indicating a belief in the company's value and future prospects. This is a strategic move that can often signal management's confidence in the business and its growth trajectory.
Analyzing the recent performance, LSB Industries has witnessed a significant return over the last week, with a 7.76% price total return, which reflects a positive investor sentiment in the short term. Over a longer horizon, the company has demonstrated a robust 26.4% return over the last three months. This sustained uptrend could suggest that the market is responding well to LSB's strategic initiatives, including its recent supply agreement and its low carbon production capabilities.
Financially, LSB Industries has a market capitalization of $695.4 million and is trading at a high earnings multiple, with a P/E ratio of 40.4. This valuation can be seen as a testament to the market's expectations for future earnings growth, despite the company's gross profit margins being on the weaker side at 12.15%. Investors considering LSB Industries will want to keep an eye on these metrics as they evaluate the company's performance relative to its industry peers.
For those interested in further analysis, there are additional InvestingPro Tips available for LSB Industries, which can be found at https://www.investing.com/pro/LXU. Readers looking to delve deeper into the financial intricacies of LSB Industries can utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a trove of valuable insights and tips.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.