Posco Holdings said Thursday that the company has agreed to cooperate with CF Industries, the world's largest ammonia producer, to co-produce blue ammonia in the US.

CF Industries operates ammonia manufacturing plants across the US and Canada, with an annual manufacturing capacity of around 9 million metric tons.

Under the agreement signed in Seoul earlier in the day, Posco Holdings and CF Industries will work together on a blue ammonia project in Louisiana. The two companies will build a new ammonia manufacturing facility in the region where CF Industries has been producing ammonia.

The project's budget and timeline, however, have not been confirmed yet, according to Posco Holdings.

Posco Holdings said the two companies will produce ammonia by using carbon capture and storage, a process used to reduce carbon emissions in industrial activities.

Posco Holdings expects it could reduce carbon emissions by more than 90 percent, compared to existing ammonia production methods. This project is also likely to benefit from the US Inflation Reduction Act, the company added.

It plans to import ammonia from the Louisiana plant for its hydrogen production, which can be used in its steel production and power generation.

“The US is one of the most important countries for Posco Group to build an economic and stable global hydrogen and ammonia supply chain,” said Yoo Byeong-ok, vice president at Posco Holdings.

The South Korean steelmaker has been looking into various green and blue hydrogen projects focusing on strategic countries that have renewable energy infrastructure in the Middle East and North America, in order to achieve carbon neutrality and establish a 7 million-ton hydrogen production system by 2050.

Earlier this month, Posco Holdings also signed memorandums of understanding with Argentina's state-owned energy company YPF and Thai energy firm PTTEP, to cooperate on low-carbon solutions and hydrogen businesses in the future.