TOKYO - Mitsui & Co has started construction of an ammonia plant in the United Arab Emirates (UAE) with partners including an Abu Dhabi National Oil Company (ADNOC) unit, it said on Tuesday.

The move comes as the Japanese trading house steps up its efforts to build global supply chains of greener fuels such as hydrogen and ammonia to help advance energy transition and tackle climate change.

Mitsui has also signed a loan agreement with the Japan Bank for International Cooperation (JBIC) to finance the development of the project, it said in a statement.

Mitsui's partners are TA'ZIZ, which is owned by ADNOC, Fertiglobe, and South Korea's GS Energy.

The plant, located in Al Ruwais in the UAE, aims to start producing 1 million metric tons per year of ammonia from 2027, with lower carbon dioxide (CO2) emissions compared to conventional ammonia.

Additional facilities will be installed in the plant to capture and store CO2 emitted during the manufacturing process, with plans to begin production of clean ammonia by 2030, Mitsui said.

Mitsui will off-take a certain volume of the clean ammonia produced at the plant for supplying Japan and other Asian markets, providing it for use as fuel, chemical and fertilizer feedstock, among others, it said.

In the UAE, Mitsui and ADNOC have been jointly developing and managing a liquefied natural gas (LNG) plant since the 1970s.

(Reporting by Yuka Obayashi; Editing by Christian Schmollinger)