Despite Governor Mike Pence's withdrawal of support, Fatima Group may yet gain approval to build their Posey County, Indiana nitrogen production facility. Pence was on board with the project initially, but once news broke that the Midwest Fertilizer Corp.'s parent company had attracted attention from the U.S. Department of Defense (DOD), Pence tabled the idea.
But DOD officials have sent word that Fatima Group is making necessary production and supply chain adjustments and the Posey County Board of Commissioners and Council have voted to revive the project and offer $1.3 billion in bonds to finance construction. Since the state has backed away and withdrawn support, Posey County has stepped up and created their own bond issuance package.
Project contracts, permits and permanent financing are expected to take until early December to square away suggesting groundbreaking in the spring of 2013. Indiana joins North Dakota, Iowa and Illinois in the quest for greenfield nitrogen projects.
These may be the last greenfield nitrogen plays we see in some time now. Agrium has reported that it will stall a $3 billion U.S. nitrogen project until they can find a partner to help shoulder the financial risk and secure a natural gas contract. But since Agruim had not yet chosen a site for this massive project, they may find it hard to find a natgas contract at such an early stage.
EIA reported better than expected injections to natural gas in storage over the previous week, lowering futures prices and suggesting these nitrogen facilities may find themselves producing nitrogen at very profitable margins. Demand is as sure as the crops need sunlight and these producers will find themselves with no shortage of customers.
The citizens of Posey County have taken cues from the Department of Defense and have voted and agreed to allow Fatima Group's Midwest Fertilizer Company to move closer to opening their doors in Indiana.
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