OCI -- A Skeleton in its Closet

February 19, 2013 09:29 AM

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Orascom Construction Industries (OCI) of Cairo, Egypt broke ground in Lee County, Iowa in November 2012 with great fanfare. Under the name 'The Iowa Fertilizer Company' OCI expects the Nitrogen production project to employ up to 2000 construction workers and, upon the plant's completion, 165 full time regular employees.

OCI was offered sizable tax incentives totaling around $130 million including 2008 disaster relief funds. But questions have been raised as OCI is still part of a 2004 lawsuit that claims the Egyptian Company hid its identity behind Virginia-based Contrack International to secure $332 million in U.S. financed construction projects in Egypt.

According to a Cedar Rapids Gazette article, "The lawsuit alleges Contrack and two other companies collaborated to win USAID-financed contracts to build Egyptian infrastructure for which they should have been ineligible. They formed a secret, joint venture to conceal that one of the partners was an Egyptian company, the lawsuit alleges, because only U.S. contractors were eligible."

This comes as Indiana officials balk at Pakistan's Fatima Fertilizer's plans to build a Nitrogen producing complex in Posey County, Indiana while refusing to cooperate with military officials in Pakistan. Fatima is thought to be a major source of the CAN fertilizer that anti-American forces use against U.S. Troops in the form of Improvised Explosive Devices.

Foreign investment in American fertilizer manufacturing is becoming unpopular. While increased Nitrogen output where farmers need it most could help moderate fertilizer pricing, some argue that foreign investment would put its own needs above the best interests of the American citizen.

The Midwest needs a better source of Nitrogen. Anhydrous is priced at the top of the market right now, and lower pricing on healthy domestic N production is very attractive to the grower. Currently the U.S. imports just under half of the Nitrogen fertilizers it spreads in a given year.

Growers would benefit from new Midwestern Nitrogen projects as local production is expected to widen profit margins by lowering the cost of inputs. But opponents of the OCI and Fatima projects fear the U.S. may be giving away the farm to get it done.

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