The Pursuit of Domestic Nitrogen

March 11, 2013 10:22 AM

The United States has a need to increase domestic production of nitrogen fertilizers. Nearly half of the nitrogen U.S. growers use each year is imported exposing corn production's most costly nutrient to volatile world market pricing.

I recently asked Iowa Secretary of Agriculture Bill Northey what it was going to take to encourage nitrogen production in the Midwest. Northey said, "Part of the problem is the expense. These are massive undertakings and if they cost one million dollars to build, we'd have lots of them. But they don't...they cost one billion dollars so it takes a special kind of company to pull that off."

Two greenfield projects have been proposed -- and funded -- in the last year that have caught our attention. The first is a project in Lee County, Iowa which has come under criticism for the amount of tax incentives the Egyptian parent company, Orascom Construction Industries (OCI), was offered to build in Iowa. Reports have since surfaced that OCI may have some questions to answer regarding allegations of tax evasion in Egypt and for misrepresenting itself in Virginia in order to be eligible for funds there.

The OCI project is on hold as archaeologists determine the significance of artifacts uncovered there during survey work, after OCI had broken ground. But another foreign fertilizer interest has their greenfield project stalled in Posey County, Indiana. Fatima fertilizer was slated to receive tax incentives much like the ones offered OCI in Iowa, but the Department of Defense has balked at that project.

In September of 2011, Lt General Michael Barbero -- director of the Joint Improvised Explosive Device Defeat Organization -- urged Fatima to help reduce the illicit use of their ammonium nitrate fertilizer as the substance was being used in Pakistan and Afganistan to create the improvised explosive devices that have been so destructive for the efforts of the United States to subdue the region. Fatima refused to comply.

One year later, Fatima incorporated the Midwest Fertilizer Corp. in Delaware and was issued $1.3 billion in U.S. disaster bonds -- funds that are now on hold in escrow. When Indiana Governor Mike Pence heard about Fatima's questionable policies back home, he put the deal on hold to investigate Fatima's actions in Pakistan.

A Saturday article form the Evansville Courier & Press in Indiana reports that Fatima has since then shown General Barbero positive results. Fatima has agreed to suspend sales of of ammonium nitrate fertilizer in two Pakistani states that border Afganistan. The move shows good promise, and may have Fatima's Midwest Fertilizer Corp. back on track soon. The Evansville Courier posted a timeline that outlines the entire Fatima story.

Two foreign entities have made good progress toward providing the U.S. with domestic nitrogen production. Nothing worth doing is easy, they say -- from allegations of supporting terrorism to tax evasion to archaeological artifacts, nitrogen production is much more complicated than assembling the brick and mortar and throwing the big red switch to "on".

OCI still plans to throw the big red switch in 2015 and, if Fatima can satisfy the Department of Defense and the Indiana Governor, the Midwest Fertilizer Corp. will do the same in early 2016. Until then, the occasional CF expansion and continued good relations with Canada will have to serve as progress toward increased fertilizer independence.


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