06 September 2012 13:27 [Source: ICIS news]
LONDON (ICIS)--Egypt’s Orascom Construction Industries (OCI) will build a $1.4bn (€1.1bn) fertilizer plant in the heart of the US Corn Belt that will produce up to 2m tonnes of ammonia, urea and urea ammonium nitrate (UAN)/year for local customers, it confirmed late on Wednesday.
Work on the massive Greenfield project at Wever in southeast Iowa will start later this year and should be finished by mid-2015, the company said in a statement, adding wholly-owned subsidiary Iowa Fertilizer Company (IFCo) will construct the plant near the Mississippi River.
The group said the new nitrogen facility will be “the first world-scale natural gas-based fertilizer plant built in the US in nearly 25 years and will help reduce the country’s dependence on imported fertilizers which exceeds 15m tonnes of ammonia, urea and UAN annually”.
Once fully operational, the plant will produce between 1.5m and 2m tonnes/year of ammonia, urea, UAN and diesel exhaust fluid, which is used to reduce emissions in diesel engines.
The investment will be funded through a combination of equity and tax-exempt bond insurance. Local authorities have agreed to a package of financial incentives that includes $100m in tax relief measures and fiscal assistance for project-related public infrastructure works.
The facility will utilise modern production process technologies from Kellogg Brown & Root LLC, Maire Tecnimont Stamicarbon (Tecnimont) and ThyssenKrupp Uhde.
Commenting on the ambitious project, OCI CEO, Nassef Sawiris, said: “IFCo is well-positioned to supply nitrogen-based fertilizer products to farmers in the Corn Belt and help reduce their substantial reliance on annual imports of fertilizer into the country. We intend to expand our presence in the US.”
Meanwhile, OCI posted a 27.7% slide in second-quarter net income to $119.4m from $165.2m in the year-ago period. Consolidated second-quarter revenues slipped 8.5% year-on-year to $1.35bn from $1.47bn.
OCI said net income during the quarter was “impacted by a high effective tax rate due to higher contribution from our European operations and … it continues to incur start-up costs on Sorfert Algeria and OCI Beaumont with no corresponding contribution to the bottom line in Q2”.
Looking forward, the group expects to benefit from Sorfert and OCI Beaumont and that due to the severe drought in US, it expects “strong demand for fertilizer products in the upcoming harvesting season and prices to remain firm for the rest of the year”.
Separately late on Wednesday, OCI announced its construction arm will acquire Iowa-based construction firm The Weitz Company for an undisclosed sum.
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