Indiana reopening discussion on incentives for Midwest Fertilizer

08 April 2014 18:11  [Source: ICIS news]

HOUSTON (ICIS)--Nearly a year after the state of Indiana withdrew financial support for a nitrogen plant over concerns with ownership keeping fertilizer products from becoming improvised explosives, Governor Mike Pence (Republican) on Tuesday said that the state will reopen talks over economic incentives for the Midwest Fertilizer project.

Midwest Fertilizer has a 48% ownership stake from the Fatima Group, a fertilizer manufacturer based in Lahore, Pakistan. The rest of the ownership is a consortium of international investors.

According to Pence, the state has been informed by federal authorities that Fatima has reformulated its fertilizer to make it more inert and less likely to detonate. In addition, the company has provided a high degree of cooperation and transparency in addressing these concerns, the governor said.

“This week, the State of Indiana was informed that our defense experts completed the second series of tests on the experimental formula and described Fatima Group's efforts to improve the safety of its fertilizer as commendable," Pence said. "In addition, US officials have reported that the government of Pakistan and the Fatima Group have implemented several positive measures to make it more difficult for extremists and terrorists to obtain the company’s products in the region."

“With continued cooperation on the part of the government of Pakistan and Fatima Group, we remain hopeful that the state of Indiana will be able to renew our support for this important economic development project with the confidence that we have done so in a manner that put the interests of our soldiers and their families first,” he added.

Pence did not reveal when discussions would start or whether there would be any modifications to the previously proposed incentives for the fertilizer project, which is viewed by local officials as potentially having a significant economic boost to the area primarily from the creation of new, high-paying jobs at the plant.

In May 2013, Pence and state economic officials decided that Indiana was not going to continue with assisting the project with the lucrative incentives primarily based on information received from the US Department of Defense.

The federal agency at the time had claimed that a segment of the proposed ownership group had been “less than cooperative” in efforts to reduce the presence and creation of explosive devices that had caused numerous deaths and injuries to American soldiers in overseas battlefields.

In December 2012, the Indiana Finance Authority had issued $1.3bn in bonds for the construction by Midwest Fertilizer of a nitrogen facility west of Evansville that, upon completion, had expected to cost $1.8bn and create 300 permanent jobs. The plant was anticipating supplying the domestic agricultural markets within the Midwest.

After learning of the federal government’s report on Fatima, the state agency put the financial pledge on hold while officials investigated further. But at the plant’s location in Posey County, Indiana, local economic officials have continued to try to advance the project, with commissioners voting last summer to preliminarily approve the plant as well as the issuance of bonds to help financially support the project.

Midwest Fertilizer is working on acquiring necessary permits related to issues such as water usage and air quality necessary for the production of nitrogen fertilizer. While no capacity figures have been revealed, the producer has previously stated its intentions to break ground on the site by this summer.

By: Mark Milam
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