Investment money is the final hurdle standing in the way of a proposed nitrogen fertilizer plant in North Dakota, according to former Brandon Simplot plant manger Don Pottinger, who is helping spearhead the project.
Pottinger said Northern Plains Nitrogen has resolved three of the four major impediments preventing construction.
A site to build the plant on has been acquired, natural gas to supply the feedstocks to produce anhydrous ammonia has been sourced and off-take agreements to ensure the product can move are essentially wrapped up, he said.
What they need now is cash.
“We have three of the four behind us — we have the land, the gas the agreement and now we are full speed ahead raising money,” Pottinger said.
A company from China might ultimately be the plant’s biggest backer, but Pottinger said there is also an opportunity for local producers to buy into the company.
At the moment, any producer willing to invest $15,000 will receive triple the equity in the plant, which will be built northwest of Grand Forks.
“The interest is there because the product that comes in is about 60 per cent imported,” Pottinger said.
While a couple of strong years might mean farmers have a little extra money in the bank, Pottinger said the plant will be even more valuable if the agricultural sector takes a dip.
“That next bushel you produce is more important when wheat is $2 compared when it is $4,” he said. “Facilities like this are important when the industry is strong, but even more important when isn’t.”
Other groups in North Dakota and Saskatchewan are also looking at similar projects.
Relying on imported nitrogen means producers are subject to a series of risks. Pottinger believes it’s paramount to be able to produce the input closer to home.
“In the nitrogen business, if all of the taps in North America are turned on, we will still have to import more than half of what is used in the country.”
The price tag of the plant is expected to top $1.5 billion.
Provided it moves ahead, at peak construction approximately 2,000 workers will be employed, with another 135 full-time positions once the plant is operational.
Republished from the Brandon Sun print edition December 6, 2013