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Iowa fertilizer plant reaches 'peak construction'

Construction of a $1.8 billion nitrogen fertilizer plant in Wever, Iowa -- the first large-scale fertilizer plant in the U.S. in nearly 25 years -- is on schedule and should be completed early next year, says Shawn Rana, president of Iowa Fertilizer.

Construction of a $1.8 billion nitrogen fertilizer plant in Wever, Iowa -- the first large-scale fertilizer plant in the U.S. in nearly 25 years -- is on schedule and should be completed early next year, says Shawn Rana, president of Iowa Fertilizer.

"Things are progressing nicely," he says.

The Iowa plant, significant in its own right, takes on even more importance in the Upper Midwest because of two similar nitrogen fertilizer projects in North Dakota.

CHS says it's building a $3 billion plant in Spiritwood, N.D. Construction could begin this fall, with the facility up and running in the first half of 2018.

And Northern Plains Nitrogen wants to build a plant, which would cost an estimated $2 billion, near Grand Forks, N.D. Don Pottinger, the company's CEO, says it hopes construction will begin in 2015, with the plant up and running by 2018. A key engineering study, intended in part for investors who might commit large amounts to the project, is expected to be released later this month.

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Rana says he's familiar with the two North Dakota projects and knows the people involved in them have done extensive research. He also says he wishes the projects success.

His plant will focus primarily on markets in Iowa, Illinois, Indiana, northern Missouri and southern Minnesota. That might overlap somewhat with areas in which the Spiritwood and Grand Forks plants would market, but Rana doesn't expect there would be major competition.

Pottinger says there eventually could be limited competition in the northernmost area served by the Iowa plant and southernmost area served by the Grand Forks plant.

Also, Iowa Fertilizer will focus on UAN, a combination, in liquid form, of urea and ammonium nitrate, while the North Dakota plants would, though offering UAN, focus on dry fertilizer, at least initially, Rana says.

In any case, regardless of what happens with the two North Dakota plants, "At the end of the day, we were the first out of the gate," he says.

'Peak construction'

The Iowa plant, now 55 percent finished, is nearing what the company calls "peak construction." It has 1,900 construction workers on site, and expects to add 400 more in the next few months. Work on the plant began in early 2013.

Iowa Fertilizer hasn't struggled to attract employees, relying as much as possible on the local workforce and bringing in outside, specialized workers when needed, Rana says.

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Iowa Fertilizer is a wholly owned subsidiary of Netherlands-based OCI N.V., a global leader in nitrogen fertilizer production, as well as an engineering and construction contractor.

That provides the Iowa plant with invaluable expertise in building and operating, Rana says.

The North Dakota plants expect to tap natural gas from western North Dakota's oil patch to produce their nitrogen fertilizer. The Iowa plant will use natural gas piped in from Oklahoma.

Safety and "environmental friendliness" are essential for Iowa Fertilizer, and the company is using the "best and most advanced technology" to achieve them, Rana says.

Iowa Fertilizer also is "putting in all the systems," including "super-strong training," to be safe and environmentally friendly, he says.

The plant faces the strictest environmental standards of any plant in the country, he says.

"We're going to be the best," he says.

Corn prices have plunged since construction of the plant began, which could discourage farmers from applying nitrogen fertilizer to their crops.

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But Iowa Fertilizer remains optimistic, Rana says.

"The reality is, people still need to eat," and corn-fed meat is increasingly popular with consumers worldwide, he says. "We see demand for corn being consistent and strong."

The price of nitrogen fertilizer, like that of any commodity, rises and falls. But Iowa Fertilizer, besides being safe and environmentally friendly, will be efficient and cost-effective

That will allow the plant to be "the low-cost producer" and help it succeed regardless of market conditions, Rana says.

Industry rebound

Iowa Fertilizer's location in the U.S. Corn Belt also is a major positive, he says.

"We feel we're very strongly positioned with our location," he says.

Wever and surrounding communities have been supportive and helpful during construction, as has the state of Iowa, he says.

Rana says he's spent his entire career in the fertilizer industry and for many years was forced to watch as it lost ground to foreign competitors.

"It's very nice to see this industry return to America," he says.

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