FNA nitrogen plant delayed

Plans to build a farmer-owned fertilizer plant in Saskatchewan are still in the works, but the project has been delayed.

“We were probably a victim of our own optimism,” said Bob Friesen, spokesperson for Farmers of North America’s ProjectN.

“We had very optimistic timelines, and they have sagged a little bit because the project is so big and there are so many complexities.”

FNA is attempting to build a $2.2 billion nitrogen fertilizer plant in Belle Plaine, Sask., which would produce 1.2 million tonnes of urea and 425,000 tonnes of UAN liquid fertilizer a year.

The original plan was to have the plant in operation by 2017, but the start-up date has been pushed back to 2018.

Friesen said it has taken longer than expected to get the permits and other arrangements in place for developing the site.

The technical project permit, which includes the required environmental permitting, is almost ready to be submitted to the provincial government.

“When that permit is ratified by the provincial government and comes back, we’re ready to go,” said Friesen. “We’ve already been told that (the province is) going to deal with that as quickly as possible to give it a really fast turnaround.”

It also took longer than expected to consult with both national railways to figure out where tracks would be positioned at the Belle Plaine site.

FNA has started discussions with natural gas companies to secure a long-term supply agreement and has submitted a water licensing permit to the province.

Friesen said talks with technology providers, engineering firms and construction companies are heating up. Interest in the FNA project escalated after CHS Inc. decided not to build its plant in Spiritwood, North Dakota.

All of the preliminary work is being funded by $9.5 million in seed money contributed by 2,500 farmers.

The next step will be to find a strategic partner willing to put up “meaningful equity” in the project.

FNA is looking for an investor with prior experience running a nitrogen fertilizer plant that is willing to make a long-term commitment to the project.

Friesen said his organization has been in discussions with potential partners who are intrigued by the low natural gas prices in Western Canada and farmer involvement in the plant.

The goal is to have farmers own a significant portion of the $2.2 billion facility.

“We want to raise as much capital from farmers as we possibly can,” he said.

FNA has an informal agreement with a company that will take all the fertilizer from the plant that the farmer-owners can’t use.

FNA hopes to complete a fundraising campaign for its related Genesis Grain & Fertilizer project before it starts a fundraising effort for ProjectN.

The company is attempting to build a series of seven western Canadian fertilizer distribution super centres: three in Alberta, three in Saskatchewan and one in Manitoba. Those facilities will distribute the fertilizer produced by the Belle Plaine plant.

FNA is attempting to raise money to build the first super centre in Belle Plaine, which will have 50,000 tonnes of dry storage capacity that can be turned three times a year.

The facility would store nitrogen and other types of fertilizer and would have full blending capabilities.

The original plan was for farmers to provide the entire $26 million required for the inaugural facility through an offering memorandum that closed April 30.

FNA has since decided to lower the target to $15.3 million, which will net $13 million for the project. The remaining $13 million will come from debt financing.

The contribution deadline has been extended to Dec. 31. FNA has already raised $6 million from farmers that is sitting in trust.

Friesen said FNA would ideally like to have the facility built and running by next spring 2016 be-cause it would allow farmers to pocket the $50 to $80 per tonne in margins currently going to fertilizer retailers and distributors.

“That’s the piece of the pie we want to capture with Genesis before ProjectN is in operation,” he said.

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