New fertilizer plant planned | Farmers of North America plans U.S. drive to sign up members
CHICAGO, Ill. — A Canadian farm input provider attempting to build a nitrogen fertilizer plant is looking south of the border for investors.
“We’re coming and we should be here shortly,” Jim Mann, chief executive officer of Farmers of North America, told an American audience gathered at the 2013 DTN Ag Summit.
The company needs more farmer investors for its proposed $1.76 billion nitrogen fertilizer plant, which will be built somewhere in Western Canada.
The plant would annually produce 1.2 million tonnes of urea and 425,000 tonnes of UAN liquid fertilizer.
“We have actually selected a site but haven’t told anybody where it is at,” said FNA vice-president Terry Drabiuk.
About 2,400 Canadian farmers have invested a little more than $8 million in seed money for the project that FNA calls ProjectN.
FNA hoped to have 4,000 farmers signed up at this point, but Mann said he is not disappointed, considering that ProjectN is still in the early stages.
FNA has 10,000 members in Canada who own about 20 percent of the nation’s farmland. The company is looking to sign up new members in the United States and encourage them to invest in ProjectN.
Mann hopes to secure about 425,000 tonnes worth of annual fertilizer demand from U.S. farmers, or about 30 percent of the plant’s production.
FNA first needs to establish itself as a legal entity south of the border in the Midwest states, where it thinks there will be the most interest in the project.
Mann expects to be signing up members early in 2014.
This is FNA’s second attempt at straddling the border. It had 400 foundation members in the U.S. Midwest at one time but growers in Ontario convinced the company to focus on the Eastern Canadian market before branching out into the U.S.
FNA officials have been attending U.S. farm meetings and talking with groups like the U.S. National Farmers Union, the American Farm Bureau and Northern Plains Nitrogen in preparation for its U.S. membership campaign.
Drabiuk told DTN delegates that ProjectN is unfolding at a rapid pace.
“A lot of people don’t know this but we’ve finished our bankable feasibility study. We haven’t told the media.”
In addition to selecting a site, the environmental work has been completed and is ready for submission to government regulators.
Mann said the next step is to find a business partner to invest in the plant. FNA has hired BMO Capital Markets to look for a partner.
The main selling point is that farmers in Western Canada pay more for their fertilizer than anywhere in North America, yet it is the cheapest place to produce the product due to low natural gas costs.
One DTN delegate asked Mann if FNA had accounted for rising natural gas costs due to increased North American natural gas exports.
Mann said the company has spoken to analysts who say natural gas prices will remain below $5 per gigajoule for the next 30 years.
ProjectN would be a closed-loop system where farmer investors in the plant would be obligated to purchase a certain amount of fertilizer annually.
Mann said the 2,400 Canadian farmers who have invested in the project represent about 10 million acres of farmland, which would require about 50 percent of the plant’s annual output.
If everything goes as planned the facility will be producing fertilizer by the first quarter of 2017.