SASKATOON — It is full steam ahead at Genesis Fertilizers despite a tumultuous June, say proponents of the proposed Saskatchewan mega-project.
“It’s not a matter of if, it’s a matter of when we get this project off the ground,” said Terry Drabiuk, vice-president of business development with Genesis.
The project is a proposed $2.89 billion, farmer-owned nitrogen fertilizer plant to be built in Belle Plaine, Sask.
Drabiuk said the project went through a “challenging time” in June when Jason Mann, the company’s founder and chief executive officer, suddenly stepped down.
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Mann is also the CEO of AgraCity, a generic crop input supplier that is attempting to financially restructure its business after experiencing cash flow problems.
AgraCity owes product to about 1,000 farmers and is attempting to reimburse growers for crop inputs they bought but did not receive.
Genesis has hired a new CEO to guide the company. Derek Penner, former president and CEO of Monsanto Canada, takes the reins as the project continues with its fundraising and front-end engineering efforts.
Mann is staying on as one of the five directors of Genesis, who all have equal voting rights.
The other directors are former Fertilizer Canada CEO Garth Whyte, former Yara Canada vice-president Kathy Jordison, former MNP partner Ian Craven and Penner.
Canadian farmers have committed $120 million to the project, including $33 million in cash. The hope is to raise another $280 million from growers.
One of those farmer investors expressed disappointment in how the Mann situation was handled at a recent fundraising event held in Saskatoon.
“He should have known what was coming down the pike and should have stepped away,” said the investor.
The farmer knows other growers in his area who are refusing to invest in the project because of Mann’s involvement.
He accused the other Genesis board members of dragging their feet and failing to replace Mann earlier.
Jordison said they found out about the AgraCity debacle at the same time as everyone else.
“We did not know any of this stuff was going on,” she said, adding Mann stepped down a week after the AgraCity news broke.
The grower asked if any of the executive leadership team or board members have invested in the proposed fertilizer company. He said farmers want to know.
Jordison said they are not allowed to invest in the firm because it would be a conflict of interest.
“We’ve got no skin in the game,” she said.
Another farmer at the meeting sai they had heard rumours that a grower who paid Genesis $50,000 for fertilizer never received it.
Jordison said that is an example of the misinformation circulating around coffee row.
That was money that was paid to AgraCity for crop inputs, not to Genesis for fertilizer, she said.
Mark Smith, chief financial officer of Genesis, said the only linkage between AgraCity and Genesis is they once shared the same CEO.
“We’re a separate entity,” he said.
“We’re financed in a separate way.”
Rob Saik, CEO of AgVisorPRO, who moderated the meeting’s question-and-answer session, said this is an opportunity for a reset of the Genesis Fertilizers project.
“I think we’ll look back at this chapter as one of the turning points,” he said.
“It might be one of the best things that happened.”
Saik said he is a supporter of the project, not an investor.
Smith said the construction cost of the project is $2.31 billion, but it has a total capital requirement of $2.89 billion when including interest, financing and other costs.
The goal is to raise $557 million in financing equity, with 75 per cent of that coming from farmer investors. The remainder of the equity would be provided by a strategic partner.
They hope to receive a $105 million government grant for building a plant that sequesters carbon.
The remaining $2.23 billion would come from debt.
“It’s highly leveraged,” said Smith.
“There’s a number of parties that will be motivated to lend us money.”
The hope is that various export credit agencies from around the world will provide about $1 billion in financing.
Genesis is targeting $600 million in financing from South Korea’s export credit agency.
In late 2024, Genesis signed a front-end engineering design (FEED) agreement with DL Engineering & Construction, a South Korean firm that builds fertilizer plants.
The FEED is essentially the construction plan for the project.
Genesis believes South Korea’s export credit agency will lend money to the project to showcase the country’s engineering know-how and carbon capture technologies.
Genesis is also counting on a $250 million loan from Italy’s export credit agency.
The company has signed agreements with European technology providers such as Thyssenkrupp Uhde and Stamicarbon, which will in turn be buying equipment from Italian manufacturers.
The company also hopes to receive $150 million in financial support from Export Development Canada.
If the company manages to secure that $1 billion in financing from those three government lending institutions, it believes it will then be in a “very strong position” to talk to commercial banks about providing the rest of the debt, said Smith.
Genesis has spent $24 million of the $33 million in cash that it has raised from farmers. It spent $4 million on securing the land in Belle Plaine where the plant will be built. The other $20 million has been spent on FEED costs.
The company estimates the FEED process was 31 per cent complete as of the end of June. It should wrap up in the first half of 2026.
The final investment decision will be made around this time next year.
Plant construction is scheduled to start in the second half of 2026 and will last about three years.
The plant will be commissioned and start production in 2029.
In the meantime, Genesis will continue asking farmers for money, which it has been doing since May 2021.
The farmer investor who questioned Genesis executives and board members for the way they handled the AgraCity situation noted that they have a long way to go if they need another $280 million from farmers.
However, he said it is a good time to be making the sales pitch because he was just quoted a price of $815 per tonne to put down fertilizer on his farm.
“We’re back in another environment again where this model should spur everybody to take 100 tonnes,” he said.
