Egyptian-based Orascom Construction Industries (OCI) wants to build a new nitrogen fertilizer plant on 318 acres of farmland along old U.S. 6 near Walcott, although they are also looking at three other Iowa sites – Lee County, Middletown and Clinton – as well as a site in central Illinois near Pekin. The plant would be built by Orascom’s subsidiary Iowa Fertilizer Co., would be its second United States fertilizer plant. In 2011, Orascom purchased Pandora Methanol LLC in Beaumont, Texas. The plant was renamed Orascom Beaumont and produces methanol and ammonia.
OCI is a leading international fertilizer producer and construction contractor, which traces its roots to a small family-run construction business, but today it is one of Egypt’s largest corporations with projects and investments across Europe, the Americas, Asia, the Middle East and North Africa. It operates five fertilizer production sites in the United States, Egypt, the Netherlands and Algeria, producing 7 million metric tonnes per year of nitrogen, 0.75 metric tonnes annually of methanol and 0.25 metric tonnes annually of melamine. They are active in 25 countries across the globe, employing 72,000 people worldwide and about 13 percent of its stock is owned by United States investors. The company has plans to split its construction and fertilizer businesses into two companies, a move approved unanimously by its shareholders last May. In addition to the proposed Midwest project, the company’s Fertilizer Group began production in May at a new plant in Sorfert, Algeria. It also has a proposed greenfields facility under development in Brazil. As of December 31, 2011, the Company’s subsidiaries and jointly controlled entities included OCI International-Cyprus and OCI Finance Limited, among others.
The USD 1.3 billion fertilizer plant being proposed by OCI would be the first new United States nitrogen plant built in decades and comes at a time when domestic production – but not demand – has dropped dramatically. The natural gas prices increases caused the United States nitrogen loose about half their capacity between 2000 and 2008. The cost of natural gas represents 70 to 90 percent of the cost of manufacturing nitrogen, and some plants were even dismantled and send them to places like China. But the fundamentals of the fertilizer industry are sound (in the United States alone the fertilizer business is estimated to be a USD 15 billion industry) and the demand for nitrogen has not declined, resulting in a significant rise in imported nitrogen.
In previous times, the natural gas prices reached a peak as high of USD 11 per million metric British thermal units, but now they are in the range of USD 2 and USD 2.50 and half of the United States nitrogen consumption is imported. So the OCI investment plan has a sound economic logic.