Orascom invest $1.4 billion in fertilizer plant in Iowa, US

Orascom to invest $1.4 billion in fertilizer plant in Iowa, US

5:30 AM, 6th September 2012
Orascom to invest $1.4 billion in fertilizer plant in Iowa, US
Nassef Sawiris, Chief Executive Officer, Orascom.

CAIRO, EGYPT: Egypt’s Orascom Construction Industries plans to invest $1.4 billion in a fertilizer plant in Iowa, US shunning overtures from neighbouring Illinois because of the state’s budget crisis and taking advantage of cheap US natural gas and soaring grain prices. The shale-gas boom has spurred a surge of investment by chemical producers looking to tap cheap raw materials. Orascom said its proposed plant in Lee County in Iowa’s southeastern corner would curtail imports of nitrogen-based fertilizer most commonly used to support corn planting.

The Egyptian conglomerate is in the process of spinning off its construction arm but has acquired a local building company to help construct the new plant, which is slated to open in 2015. Orascom has been planning its US expansion for more than a year. Iowa boosted its tax-incentive package to more than $100 million to lure Orascom, though state officials said this was still less than was offered by Illinois. The plant will create an estimated 165 permanent jobs, along with 2,500 construction jobs over the next three years.

According to Nassef Sawiris, Chief Executive, Orascom, there remains plenty of room for new capacity as farmers in South America try to boost crop yields to the level seen in the US. He added that natural-gas reserves in Trinidad, a key supplier of nitrogen ingredients to companies such as Koch Industries Inc, are expected to run out within the next decade, which will increase reliance on US supplies.

The company is also evaluating other opportunities in the US. The company also announced that it was acquiring The Weitz Co, an Iowa-based general contractor that generated $681.5 million in revenue in 2011. It also plans a sizable expansion of a Beaumont, Texas, ammonia and methanol plant it acquired in 2011.

© Dow Jones News

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