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Orascom Construction Industries (OCIC), Egypt’s biggest publicly traded company, said it will build a $1.4-billion fertilizer plant in Iowa, the biggest investment in the state’s history.
The planned project, with an annual production capacity of 1.5 to 2 million tons, will take advantage of low natural-gas prices and growing U.S. demand for fertilizers, Chief Executive Officer Nassef Sawiris said in a telephone interview from New York yesterday. OCI is also finalizing an acquisition of Des Moines-based Weitz Co., a construction company that will assist in building the plant, he said.
The investment is OCI’s second in the U.S., following the phased start of production at its $250 million ammonia and methanol plant in Beaumont, Texas, over the last year. The plant will be based in Lee County and is planned to start production in 2015, Sawiris said. Iowa is the biggest corn-producing state and the largest consumer of nitrogen-based fertilizer, according to OCI.
Increasing U.S. natural gas reserves and growing demand for fertilizers have been “game changers,” Sawiris said, making the project “a very attractive investment.”
The project will be financed using equity and a tax-exempt bond issuance, according to the company’s statement. Iowa has approved $100 million in tax breaks for the project, which will employ 2,500 people, it said.
Sawiris declined to disclose details about the acquisition of Weitz because the negotiations haven’t been completed. The company had a backlog of $787.7 million as of the end of June, which the company expects to increase by about 30 percent when it starts work on the fertilizer plant.
OCI shares were little changed at 284.15 pounds at the close in Cairo. The stock has climbed 41 percent this year, compared with a 52 percent increase for the benchmark EGX 30 Index (EGX30), valuing the company at 59.4 billion pounds ($9.7 billion).
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