Indiana authorities are now be rethinking whether the Fatima Group will be allowed to build a major new nitrogen complex in Posey County, Ind. The Indiana Finance Authority issued some $1.26 billion of Midwestern Disaster Area Bonds late last year (GM Dec. 17, p. 1). to help finance a new nitrogen complex in Posey County. The company was identified as Midwest Fertilizer Corp., which is backed by Pakistan’s Fatima Group.
The Indiana Economic Development Corp. is now telling the local press that it has suspended the project pending its own investigation and consultation with the U.S. Department of Defense regarding recent media reports regarding Fatima.
These reports have focused on Fatima’s history as a Pakistani calcium ammonium nitrate maker whose product has been used in improvised explosive devices (IEDs) that have been used against American and coalition troops, as well as innocent civilians in Afghanistan and Pakistan. Not only has Fatima’s product been used, but the company has not been too cooperative with U.S. efforts to keep the product from getting to terrorists. This according to Lt. General Michael Barbero, director of the Joint Improvised Explosive Device Defeat Organization (JIEDDO), who testified on the matter before Congress in December.
While Pakistani producers of CAN made minor packaging and marketing changes, Barbero said they have not established tracking processes to monitor and account for the distribution of their product. JIEDDO has been asking them to dye their product, but they have refused.
Barbero said that some 85 percent of IEDs employed against coalition forces are homemade explosives (HME), and of those, about 70 percent are made of ammonium nitrate derived from CAN, which is produced at two factories in Pakistan, with a total capacity of 870,000 mt/y. Barbero said that more than 60 percent of U.S. combat casualties in Afghanistan, both killed and wounded in action, are a result of IEDs. In 2012, some 1,874 U.S. casualties were from IEDs, with some 14,500 IED events during the year.
Barbero’s testimony has also aroused members of Congress, who have begun speaking out against the Indiana project.
The Fatima project in Indiana is the second floated for the state. The other, as previously reported, is by Ohio Valley Resources for Spencer County (GM Dec. 10, p. 1). By contrast, it is by a U.S. entrepreneur who did not receive $1.26 billion in disaster bonds for funding.
Last week, Fatima acknowledged in Pakistan that it is exploring the Indiana opportunity and provided a few more details. Fatima Fertilizer Co. told the Karachi Stock Exchange Jan. 31 that it is eyeing participation in a global consortium to set up a nitrogen plant in Indiana. Fatima said the plant’s production capacity will be 1.5 million mt/y, which will cater to domestic as well as future international demand. It said the main investment driver for the project is the long-term availability of natural gas at historical low prices due to the shale gas phenomenon. The company expects an attractive return on its 31 percent equity stake worth $150 million, and expects Pakistan to also benefit from this project.
In the meantime, Fatima Fertilizer on Jan. 30 posted profit-after-tax of Rs6.11 billion (US$62.5 million) in fiscal year 2012, compared to Rs4.11 billion (US$42.1 million) earned in FY2011, showing a growth of 48.66 percent. This despite a urea sales decline of 23 percent year-on-year (YoY) to 339,000 mt as the company took a hit from a decline in urea demand and excessive urea imports by the government. According to a brokerage house, despite the industry-wide pressure on nitrogen-based fertilizers, Fatima managed to report 3 percent YoY growth in CAN sales, which being a cheaper product, attracted farmer interest. Fatima’s market share in CAN improved from 62 percent in 2011 to 78 percent in 2012, which is