OCI NV’s Iowa Fertilizer Co.’s $1.9 billion nitrogen plant remains on track, according to the company, despite a lawsuit by a subcontractor and a dust-up from a couple of local politicians.
“Iowa Fertilizer Co. continues to make tremendous progress in the construction of the new plant in Wever,” said company spokesman Jesse Harris last week. “In fact, the company plans to increase construction from its current level of approximately 2,000 personnel to approximately 2,500 in both March and April, taking advantage of improved weather conditions as we enter the final months of the project. Right now, the project is concluding the pre-commissioning phase for utilities and nearing the pre-commissioning phase for ammonia to the project, so variances in the number of people working will occur.”
Maintenance Enterprises LLC, a subcontractor, brought suit against Iowa Fertilizer and contractor Orascom E&C USA Inc. in U.S. District Court for the Southern District of Iowa, Davenport Division, on Feb. 19. The plaintiff said that on Dec. 22, 2015, it warned Orascom that it would halt work until Orascom paid overdue invoices. Thereafter, the plaintiff said it was told to prepare to hand over its work to Orascom, and the last work the subcontractor performed was Jan. 31, 2016. The plaintiff says it is owed some $53 million.
The plaintiff, which is owned by MEI Group, a unit of Crown Enterprise LLC, all of White Castle, La., says it was initially hired in September 2014 to work on the ammonia primary reformer furnace, and was retained to work on the urea unit in first-quarter 2015 after another subcontractor was terminated.
In the meantime, at least two Iowa politicians have been making hay over any perceived labor woes at the plant, including Democrat State Senator Tom Courtney of Burlington and Democrat Robert Krause, who is running for the seat of U.S. Senator Charles Grassley. Both have criticized the amount of federal and state aid to the project, and Courtney has called on the legislature to investigate.
There were major concerns at the plant in May 2015, when local union officials told the Des Moines Register that more than 3,000 workers were onsite in mid-April when Iowa Fertilizer changed contractors (GM April 27, 2015), and that about 1,500 workers were laid off, with only about 300 of those rehired (GM May 11, 2015). They cited reports that contractors were looking to hire non-union workers from elsewhere (GM May18, 2015). State officials eventually facilitated a meeting between labor and the company.
Without naming the plaintiff in the lawsuit, Courtney told the local press a new company had to be contracted to remedy subpar work from a Louisiana company. Neither side of the lawsuit commented on the issue last week.
Harris said that the plant is 94 percent complete and is slated to come up later this year. However, the plant is behind schedule, according to its expectations ten months ago. As of April 29, 2015, Iowa Fertilizer told analysts the plant would be in production in fourth-quarter 2015 (GM May 18, 2015).
In addition to any construction issues, one intervening factor is CF Industries Holdings Inc.’s agreement to buy select major assets of OCI NV, including the Wever plant, back in August 2015 (GM Aug. 10, 2015). The deal is expected to close in mid-2016. With a new owner on the horizon and a weak nitrogen market, the rush to production may have waned.