Egypt Kuwait Holding Co. (EKH), a major investor in the proposed $2.5 billion Magnolia Nitrogen Idaho (Magnida) project in American Falls, Idaho, told Bloomberg last week that it was pulling out of the project due to high construction costs. EKH Chairman Moataz Al-Alfi said the company may instead invest in the Middle East. Cairo-based EKH is an Arab private equity consortium established in 1997.
In its annual report last year, EKH said it acquired 100 percent of Magnida’s share capital in November 2012, including water rights, for $25 million, giving it a controlling stake, but Magnida CEO Ric Sorbo said at the time that EKH was one of multiple investors (GM Sept. 15, 2014). He said EKH would be part of a group of domestic and global investors who would contribute a total of $800 million, which would be used as a down payment on the project.
Sorbo was not immediately available for comment last week. However, Kristen Jensen, executive director of the Great Rift Business Development Organization, who has worked closely on the Magnida project, and Brett Crompton, publisher of the Power County Press, both told Green Markets that Magnida officials continue to pursue financing for the project.
At the end of March, Sorbo told Green Markets that Magnida hoped to select either Bechtel/UHDE or KBR/Kiewit as the general engineering, procurement, and construction contractor by the end of April, finalize financing by early summer, and begin construction by the end of this summer (GM March 30, p. 1). Sorbo said institutional investors and sovereign wealth funds showed interest in the Magnida project during the first quarter of 2015, broadening its investment base.
Societe Generale SA, a Paris-based multinational and financial services company, was selected by Magnida as the project’s lead banking institution.
Magnida originally had hoped to select the project’s contractor by last August, but bids submitted by the two companies reportedly were higher than anticipated. The company also had hoped to reach financial close by the end of last December.
The Magnida plant would be constructed on 450 acres zoned heavy industrial next to ConAgra’s Lamb Weston potato processing plant in Power County. ConAgra fought the issuance of an air quality permit to the Magnida plant until Idaho Gov. C.L. “Butch” Otter intervened last year to end the dispute between the two companies.
The plant would use 85 million standard cubic feet of natural gas per day as a feedstock to produce up to 2,500 st/d of liquid ammonia and make up to 4,100 st/d of granulated urea, up to 2,900 st/d of UAN, and up to 1,050 st/d of diesel exhaust fluid.
Magnida estimates 150 full-time workers would be employed at the plant, and between 1,500 and 2,000 workers would be needed during the construction phase.