Keystone Agricultural Producers is joining the North Dakota Corn Growers Association’s bid to build a farmer-owned nitrogen fertilizer plant.
With a feasibility study already completed, and sites in eastern North Dakota being examined for the $1.5-billion plant, the project is moving towards the business-planning stages.
Following consultations with commodity groups with the organization, KAP has moved to secure a seat on the proposed plant’s board, said president Doug Chorney.
“We think there’s a real appetite among farmers to take control of some of their costs, and I think this facility will be just the kind of opportunity we need to address nitrogen fertilizer prices,” said Chorney.
Retired industry veteran Don Pottinger, a former manager of the Brandon fertilizer plant now owned by Koch, is serving as a consultant for the project.
There’s a strong business case for the plant thanks to growing nitrogen demand and expectations that natural gas prices will stay low for several decades, he said.
“In western North Dakota, the amount of natural gas coming out of the ground that is being flared is simply unbelievable,” said Pottinger.
With corn sucking up an estimated one pound of nitrogen fertilizer per bushel, and new high-yielding canola varieties not much further behind, there is a strong need for alternative supplies, added Pottinger, noting two-thirds of North American supplies are currently imported.
“Those products have to be ordered and paid for months in advance, and come through sometimes perilous waters and gulfs to get to ports here,” he said.
The proposed plant, roughly double the size of Koch’s Brandon plant, would service Manitoba, southern Saskatchewan, the “gap” in the Dakotas, and parts of Minnesota and Montana where no nitrogen fertilizer plant exists today.
Farmers may be offered shares in the plant at a cost of $50,000 each as early as next February. Construction, which would require an estimated 1,500 workers, is expected to take about two years. Once opened, prices for its products will be indexed to global markets, and farmer-investors will benefit from dividends earned via equity ownership.
Brian Chorney of the Manitoba Canola Growers Association has been chosen to represent KAP on the project’s board.
Doug Chorney said that there will be a “hefty” cost associated with securing that seat, including administration, business planning, technical and legal expertise, as well as per diems and travel.
“It’s going to mean a great opportunity for Manitoba farmers to have influence on how the new fertilizer plant is structured,” he said, adding that KAP will push for a co-operative-type structure.