Koch Industries has purchased OCI’s Iowa Fertilizer Co. for $3.6 billion, a project in southeast Iowa that sparked controversy a decade ago after snagging $110 million in state incentives.
OCI Global, the Dutch parent of Iowa Fertilizer Co., said Monday it sold 100% equity interest of the Wever plant to Koch Ag & Energy Solutions, a Koch Industries company, for $3.6 billion. The cash, free-debt deal followed a competitive purchase process, OCI said. Subject to federal antitrust review, the purchase is expected to close next year.
OCI built the Iowa Fertilizer plant, which produces 3.5 million metric tons of nitrogen fertilizer and diesel exhaust fluid annually, after receiving $109 million in state assistance and $30 million in local tax abatements.
The project, which created 260 permanent jobs and 3,500 construction jobs, was “one of the largest private sector construction projects in Iowa’s history and the first world-scale, greenfield nitrogen fertilizer plant built in the United States in more than 25 years,” OCI said
Iowa ag groups supported the project, saying it would lower Midwest nitrogen fertilizer costs for corn and other crops.
The state is the nation’s largest corn grower and second-largest soybean producer.
OCI said it sold the plant to significantly reduce the company’s debt, “unlock value for shareholders” and enable it to continue building lower-carbon ammonia and green methanol platforms. Its projects include a blue ammonia project in Texas.
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“Our strengthened balance sheet will support … the energy transition goals we share with many of our stakeholders, establishing us as a leader in the low carbon space,” said Nassef Sawiris, OCI’s executive chairman, in a statement.
Iowa Fertilizer “will be well-positioned for its next phase of growth” under Koch’s guidance, Sawiris said.
Privately held Koch, based in Wichita, Kansas, says its revenues reached $125 billion this year. The company employs 120,000 people in the U.S. and globally. In Iowa, Koch employs about 490 people at operations that include a fertilizer plant in Fort Dodge.
OCI said it has invested heavily in the Iowa Fertilizer Co.’s “continuous development,” including the “surrounding region’s distribution and logistics infrastructure to support the Midwest’s agriculture industry.” OCI initially placed the project costs at $3 billion.
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“In addition to supporting farmers throughout the region, the facility has enhanced the economic outlook across southeast Iowa,” the company said. Lee County, where Iowa Fertilizer Co. is located on about 320 acres, has historically had one of the highest unemployment rates in the state.
In October, the most recent data available, Lee County’s unemployment rate was still the third-highest in the state at 4.5%. Nearby Des Moines County was second-highest at 4.6%; Marshall County led the state at 4.8%. The statewide unemployment rate was 3.2% two months ago.
Ahmed El Hoshy, OCI’s CEO, said in a statement the company is proud of Iowa Fertilizer’s “extraordinary achievements since commissioning in April 2017.”
“We are exceptionally proud to have single-handedly built a world-class global nitrogen facility and revitalized a core industry in the United States,” El Hoshy said. “Today’s transaction is a testament to the team’s efforts and marks a natural evolution in OCI’s journey to create long-term sustainable value for all its stakeholders.”
The diesel exhaust fluid Iowa Fertilizer produces is used to help reduce harmful vehicle exhaust emissions.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.
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