News Local

Farmers cooperative seeks investors in fertilizer plant

By Vince Burke, Lacombe Globe

Terry Drabiuk, FNA vice president of operations held meetings in Camrose and Ponoka Nov. 21 and spoke of Project N, which is the plan to build a fertilizer plant in the western Canada.

Terry Drabiuk, FNA vice president of operations held meetings in Camrose and Ponoka Nov. 21 and spoke of Project N, which is the plan to build a fertilizer plant in the western Canada.

Officials from the Farmers of North America (FNA) are touring the province, looking to gain support for a proposed fertilizer plant project to be built somewhere in western Canada.

Terry Drabiuk, FNA vice president of operations held meetings in Camrose and Ponoka Nov. 21 and spoke of Project N, which is the name of the plan to build the fertilizer plant.

FNA is a cooperative that allows for better prices for products and services for its members. The plan is the same for the fertilizer plant, as Drabiuk said currently producers are subject to prices set out of New Orleans, and those prices increase the further one is from that centre. He said a survey of FNA members indicated the want for the plant’s construction and thus Project N was launched in 2010.

“This is the opportunity, a $1.76 billion (project). A plant that will produce ammonia, UAN and urea,” said Drabiuk.

The expectation is for 2,400 tonnes of ammonia per day, 3,425 tonnes or urea per day and 1,215 tonnes of UAN per day.

Drabiuk said the site for the plant has been chosen, but is not being released.

“We have now settled on a site and have told no one about it,” he said.

There are plans for supercentres to be built throughout western Canada to aid the delivery of product to producers at local levels.

Drabiuk said the plant allows for better fertilizer and related product pricing for producers with an interlooped integration process, where the fertilizer is already presold to its investors - the producers. It would be owned by those who invested paying them dividends as part of the investment.

The expectation is for the project to earn $400 million in cash flow through the wholesale of fertilizer.

“There will be distribution of $150 million to shareholders on an annual basis while the plant is being paid off. So after the plant is being paid off you have $400 million to play with,” said Drabiuk. It is expected to take 8.9 years to pay off the plant, which includes 3.5 years of design and construction duration.

The plan is to have the plant operational by 2017, but FNA needs 4,000 producers or those in the agriculture industry to buy into the project, currently there are about 2,000 signed on. Also 8,100 seed credit units are also needed to be purchased to reach the goal of 12,000. Seed credit units is risk capital from investors converted to equity once an offering memorandum is complete.

vince.burke@sunmedia.ca


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