Northern Plains Nitrogen's path to Grand Forks still isn't clear, but the CEO of the potential $2 billion-plus fertilizer plant said he's optimistic about the project's future, citing what he sees as a market poised for resurgence as the catalyst for the investments project leaders have long pursued.
"The project is so good, and it is so necessary in the area, in the market that we plan to serve, that we are just bound and determined to pursue the financing until it's successful," Don Pottinger, CEO of the fertilizer plant, said in a Wednesday interview. "We have a good team in place, we have a strong board in place, and we continue to work diligently."
But the project is still working to draw investors, Pottinger said. Though it has "seed" money in place, he said the project is still working to draw investments substantial enough to get the project underway.
"The fertilizer business is very volatile and very cyclical," he said. "Though we've had the permitting in place for more than a year-maybe a couple of years-the price of fertilizer over the past couple of years has dropped rather significantly."
But Pottinger said he sees signs of a market that's bottomed out and is beginning to brighten again, pointing to recent growth in the stock of fertilizer producers like Agrium and Mosaic. He added project leaders are "in discussion" with "several capable and interested investing companies" both in the U.S. and abroad.
Headwinds and optimism
The project was first announced in 2013, and leaders had hoped to have the plant running sometime this year. The total project cost, according to Project Manager Calvin Coey, is now at about $2.5 billion.
Asked how much longer he felt the project would continue to wait for investment, Pottinger said "indefinitely" was too strong a word, but expressed confidence in the project nonetheless.
"We have enough reasons for optimism, ... we're working hard on it," Pottinger said.
But Chad Weckerly, a member of the North Dakota Farm Bureau’s Board of directors, identified economic headwinds for the project. Low commodity prices are driving farmers away from corn and wheat, which use nitrogen fertilizer, and toward soybeans, which don’t, he said, while a recent bump in urea prices appears to be a short-term hiccup. A strong U.S. dollar works in farmers’ favors when purchasing imported fertilizer, he said.
"I would really struggle with getting into a new fertilizer plant right now," he said, adding he expects commodity prices to keep struggling for another three years.
But Coey said there are still plenty of reasons to be excited about the project. He echoed Pottinger's confidence that the market will rebound soon and said that even if it takes longer, investing now could help position investors well when the plant finally opens-especially the way changing commodity prices like steel and copper have worked in construction costs' favor.
"We always tell folks is that we're looking for a sophisticated investor that understands fertilizer-the cyclic nature that it goes through, and it just cycles and it's normal and we're in a downturn, and you have to be able to ride through those cycles," he said.
Coey added project leaders are planning an investor meeting in Grand Forks for the near future.
Mark Watne, president of the North Dakota Farmers Union, said there' strong demand for fertilizer produced locally-one that doesn't have to be shipped across the country from as far away as Iowa or the Gulf of Mexico.
"I don't think there's a farmer out here who wouldn't like seeing a nitrogen fertilizer plant here in North Dakota," he said.