March 13, 2018
Greenfield Nitrogen, an early-stage fertilizer company, has announced plans to raise $120 million toward building the first regional anhydrous ammonia manufacturing plant through grassroots ownership.
Located at Garner in northern Iowa, the plant will cost about $220 million to build and will produce 120,815 tons of ammonia annually.
On-site storage will allow the company to sell and store up to 66,000 tons (50% of annual production) for maximum profitability. Ownership will give farmers and ag retailers access to attractive manufacturers' margins.
U.S. continues to import N
In the last decade, abundant, low-cost natural gas made the U.S. one of the world's lowest-cost producers of nitrogen fertilizer. Still, the U.S. continues to import more than 6 million tons of nitrogen fertilizer, which is shipped long distances to reach the Midwest.
Though many nitrogen facilities have increased production, they now produce urea, UAN, or other nitrogen products, leaving less net ammonia available. After 2018, the Midwest could see a decline of up to 390,000 tons in the domestic supply of anhydrous ammonia due to product upgrades.
The Midwest is the world’s most intensive ammonia-use region, and yet ammonia is shipped long distances. That realization that anhydrous ammonia is a logistics and storage game is what led to the plans for development of this nitrogen plant.
Karl Theis, an engineer and farmer who understands the ammonia manufacturing process, came up with the idea in 2011 to build the plant. “In 2011, I received a bill from my local co-op for anhydrous at a cost of $835 a ton,” he says. “The production cost of anhydrous ammonia was about $235 a ton, thus providing a $600 spread.”
Designed to serve nearby market
Located in the heart of the Corn Belt, the Garner plant will serve the ag community within a 100-mile radius and produce enough ammonia to meet a third of the expected shortfall and about 1% to 2% of overall nitrogen imports. Should the market change in the future, the plant will be able to upgrade to other nitrogen products.
In addition to meeting local demand for nitrogen fertilizer, Greenfield Nitrogen is creating a new way for farmers and ag retailers to profit.
"Greenfield Nitrogen has created a truly distinctive way to allow farmers and agricultural retailers to invest in the same facility so that all investors gain access to manufacturers' margins," Theis says. "No other plant has invited participation from both groups."
Theis is an Iowa native and an industrial engineer with more than 20 years of experience in agriculture and farming.
Construction to begin later this year
The $220 million plant at Garner will use conventional, proven technology to produce nitrogen fertilizer and serve the local market. A seed capital round has already raised $4.7 million. The site is shovel-ready and permits are in hand. Construction is set to begin later this year and production is expected to begin in 2020.
Investment opportunities are open to accredited investors, and early forecasts show a 16% to 20% return on investment. Investor packets can be requested at GreenfieldNitrogen.com/showme In-person meetings can be found at GreenfieldNitrogen.com/programs.
Source: Greenfield Nitrogen LLC
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