Farmer investors are getting an update this week on the progress being made with Genesis Fertilizers proposed $1.7 Billion Urea Fertilizer Plant for Western Canada.
Genesis Fertilizer and Grain already has a fertilizer distribution centre at Belle Plaine, which will also be the future site for the 700 thousand metric tonne urea fertilizer facility.
Over the last few years farmers have seen an increase in fertilizer prices and now are looking at Ottawa's proposed 30 per cent fertilizer emissions reduction target.
Genesis board member Garth Whyte - past president of Fertilizer Canada - doesn't believe we'll see a restriction on fertilizer.
"No government could do that. I've kind of ironic you look at the United Nations Sustainable objectives. The first two are in poverty and feed the world. The next ones are environmental. You need a balance you need both. I think we can do both."
Barrie Mann, vice president of investor relations says despite urea being produced in Western Canada, farmers here pay some of the highest prices because we're landlocked from shipping routes with the price being set out of NOLA (New Orleans Louisianna) port.
Under the Genesis proposal, 75 per cent of the plant's annual urea production will be sold direct to farmer investors who through their investment are locking in tonnage based on what they'll use on their farm, the other 25 per cent will be sold on the open market.
He points out the real benefit for producers as "investors" is the return on the margins direct to the farmer.
Whyte says it's really unique being a vertically integrated closed loop system, adding that the Belle Plaine area where the plant would be built offers a wide range of natural resources.
"The owner is actually going to buy the fertilizer so they're getting a surety of supply and they get some of the profitability from that fertilizer plant. That's a very appealing process. And if it can be set up in Belle Plaine where there's gas right there, water right there, electricity is there, it's central. That's really intriguing and a good thing."
Mann points out a number of benefits come with building the plant in Saskatchewan, with the natural resources that are available here.
The Saskatchewan Government is also supportive of the project through their tax incentives program with Genesis benefiting from up to $625 million just by building in the province.
Mann says at this point the Genesis project is moving along at a very strategic pace adding they've now reached the stage in the equity raise where they have sufficient capital and good reserves to move fully forward with the front-end engineering design.
"We're over in the Netherlands right now and meeting with the company StamiCarbon that owns the technology and builds the reformers that make the urea and also the granulation of the urea. So very crucial. They're about 50 per cent of the plant. The other side, of course, is the ammonia which is also in Germany, we will be meeting with that company next week. And that's all about narrowing down what they call the basis of design."
He notes the engineering phase takes about 12 months to complete, while the actual plant construction is expected to take about 32 months from start to finish.
Genesis Fertilizers will be also setting up a number of SuperCenters across Manitoba, Saskatchewan, and Alberta that will efficiently source, store, blend, and distribute fertilizer directly to farmers.
In general, there's a lot of discussion around fertilizer pricing and use with Ottawa's proposed fertilizer emission reduction target which suggests by 2030 the Federal Government wants to see fertilizer emissions reduced by 30 percent from 2020 levels.
Whyte says he's not concerned by the political climate today and the fertilizer emissions reduction goals.
"My prediction - there will be no restriction on fertilizer. No government could do that. It's kind of ironic you look at the United Nations Sustainable objectives. The first two are end poverty and feed the world, the next ones are environmental. You need a balance you need both. I think we can do both."
Source : Pembinavalley online