MONEY

Orascom: 'Defective' work delayed Iowa fertilizer plant

Matthew Patane
mpatane@dmreg.com

The "defective work" of a Louisiana-based contractor increased costs of and delayed a $1.9 billion fertilizer plant in southeast Iowa, according to the company constructing the plant.

In a response to a lawsuit against it, Orascom E&C USA claims Maintenance Enterprises conducted low-grade work on the Iowa Fertilizer Co. plant in Wever, employed insufficient manpower, repeatedly raised its costs for doing work and failed to meet deadlines.

When Orascom replaced Maintenance, new subcontractors "identified numerous defects" with Maintenance's prior work, according to the counterclaim.

Overall, Orascom estimates Maintenance has cost it an additional $65 million on the project.

Maintenance first filed a lawsuit against Orascom in February in U.S. District Court. The Louisiana-based contractor claims OEC stopped providing payments, "physically barred" it from removing tools and equipment, and owes Maintenance more than $53.4 million.

Orascom filed its response and counterclaim Friday.

Tiny unincorporated Wever abides as fertilizer construction, controversy boom

The $2 billion Iowa Fertilizer Co. plant rises from the Green Bay Bottoms in February along the Mississippi River near Wever in the southeast corner of Iowa. An $8 billion deal between CF Holdings and OCI has been canceled as of Monday, May 23, 2016, meaning the Wever plant will still be owned by OCI.

Orascom E&C is a U.S.-based subsidiary of Orascom Construction, which is a construction company based in Egypt and Dubai. Orascom is also the owner of Des Moines-based construction firm The Weitz Co.

The plant is operating under the name Iowa Fertilizer Co., a subsidiary of Netherlands-based OCI N.V. that was previously a part of Orascom before a company split.

The fertilizer plant project has received criticism due to the hundreds of millions of dollars in local, state and federal incentives it has received. For example, the Iowa Economic Development Authority has approved providing about $107.5 million in state incentives for the project.

Proponents, such as Iowa Gov. Terry Branstad, have hailed the fertilizer plant as a much-needed economic engine for southeast Iowa and Lee County.

The Iowa Fertilizer plant was initially supposed to open in late 2015 or early 2016. It is now expected to be complete in mid- to late 2016.

In a recent earnings report, Orascom reported a net loss for its 2015 fiscal year, blaming construction-related challenges at the Iowa Fertilizer plant.

Once finished, the plant is expected to employ about 240 people and make between 1.5 million and 2 million tons of nitrogen fertilizer annually.