New York-based Magnida seeking to build US$2B nitrogen fertilizer plant in American Falls, Idaho, but has been halted due to appeal from ConAgra Foods subsidiary Lamb Weston; subsidiary has nearby french fry plant, has concerns about odor, water quality
May 29, 2014
– A company seeking to invest $2 billion to build a nitrogen fertilizer plant in American Falls has hit a snag with its air quality permit.
But it wasn't an environmental group that filed an appeal against the state of Idaho for approving Magnida Magnolia Nitrogen's permit. Corporate agriculture giant ConAgra, whose subsidiary Lamb Weston has a french fry plant in American Falls, doesn't want the fertilizer plant in its backyard.
The Idaho Conservation League actually sent a letter in support of the project during the public-involvement period earlier this year.
"We've reviewed all their proposals and applications and were comfortable that the plant they are proposing meets all the stringent air quality requirements you could legally require," said Justin Hayes, Idaho Conservation League program director.
Magnida, a New York company, hopes to complete the financial arrangements this fall, with construction to begin in the summer of 2015. Its investors include a private equity firm led by former executives of Morgan Stanley.
It expects to hire 1,900 people during construction and have 170 people working permanently at the natural gas-fired plant. The plant would turn the gas into nitrogen fertilizer for domestic farmers. It could open as soon as 2018.
Lamb Weston ConAgra Foods recently raised concerns about the proposed plant's effects on emergency preparedness, odor and water quality. Its representatives met with Magnida CEO Ric Sorbo and his team two weeks ago and filed the appeal on the last day possible.
Sorbo was on Wall Street on Wednesday, assuring investors that the appeal was just a "blip" in his plans. But others suggested that ConAgra's appeal could delay the project at a key moment as Magnida works to build a plant to compete in the U.S. market.
"We are extremely frustrated with their response at the so-called midnight hour," said Sorbo. "We are very comfortable and confident that the state of Idaho will prevail."
The appeal is a potential blow to Idaho Gov. Butch Otter's economic development efforts. He has traveled around the world to help the company get investors for several years, including on his 2010 trip to China.
Sorbo said that since Magnida began its efforts, Idaho has demonstrated that it is open for business. But the appeal of the air quality permit sends another message to investors.
"I'm frustrated that someone in the Idaho business community could take this action against someone else in the Idaho business community," Sorbo said.
ConAgra spokeswoman Shelby Stoolman said Lamb Weston's plant has been in American Falls for 50 years and employs 600 people.
"We're not opposed to Magnida building a facility in American Falls. We are against the proposed location, 500 yards from our plant," said Stoolman, who is based in Eagle. "We appealed the air permit because we believe it is deficient in several respects, which we've outlined in our appeal."
Sorbo said that during their meeting, he offered to address all issues ConAgra raised in its appeal and comments. He said ConAgra has not been responsive.
Sorbo said Magnida is not moving somewhere else or quitting on Idaho.
"We have already invested $40 million developing the asset to where it is today," Sorbo said. "The notion we are going to stop ... it's just not going to happen."
Neither Otter nor Idaho Commerce Secretary Jeff Sayer would comment.
"We are aware of the appeal," Otter press secretary Jon Hanian said. "Because it's in the middle of the process, we aren't going to comment further."
The fertilizer plant's construction workers would make "high $50,000 range," as would most of the permanent workers at the state-of-the-art facility, Sorbo said.
Food manufacturing workers in Idaho averaged an annual salary of $41,934 in 2012, according to the Idaho Department of Labor. Lamb Weston ConAgra Foods advertised for a team leader production worker in American Falls this month with a wage of $23,000 annually.
ConAgra spokesman Stoolman said the company's objections are not about the potential of Magnida to drive up labor costs.
"It's about the Magnida plant's potential impact on our operations," Stoolman said.
"Our concerns are related to the many outstanding details about the proposed facility that have not yet been shared."