Gov. Mike Pence nixes fertilizer plant deal with Pakistani company in Posey County

Company wanted $1.3B in bonds

POSEY COUNTY, Ind. - Citing security concerns, Gov. Mike Pence closed the door Friday on a Pakistani company’s efforts to secure $1.3 billion in Indiana-issued bonds to build a massive fertilizer plant in Posey County.

The company, though, said it will "explore the full range of options" in hopes that it can still build the plant in Southwestern Indiana.

Pence’s decision comes after a four-month review that was triggered by a Pentagon official’s complaint that Fatima Group’s product manufactured in Pakistan was being used to make improvised explosive devices in the Middle East.

The company has since agreed to a series of changes to its product, but Pence said he would not be comfortable until those changes are tested by United States officials – a process that could not fit with the company’s financing schedule for its Posey County project.

"I did not take this decision lightly. Economic development is important, but the safety and security of our soldiers in harm’s way is more important," Pence said.

Regional economic development officials had pushed Pence to green-light a project that they said would create 2,500 construction jobs and 300 permanent jobs at the Ports of Indiana in Mount Vernon.

"It’s just an incredible disappointment, because I don’t agree with the decision," said Greg Wathen, the president and chief executive officer of the Economic Development Coalition of Southwest Indiana. "It’s hard to reconcile. It’s hard to understand, especially with Indiana being promoted as a state for pro-growth, that we would somehow decide not to pursue this project."

Midwest Fertilizer Corp., the legal entity developing the plant and funded largely by Fatima Group, said -- in a statement issued through a public relations representative but not attributed to a specific individual -- that it still hopes to build its plant in the area.

"Midwest Fertilizer is optimistic -- working together with the Posey County Economic Development Partnership and the Economic Development Coalition of Southwest Indiana -- that a joint effort will be successful," the statement said. "The company is continuing to explore the full range of options to try and advance this critical project to manufacture nitrogenous fertilizer for thousands of farmers in Indiana and the Midwest."

The company also touted the Fatima Group’s efforts to revamp its product.

"The new fertilizer is more inert, less explosive, and therefore less susceptible to misuse by insurgents and terrorists," it said.

The Indiana Finance Authority decided in December, under former Gov. Mitch Daniels, to authorize $1.3 billion in federal bonds that were available through a disaster relief program, as well as allow for construction at the port, to move the project forward.

Later that month, Lt. Gen. Michael Barbero said at a congressional hearing that Fatima Group, a Pakistani company that is investing heavily in the Posey County plant, had been "less than cooperative" in addressing security concerns related to its product.

Ammonium nitrate fertilizer had made its way from that company’s plant in Pakistan into improvised explosive devices being used by terrorist groups in the Middle East, said Barbero, the director of the Joint Improvised Explosive Device Defeat Organization.

Indiana Economic Development Corp. officials told Pence of the security concerns, and he quickly paused the state’s involvement in the Posey County project.

Since then, Barbero has negotiated with Fatima Group and said the company has agreed to make a series of changes to the substance of its product and its distribution methods in hopes of making it less explosive and tougher for terrorists to acquire.

This month, Barbero commended the "big steps" Fatima Group has taken. He said the company agreed to have a U.S. Department of Commerce official inspect its security processes, and to conduct joint testing of its new compound with the United States.

But Pence decided those changes could not happen soon enough.

"While we have been encouraged by promises made by Fatima Group to replace production of their current fertilizer with a more inert and less explosive formula in Pakistan, at this point in time, U.S. officials have not been able to independently confirm this fact and, as such, Indiana will not be moving forward with this project," Pence said. "Without assurances from our Defense Department that the materials which have been misused by the enemy in Afghanistan will be permanently removed from production by Fatima Group in Pakistan, I cannot in good conscience tell our soldiers and their families that this deal should move forward."

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