Koch Industries Completes $3.6 Billion Acquisition of Iowa Fertilizer Co

In a significant development within the global fertilizer sector, Koch Industries is poised to pay $3.6 billion for the acquisition of the Iowa Fertilizer Co., marking a strategic move in a period of robust industry profitability. The announcement comes as part of a broader trend of consolidation and strategic investments in the flourishing fertilizer market.

OCI Global, the parent company overseeing the Southeast Iowa-based plant in Wever, disclosed the sale on Monday, highlighting the transaction's potential to alleviate debt for OCI, generate returns for shareholders, and facilitate future investments for the multinational corporation. The completion of the sale is contingent upon receiving approval from U.S. antitrust authorities.

OCI's Chief Executive Officer, Ahmed El Hoshy, expressed pride in the achievements of Iowa Fertilizer Co. (IFCO) since its commissioning in April 2017. El Hoshy acknowledged the dedicated efforts of OCI and IFCO employees, emphasizing the construction of a world-class global nitrogen facility and the revitalization of a core industry in the United States.

Notably, the opening of the plant initially faced skepticism from Iowans due to the substantial incentives offered, totaling over $230 million in state and local support. However, OCI met all state obligations by successfully establishing a $3 billion fertilizer plant that currently employs 265 people full time, in addition to contracting with 50 to 90 individuals for engineering, electrical, and service functions.

Over the course of two years, the state provided OCI with $107 million, while Lee County extended $133 million in local tax abatement spanning 20 years. As part of the agreement, IFCO made predetermined payments to Lee County instead of traditional property taxes and also contributed a replacement tax on the natural gas used at the plant.

OCI Global, formerly known as Orascom since its inception in 2013, began as a family-owned construction company in Egypt. The company acquired its first fertilizer plant in 2005 and has since expanded its footprint to include plants in the United States, the Netherlands, United Arab Emirates, Egypt, and Algeria.

When Iowa entered into an agreement with Orascom in 2012 to build the Wever plant, agricultural groups anticipated that having a major supplier within the state would lead to reduced fertilizer costs for local farmers. IFCO's process involves combining nitrogen from the air with hydrogen from natural gas at high pressure and temperature to produce ammonia, a critical component in fertilizer production. The plant, which opened with plans to produce up to 2 million metric tons of fertilizer annually, reported a total fertilizer output in 2021 that included 1.2 million tons of urea ammonium nitrate and 700,000 tons of anhydrous ammonia.

Beyond fertilizer production, the plant also contributed to environmental efforts by producing 700,000 tons of diesel exhaust fluid (DEF), utilized to reduce greenhouse gas emissions when added to diesel fuel.

Lowa, recognized as the leading corn-producing state in the U.S., currently hosts around 30 fertilizer manufacturing plants. Koch Ag & Energy, a subsidiary of Koch Industries, serves as the holding company for Koch Fertilizer and various other subsidiaries. Headquartered in Wichita, Kansas, Koch Industries stands as one of the world's largest privately-owned companies, founded by Fred Koch and later supported financially by his sons Charles and David Koch, who were instrumental in funding the right-leaning political group Americans for Prosperity.