Minnesota-based CHS Inc. pulls plug on planned $3 billion fertilizer plant in North Dakota



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BISMARCK, North Dakota — Minnesota-based CHS Inc. said Wednesday it will not move forward with a planned $3 billion fertilizer plant in southeastern North Dakota.

The farmer-owned cooperative instead is buying a minority interest in CF Industries Nitrogen LLC for $2.8 billion. The deal includes a supply agreement under which CHS can buy up to 1.7 million tons of fertilizer annually.

"Entering nitrogen fertilizer manufacturing through the purchase of a minority ownership in CF Nitrogen is the single-largest investment in CHS history," CHS President and CEO Carl Casale said in a statement. "This positions CHS and our owners for long-term dependable fertilizer supply, supply chain efficiency and economic value."

Plans for the fertilizer plant near Spiritwood had been in the works for more than three years. CHS Inc., based in Inver Grove Heights, Minnesota, announced about a year ago that its board of directors had given final approval for the factory, with plans to use abundant natural gas from the western North Dakota oil patch as a feedstock.

CHS said at the time that it would be the largest project in its history and the biggest single private sector investment in North Dakota. The plant was to begin operating in 2018, employing up to 180 workers and supplying fertilizer to farmers and agricultural products retailers in North Dakota and the surrounding states.

Gov. Jack Dalrymple and other officials at the time lauded the decision as good news for farmers and the state's energy industry.

"Of course we're disappointed that CHS has decided not to go forward with the fertilizer project," Dalrymple spokesman Jeff Zent told The Associated Press on Wednesday. "But we also understand that in business, all investments have to prove themselves financially, and sometimes, inevitably, some projects do not move forward."

Casale said Wednesday that investing in CF Nitrogen will provide more immediate benefits to CHS owners and customers than a four-year plant construction window.

"Ultimately, we determined that the construction cost, water supply challenges, overall risk profile and time required for the Spiritwood project had changed significantly since it was first considered," he said. "As a result, we concluded we couldn't achieve the level of returns needed to justify the increased costs and risks."

North Dakota Farmers Union President Mark Watne said he was disappointed the plant wouldn't be built but happy about the deal between CHS and CF Nitrogen.

"This step will ultimately help producers and will allow CHS to get their products to patrons on a timely basis," he said.

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