State halts backing for foreign-owned fertilizer plant

Indiana officials are withholding state backing for a Posey County fertilizer plant over concerns about whether its Pakistan-based owners are doing enough at its overseas operations to keep the potentially explosive material from being used against U.S. troops.

The Indiana Finance Authority issued $1.3 billion in bonds in December for a nitrogen fertilizer plant that Midwest Fertilizer Corp. wants to build at the Port of Mount Vernon, in the southwest part of the state. Midwest Fertilizer is owned by the Fatima Group, a company based in Lahore, Pakistan, that already manufactures fertilizer in the south Asian country.

The state agency learned Jan. 14 about concerns that Fatima Group might not be cooperating with U.S. officials worried that fertilizer made in Pakistan ends up in improvised explosive devices in Afghanistan that have killed American troops, Indiana Economic Development Corp. spokeswoman Katelyn Hancock told the Evansville Courier & Press.

Indiana Gov. Mike Pence ordered the project halted shortly after his inauguration Jan. 14, and his office said at the time that the state had begun begun "actively investigating the situation in consultation with federal authorities" and the U.S. Department of Defense.

"Economic development is important, but the safety and security of our troops in harm's way is more important," Pence said in a statement. "We're in the process of making a careful evaluation of the appropriateness of Indiana's involvement in this project with those priorities in mind."

Kara Brooks, a governor's office spokeswoman, further emphasized the Defense Department's central role in whether the plant ever gets built.

"We're just working with federal officials to determine Fatima Group status with the DOD," she told The Associated Press on Friday.

To convert fertilizer into material that can be used in bombs, insurgents either grind or boil it to separate the calcium from the nitrate, which is then mixed with fuel oil.

The U.S. Senate Foreign Relations subcommittee heard testimony last year from Gen. Michael Barbaro, who said he met with Fatima Group leaders in 2011 to ask them to make their fertilizer easier to identify and track.

"While the international and U.S. professional fertilizer associations are receptive and actively addressing these issues, the producers within Pakistan have been less than cooperative. Despite making minor packaging, tracking and marketing changes, they have not implemented any effective product security or stewardship efforts," Barbaro said, according to a transcript of his testimony.

Eric Doden, president of the Indiana Economic Development Corp., said in a statement that the group was thrilled when Fatima approached it about its plan to invest more than $1 billion in the state and create hundreds of jobs.

"At the time, the (Defense Department) described the company's level of cooperation addressing issues as supportive," Doden said. "However, as soon as we learned of the (Defense Department's) significant change in position, the state paused the project until a thorough investigation can be completed."

John Taylor, the executive director of the Posey County Economic Development Partnership, said he's still working on the project "in the event that this project happens." He said his group hired consultants to help it research Fatima Group. The company makes a legal product that sometimes falls into the wrong hands, but that doesn't mean the company should be held responsible, he told the Courier & Press.

It is unclear what would happen to the bonds the Indiana Finance Authority issued if the project did not go forward.