Bloomberg Business has announced that EuroChem has “shelved” its decision to build a $1.5 billion fertilizer plant in Iberville Parish because of “changes on the financial markets, namely affected access to credit resources.”
The cancellation immediately throws into doubt the $6 million performance-based grant to offset the costs of site infrastructure improvements announced at the time. In addition, EuroChem was to have received the services of LED FastStart®. The company also was expected to utilize Louisiana’s Quality Jobs and Industrial Tax Exemption programs, Jindal said in making the announcement on July 10, 2013.
All that would appear to now be off the table with the state holding a favorable re-purchase option—except with the state facing a $1.6 billion budget shortfall, there apparently is no money to exercise that option.
“The decision on the project is delayed due to changes on the financial markets, namely affected access to credit resources,” Chief Financial Officer Andrey Ilyin said in Moscow.
Both Europe and the U.S. sanctioned Russia last year over the Ukraine conflict which stymied Russia’s biggest lenders from borrowing in the U.S. and European Union, which in turn plunged the ruble 46 percent against the dollar.
The $12 million real estate deal between the Louisiana Department of Economic Development (LED) and a Russian oligarch on 2,150 acres surrounding a Louisiana National Guard facility in Iberville Parish has been suspect from its beginnings two years ago because of the triple whammy of a curious buy-back clause contained in the agreement between the state and EuroChem Louisiana LLC, an option for EuroChem to purchase a second tract in St. John the Baptist Parish, and talk about environmental emission credits that were supposedly promised to Eurochem but then appear to have evaporated.
The transaction was part of a Senate bill that included what appeared to be a sweetheart deal between the state and Vantage Health Plan whereby Vantage was allowed to purchase the former Virginia Hotel in Monroe for $881,000 without having to bother with a pesky public auction and sealed bids.
That transaction was made possible (even though there was another party interested in purchasing the building that had been serving as the State Office Building in Monroe) by Senate Bill 216 (SB 216) by Sens. Mike Walsworth (R-West Monroe), Rick Gallot (D-Ruston), Neil Riser (R-Columbia), and Francis Thompson (D-Delhi).
SB 216 (which became Act 127 upon the signature of Gov. Bobby Jindal) contained both transactions with the EuroChem deal tacked onto the bottom of the Virginia Hotel sale as an obscure “Section 3” which called for the sale of 2,150 acres of land within the town of St. Gabriel in Iberville Parish to a then unidentified “business entity that enters into a cooperative agreement” with the Department of Economic Development.
Not only was the prospective buyer not named in the bill (contrary to the other part of the bill that clearly identified Vantage Health and the purchase price of the Virginia Hotel), but the bill also contained no mention of a purchase price for the Iberville property.
The bill passed the House by a 96-1 vote and by a 31-1 vote in the Senate. Voting against the bill in the House was Rep. Marcus Hunter (D-Monroe) while the lone dissenting vote in the Senate was cast by Sen. Dan Claitor (R-Baton Rouge). Seven senators and eight House members were absent or did not vote.
The Senate vote was on April 24, 2013, and the House approval followed on May 22. Jindal signed the bill on June 5 and the cooperative endeavor agreement was signed on June 14 by LED Deputy Secretary Steven Grissom—even though the bill did not become law until Aug. 1, 2013.
The name of the Eurochem representative on the state documents obtained from LED was Ivan Vassilev Boasher, identified only as “Manager.”
EuroChem, founded in 2001, is a Russian company owned jointly by oligarch Andrey Melnichenko (92.2 percent of shares) and CEO Dmitry Strezhnev, who owns the remaining 7.8 percent. It was Strezhnev, and not Melnichenko, who joined with Jindal in announcing plans for the $1.5 billion facility.
At the time the deal was announced, Melnichenko, one of the world’s richest men, said the planned facility would employee 200 and produce 1300 positions in related industries. Ilyin said the project may still be developed, possibly even this year.
“EuroChem is evaluating two final sites for its Louisiana plant,” Jindal said in his 2013 announcement. The Iberville Parish property had been on the market for more than two years through the Office of State Lands, and EuroChem deposited $12 million in an escrow account to buy the property. At the same time, EuroChem also secured an option to purchase a 900-acre, privately-owned tract in St. John the Baptist Parish. “Both Mississippi River sites are being evaluated for construction and logistics suitability, and the company will make a final site decision within the next year,” Jindal said. http://gov.louisiana.gov/index.cfm?md=newsroom&tmp=detail&articleID=4141&printer=1
The option on the St. John property, identified by sources as the Goldmine Plantation in the Mississippi River’s east bank near the town of Edgard, which was for 330 days, has expired and was not renewed. No documents requesting permits have been filed with St. John or Iberville Parish, the town of St. Gabriel or the U.S. Army Corps of Engineers.
The 2,150 acre parcel in Iberville Parish is isolated on three sides by the Mississippi River and surrounds the Carville Historic District that houses the National Hansen’s Disease Museum, the Gillis W. Long Military Center (Louisiana National Guard facility), and the U.S. Department of Labor’s Carville Job Corps Center. There are no exiting shipping terminals on the tract and the property is prone to flooding during times of high water.
One Iberville Parish official said late last year that he did not believe the project was going to move forward because of relations between the U.S. and Russia over the Ukraine crisis and because of current restrictions in Iberville on air emissions from existing plants which limits the amount of air emission credits available.
And it is those air emission, or carbon, credits that appeared to be the key in the entire deal.
One person close to the St. John transaction said that the purchase of the Iberville property “had to do with environmental credit.”
The credits, he said, were available from another company at the time they purchased the Iberville tract but are now gone. He refused to identify the company from whom credits were supposed to be available nor did he say what happened to those credits. “One was the deal (for construction) and one was about emission credits,” he said. “They purchased the Iberville land and continued to do business with us like it never happened.”
A spokesman for the Department of Environmental Quality explained that there are basically two geographic categories when considering air quality standards for permitting: attainment or nonattainment. When an area is considered to be in the nonattainment area, DEQ works with businesses to lower emissions to meet standards through “emissions credits.”
These “credits,” which are provided by the state, are gained by companies that make improvements to their current physical plants in order to reduce oxide and volatile organic compound (VOC) emissions. The credits can be bought and sold much like a commodity on the open market, he explained.
The credits also have to be acquired from companies within that particular designated geographic area that is considered in the nonattainment area.
Because Iberville Parish is within a nonattainment area, Eurochem would have to acquire the credits if planning to make an application for construction and would be required to demonstrate it had sufficient oxide and VOC credits to meet the application approval.
There is a flourishing international black market for emissions credits that has come under scrutiny by several investigative agencies, including Interpol, which calls carbon trading the “world’s fasting growing commodities market.”
Larry Lohmann, writing for New Scientist, says that the larger carbon markets are “poised on the edge of breakdown.” https://www.academia.edu/3152549/Regulation_as_Corruption_in_the_Carbon_Offset_Markets
Deloitte Forensic, Australia, calls carbon credit fraud “the white collar crime of the future.”
Still another unanswered question concerns that buy-back clause in the cooperative endeavor agreement between Eurochem and LED. The side of the ledger favoring EuroChem is the $6 million grant the state gave EuroChem, along with all the other tax incentives it supposed to have received but apparently now will not. But on Louisiana’s side of that same ledger is the clause that says if the fertilizer plant is not built, the state has the option of buying the land back at a reduced price or approving the buyer for re-sale.
So, what we have is a Russian entity purchasing 2,150 acres of land in Iberville Parish from the state for $12 million (and in the process, getting that $6 million grant and a laundry list of tax incentives) for the construction of a fertilizer plant that apparently will not be built there at all because the same Russian firm also signed an option on 900 acres in St. John the Baptist Parish but that option has now expired with no progress made toward construction at either site.
And now the entire deal appears to have been scrubbed.