Midwest Fertilizer Company’s EPC contract with ThyssenKrupp is now terminated.

The agreement, which had only been announced in January 2016, contained a “Financial Closing deadline,” for the first week of December.

Now that this deadline has passed, and MFC has not reached financial close, the contract is no longer in effect.

It isn’t entirely clear to me what is going on here: I don’t know if either party exercised any rights to void the contract unilaterally, or if the contract simply became moot after the deadline; I don’t know whether there is any link to the corruption scandal that led to the resignation of the TKIS CEO.

MFC provided a comment on the situation:

Midwest Fertilizer was notified of the contract termination last week and since then, senior management from Midwest Fertilizer and TKIS have been in communication to discuss how best to move forward with an EPC contract. Midwest Fertilizer remains confident the Indiana fertilizer manufacturing plant will be successful and Midwest Fertilizer is working toward a groundbreaking in 2017.
Midwest Fertilizer Company statement, 12/13/2016

In any case, this is a significant step backwards for MFC. It will need to renegotiate a new EPC contract before it is able to restart work on the financial close – there will be no financial close without a new EPC contract first.

In my opinion, the TKIS corruption scandal is probably immaterial when it comes to whether a big project like this can reach financial close (which isn’t to condone or accept that behavior). Other factors might be much more important, like the USD:PKR exchange rate. Nonetheless, the scandal may have tipped the scales here – in which case, I can’t see how the project can move forward.

Nonetheless, MFC looks forward to a groundbreaking in 2017.