Oklahoma chemical manufacturer set to fund $850 million El Dorado expansion project

LSB Industries Inc. of Oklahoma City has completed the sale of $210 million of preferred stock and warrants in a private placement the company will use to complete the construction of an ammonia plant, nitric acid plant and nitric acid concentrator at its chemical facility located in El Dorado.

LSB recently completed a new nitric acid plant at its El Dorado Chemical Company (EDC) that is now fully operational and has passed all performance tests. Company officials said construction on a 375,000 ton per year ammonia plant is approximately “85% mechanically complete.” That plant is expected to come on line in February 2016 and remains on schedule to begin production in the second quarter of 2016.

The total cost to complete the El Dorado expansion projects remains in the range of $831 million to $855 million, officials said, which includes $564 million spent at the end of the third quarter, $197 million to $216 million to be spent by the end of the year, and between $70 million to $75 million to be spent in 2016.

“We are pleased to have secured the additional financing to complete the expansion projects at our El Dorado facility,” LSB Interim CEO Daniel Greenwell said in a statement. “These projects remain on schedule, with the nitric acid plant in operation and producing, and the ammonia plant anticipated to enter service in the second quarter of 2016. The budget we articulated in early November remains intact. We continue to forecast a material increase in profitability once the El Dorado ammonia plant is in full production and we look forward to reporting our progress to shareholders.”

Publicly traded LSB principal business activities include the manufacture and sale of chemical products for the agricultural, mining and industrial sectors. LSB’s 150-acre, multi-product facility in El Dorado is located on a 1,400-acre site in the South Arkansas city. More than 150 employees produce a variety of agrochemical and industrial products including regular nitric acid and concentrated nitric acid, mixed (nitrating) acids, sulfuric acid, and both agricultural and industrial grade ammonium nitrate.

EDC uses ammonia as its primary feedstock, delivered by pipeline, and its products are transported to market via truck or rail. The El Dorado company distributes its agricultural products mainly through third party distributors, wholesalers and through 17 company-owned retail distribution centers in Texas, Tennessee, and Missouri.