Midwest Fertilizer Company, which plans to build a new fertilizer plant in Indiana, is losing support for its plans and one of the biggest original supporters has withdrawn his support. Indiana Governor Mike Pence withdrew his support for the project Friday after the Pentagon raised concerns that the Fatima Group’s products could be used to make bombs.

Pence has withdrawn the state’s incentives for the project, which was planned to be built near the Illinois border. The Defense Department has said it needs more time to determine if the company, which is owned by the Pakistan-based Fatima Group, has developed a less explosive fertilizer since its calcium ammonium nitrate can be an ingredient in improvised explosive devices, which are commonly used against U.S. soldiers in Afghanistan.

On Nov. 30, 2012, the Indiana Economic Development Corporation (IEDC) offered a package of incentives to Midwest Fertilizer Company to build a fertilizer manufacturing facility in Posey County. The Fatima Group, a Pakistan-based fertilizer company, owns 48 percent of Midwest Fertilizer Company.

"I did not take this decision lightly,” Pence said in a statement. “Economic development is important, but the safety and security of our soldiers in harm's way is more important.

"Throughout the past four months, our administration has worked in good faith to evaluate whether our state should be involved in this project. I am aware of Fatima Group's efforts and cooperation with federal defense officials in recent weeks and believe their actions to be sincere.

"While we have been encouraged by promises made by Fatima Group to replace production of their current fertilizer with a more inert and less explosive formula in Pakistan, at this point in time, U.S. officials have not been able to independently confirm this fact and, as such, Indiana will not be moving forward with this project.

"Without assurances from our Defense Department that the materials which have been misused by the enemy in Afghanistan will be permanently removed from production by Fatima Group in Pakistan, I cannot in good conscience tell our soldiers and their families that this deal should move forward."

The Indiana Finance Authority in December sold $1.3 billion of notes for the initial phase of the facility. The proceeds will remain in escrow until July 1. After that time, they would convert into bonds if the project proceeds. If the project is stopped, funds will be returned to investors.

In response to Pence’s statement, the Midwest Fertilizer Corporation issued its own statement expressing its disappointment with Pence’s announcement. It went on to say, “Midwest Fertilizer is optimistic — working together with the Posey County Economic Development Partnership and the Economic Development Coalition of Southwest Indiana — that a joint effort will be successful. The company is continuing to explore the full range of options to try and advance this critical project to manufacture nitrogenous fertilizer for thousands of farmers in Indiana and the Midwest.

“Even in light of today’s decision, the company emphasized that The Fatima Group — one of the investors in Midwest Fertilizer Corporation and headquartered in Pakistan — has implemented a comprehensive product stewardship program in Pakistan that tracks product from factory to farm, as well as voluntarily suspended sales of Calcium Ammonium Nitrate (CAN) fertilizer to the Pakistani provinces of Khyber Pakhtunkhwa and Baluchistan along the Afghan border. These initiatives have already been acknowledged as significant and meaningful by the U.S. Departments of Defense and State.”