POSEY COUNTY, Ind. — What might have been a huge fertilizer plant in the far southwestern pocket of Indiana is on hold now because the company that wants to build it has run afoul of the U.S. Department of Defense (DOD).

Indiana’s new governor, Mike Pence, pulled the plug in mid-January on state financial support for the nitrogenous fertilizer facility to be operated by Midwest Fertilizer Group, a subsidiary of the Fatima Group, with headquarters in Pakistan.

According to a news release from his office, Pence was notified as soon as he took office that Fatima Group has been red-flagged by the DOD because it has not cooperated fully with U.S. requests to make more of an effort to eliminate smuggling fertilizer out of Pakistan to Afghanistan.

Fertilizer is one of the main ingredients in homemade bombs that are being used in Asia and Africa, known as Improvised Explosive Devices (IEDs). U.S. military and State Department officials have known for some time that fertilizer is smuggled into Afghanistan from Pakistan, sometimes disguised as detergent powder. IEDs killed more U.S. and NATO troops last year than any other means.

Fertilizer is either ground or boiled to release the calcium from the compound. The ammonia is the explosive ingredient that is then added to fuel oil.

“Economic development is important, but the safety and security of our troops in harm’s way is more important,” said Pence. “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.”

His press secretary, Kara Brooks, indicated last week no timeline for a solution has been given, nor has the governor’s office been given a timeline for the investigation.

Fatima is not banned from trading with U.S. companies, nor are its officials restricted from U.S. travel. The  Indiana Economic Development Commission (IEDC) informed Midwest Fertilizer/Fatima in a Jan. 15 letter that economic support has been deferred until the investigation is complete.

The IEDC had issued $1.27 billion in municipal bonds through the Indiana Finance Authority and offered other tax incentives to woo the facility to Indiana. It was to have been constructed at the Port of Indiana – Mount Vernon. Midwest Fertilizer is registered in the state of Delaware.

Last summer, according to previous news reports, the feds were supportive of the company, noting in a report Fatima was cooperating with the government. In his December 2012 testimony before a subcommittee of the U.S. Senate Foreign Relations Committee, however, Army Lt. General Michael Barbero – the director of the DOD’s Joint Improvised Explosive Device Defeat Organization – said the Fatima Group was being “less than cooperative.” The parent entity of Fatima Group is the Arif Habib Group.

Fatima is one of two fertilizer-producing companies in Pakistan and is considered, according to a report in The Washington Times, the source of a good portion of the product smuggled across the border into Afghanistan.

The military and the Foreign Relations Committee have prodded the Fatima Group to do something to curtail smuggling of its product. The Times reported U.S. officials have photographs of tons of Fatima fertilizer that was confiscated in Afghanistan.

Barbero charged there are only two sources of calcium ammonium nitrate being smuggled into Afghanistan. He said more than 60 percent of U.S. combat casualties in Afghanistan, both killed and wounded in action, are a result of IEDs.

He noted in his testimony that Afghanistan has banned the import of ammonium-based fertilizers, but an estimated 200 tons of fertilizer were used to make IEDs in Afghanistan in 2012.

One suggestion was to dye the fertilizer granules so they could not be disguised as powdered laundry detergent. Barbero testified the dye has not been added to Fatima Group fertilizer; however, a recent response by the Pakistan Embassy in Washington, D.C., to The Times indicated the company is marking fertilizer bags with tracking information.

The embassy’s statement indicated: “Fatima has initiated strict controls over its production, shipment and sale through their authorized dealers.” Batch numbers are being printed on each bag, with the date of shipment, the dealer to whom it is to be delivered and the customer name and address, the vehicle registration number and the driver’s name and ID number, according to The Times report.

The embassy did not respond to Farm World’s request for information by press time. Barbero acknowledged the Pakistani government and fertilizer producers have taken some steps to reduce the smuggling, just not enough.

Indiana economic development and Posey County officials have not given up hope the facility will eventually be built. If it ever goes online, the facility is hoped to eventually create 309 full-time jobs with annual salaries of $58,000 each, according to the original announcement distributed by the state Economic Development Office.

Posey County Economic Development Director John Taylor did not respond to a request for information about the project by press time.