I'm really disappointed, having read more reports about the discovery of an "insurgent chemical factory" in Mosul, to discover that the first reports that made it a "chemical weapons" story weren't true. The irony would have been perfect. But, of course, an idea whose time has gone dies terribly hard - even though there isn't, apparently, any reason to think chemical weapons were prepared there, the word "chemical" still triggers off the Pavlovian response that - Yes! We've Found The WMD! Chemical, famously, is a bad word, as Ben Goldacre's Bad Science blog would tell you. Of course, any explosive is a chemical, and a weapon too. I wouldn't be surprised at all if the lab was producing drugs, either, whether for purely criminal ends or to fund insurgent activity.
More seriously, it wouldn't be impossible for them to be trying to brew up certain kinds of poison gas, Tabun for example, in an improvised lab. I wonder, though, if they would find it worthwhile in terms of the effort invested, given the impact they can get from the same investment in explosives? The only two recorded terrorist/guerrilla chemical attacks, carried out by Japanese cultists, needed extensive and expensive preparations in order to make sarin and release it on the underground, but killed only as many people as they might have done with primitive explosives.
(Broken link fixed)