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Plans for Hancock County ethanol plant on hold.
The bright promise of an ethanol plant in Hancock County is somewhat dimmer with the start of 2009.
Nationally, the U.S. saw the second-biggest corn crop ever after ideal summer growing conditions last year. But when harvesting began, the U.S. economic crisis fueled fears that foreign demand would drop. In October, ethanol took a big hit.
Ethanol giant VeraSun Energy Corp., owner of a plant in Dyersville, filed for protection from creditors under Chapter 11 of the federal bankruptcy code. Corn prices plummeted.
Other ethanol plants followed suit, some closing, many never starting to build in their planned locations across the state.
Construction on a proposed 100-million-gallon Harvest Biofuels ethanol plant near Garner could be in the same situation.
Groundbreaking of the Addison, Texas, company was to have taken place by the end of July 2007, but financing slowed, then halted the process.
In August 2007 the Iowa Transportation Commission awarded Hancock County with a $270,000 RISE (Revitalizing Iowa's Sound Economy) grant, which the county requested to assist in paving two roads that would access the ethanol plant
Harvest Biofuels plans to build on a 180-acre parcel of land in Concord Township east of Garner, but Hancock County Supervisor Jerry Tlach doesn't see any work happening on the project any time soon.
“The company has extended their option through April,” Tlach said. “I can't imagine it's really favorable to build (an ethanol plant) right now.”
Calls to Harvest Biofuels representatives were unreturned by press time.
The supervisors were hoping to add up to $18,000 in tax revenue to the county when the agricultural land the company would build on changed over to industrial. The change in zoning will not be made until construction.
The proposed ethanol plant has a 10-year, 100 percent abatement of the taxes on the improvements on the property.
As part of the agreement the company committed to donating $50,000 annually to Hancock County to be dispersed at the discretion of the supervisors for fire protection, emergency medical services and the Hancock County Memorial Hospital.
News-Tribune Editor
Another ethanol producer looking for financial answer.
A northeast Nebraska ethanol plant has stopped taking deliveries on corn and its management is appealing to farmers with contracts to provide that corn for less money to help the plant survive what its management describes as “this economic storm.”
The leadership of Husker Ag LLC at Plainview met with contract holders at the nearby Osmond city auditorium Monday.
General manager Seth Harder was not available to answer questions afterward. But the letter inviting farmers to attend referenced rapidly rising corn prices early in 2008 and then “a mass selloff of commodities” and rapidly falling corn prices later.“We would like to discuss all options available to both of us to help Husker Ag make it through these tough economic times while continuing to provide a valuable market for your grain,” said a single-page meeting invitation signed by Husker Ag Board Chairman Mike Kinney.
The management of VeraSun, which owns ethanol plants at Ord, Albion and Central City, filed for Chapter 11 bankruptcy protection in October after getting caught up in a situation in which it bought corn at $6 a bushel and higher for use in Nebraska and at its plants in other states.
Under the terms of the pending bankruptcy proceeding, Sioux Falls-based VeraSun was allowed to reject contracted deliveries to plants that had been taken off line as it continues to seek a financial solution.
Lincoln attorney Steve Mossman, who specializes in agricultural law and represents several farmer-clients in the VeraSun proceedings, doubts that Husker Ag can pursue that same strategy.
“Absent a bankruptcy filing,” Mossman said Monday, “the contracts between Husker Ag LLC and producers would be binding and enforceable by producers, particularly in terms of the price that’s set in each of those contracts.”
Signs of trouble at Plainview, located about two hours north of Lincoln, are only the most recent for an industry that had been expanding rapidly and largely to respond to a federal renewable fuels mandate.Besides VeraSun, among the other signs of turmoil are decisions to stop construction on projects at Aurora, Carleton and Wahoo and the defaulting on a $10 million loan by Advanced BioEnergy.Advanced BioEnergy owns the Fairmont plant, which began operating in 2007, as well as two sister plants in South Dakota.Plainview attorney Bruce Curtiss attended the Monday meeting in Osmond at the request of a farmer who had signed contracts for corn delivery.Curtiss later estimated that about 200 people were on hand. He characterized the company position this way: “Essentially, modify enough of these contracts so we can survive or we may not survive.”He sensed “a desire to accommodate” among farmers selling corn to the plant. “But there was a nervousness about delivery of grain, in general, with the specter of bankruptcy hanging out there.”As viewed from the company side, Curtiss said, “they suffered losses in the futures market. And now there’s the potential of paying much more than would be necessary for grain if they have to honor all the contracts.”The rapid drop in the corn price “cost Husker Ag millions of dollars in the futures market here in the last six months,” he said.Complicating matters further, as Curtiss described it, was an inability to sell ethanol at prices that would cover high corn costs. “They couldn’t sell ethanol far enough out to match up with the corn contracts.”
As the Plainview ethanol plant’s management and its corn suppliers try to agree on a solution, the Nebraska Department of Agriculture will host two workshops today in Central City and Ord to help farmers understand their obligation in forward contracts for grain.
The meetings were scheduled because of what Agriculture Director Greg Ibach described as “the large turnout of producers” at a similar event in Albion in December.
Lincoln attorney Mossman said, even though farmers appear to be on solid ground right now in their contracts at Plainview, that could change.“The only hammer that the company would have would be a bankruptcy filing, assuming the contracts are valid.”
Lincoln Journal Star
Ethanol now on tap in Dalby, Qld.
Australia's first grain-to-ethanol plant is up and running, generating huge interest as it seeks to meet most, if not all, its original strategic objectives.
Dalby Bio-Refinery Ltd’s (DBRL) production processes holds the key to transforming truck-loads of sorghum into quality green fuel.
Plus a number of equally significant by-products.
It’s been a long haul for all involved – a journey that began more than five years ago when the concept of locating a $140 million ethanol plant among some of the state’s prime sorghum-growing country was first mooted.
Initially, the world in general and the US in particular championed the renewable fuels revolution from grain.
The US ethanol program contrasts with Brazil's use of sugar as the primary feedstock in its ethanol revolution.
In the US, the upsurge in ethanol output saw thousands of hectares of farmland earmarked for producing ethanol, principally from corn.
Such was its momentum that at one stage the US had 125 operational ethanol plants with 80 or so more due to come on-stream as fast as they could be completed.
Originally, ethanol was seen as playing an important part in combating climate change since it produces ’cleaner’ emissions when compared with fossil fuels.
But early last year the United Nations appeared to have a change of heart when one official gained global mileage by suggesting ‘green energy’ was leading to thousands of acres of rain forest being cleared to grow crops for fuel, labelling it “a crime against humanity.”
Equally, a run of scare stories about the likely damage ethanol could inflict on car engines in this country did nothing to enhance consumer confidence in Australia.
Then there’s also been the Australian Lot Feeders Association’s long-standing opposition for any government support for grain-derived ethanol production.
But there have also been some upsides for the fledgling biofuels industry.
The Qld Government last year flagged its commitment to a 5pc ethanol mandate by 2010, and NSW also has indicated it wants an ethanol mandate.
Queensland Country Life
OUTLOOK ’09: US biofuels industry expected to consolidate.
The US biofuels industry is expected to undergo consolidation in 2009, with many of ethanol and biodiesel plants either closing or being absorbed by a few larger players who will dominate the market.The US has 171 biodiesel refineries with estimated capacity at more than 2.4bn gal/year, well ahead of the 6m gal/year mandated by the US government for 2009. With domestic renewable fuel infrastructure relatively underdeveloped and Europe taking an increasingly aggressive stance against US biodiesel imports, many analysts consider the US market oversupplied.Demand for US biodiesel in the domestic and overseas markets will be muted through the first quarter of 2009. The EU, traditionally the destination of about 70% of US biodiesel, is investigating allegations of dumping by subsidised US biodiesel sellers and has taken steps to reduce imports. At home, the rapid decline in crude oil values - from $147/bbl in July to the $40s/bbl in December - has squeezed profit margins for biodiesel producers who compete against the petro-fuel. In both arenas, the global recession also has contributed to a considerable softening in demand.Some biodiesel industry representatives continue to argue that soy-based biofuels have little influence on food markets supply and pricing. However, commercial suppliers are increasingly looking toward such “second-generation” feedstocks as jatropha seeds and algae. Both of these potential fuel sources yield more oil than conventional feedstocks and exist outside the “fuel vs food” sphere.
Market analysts and producers consider algae an especially promising feedstock, as it can be grown virtually anywhere and, by some estimates, can yield 2,000 times more oil than soybean feedstocks. A commercially viable algae-based biodiesel process is still considered at least five years away, however.
On the ethanol side, consolidation and mothballing were poised to be the buzzwords for 2009, market sources said.
The vulnerability of the US ethanol industry came under the spotlight in October, when VeraSun Energy, the country’s second-largest producer, filed for bankruptcy, citing shrinking liquidity.
VeraSun was only one of at least six producers that have halted production or sought bankruptcy protection in the fourth quarter of 2008.
According to sources, some 16 US ethanol mills were off line in the last two months due to deteriorating market conditions, including tighter credit and a sharp decline in fuel ethanol prices.
The units account for about 1.5bn gal/year in capacity, market sources said.
The US has 172 ethanol mills with capacity estimated at 10.5bn gal/year, according to the Renewable Fuels Association (RFA).
Market participants said several more bankruptcies were expected in 2009.
One industrial ethanol producer said the pressure on ethanol margins was significant for mills running without major debts, let alone for the new units that started out highly leveraged.
The industry will go through a transition period and the number of US producers will drop, one analyst said, predicting that the transition would likely last 2-4 years.
The analyst said investors would also hit the brakes on new projects, snapping the sharp increase in capacity that the US industry saw in the last two years.
On the industrial ethanol side, the outlook for the industry mirrored the weakness of the general economy.
US industrial ethanol demand is likely to drop by 10% in 2009 amid reduced consumption in key end-markets such as the housing and automotive sectors, one producer said.
Demand for industrial ethanol has also dropped for any product where disposable income is involved, the source said, adding that staple markets, like cleaners and detergents, were weakening.
Beverage ethanol stood out as the shinning star for industry this year.
US demand for beverage ethanol rose by 7-8% in 2008 due largely to a displacement from imported, ultra-premium grade product to domestically made premium grade.
However, the weak US economy is also expected to weigh on the beverage side in 2009, erasing any prospect for continued growth.
Beverage ethanol also involves disposable income and consumption will eventually begin to level off, one market participant said.
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