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Ethanol plant sales reflect doubt over EPA mandate

01.03.2014  | 

Bunge has decided to sell its stake in an ethanol plant in Vicksburg, Mississippi, reflecting uncertainty over US biofuel use. The sale is the first in what will likely be a series of ethanol industry divestitures.

Keywords: [ethanol] [biofuel]

Bunge North America Inc. has decided to sell its stake in a 54-million-gallon-per-year (MMgpy) ethanol plant in Vicksburg, Mississippi, reflecting uncertainty over US biofuel use. The sale is the first in what will likely be a series of ethanol industry divestitures, according to analysts.

Private firm Ergon Inc. will buy Bunge's share of the joint-venture plant, which is the only facility in Mississippi that produces ethanol from corn. The terms of the deal, and the volume of Bunge's share, were not disclosed.

Don Davis, president of Ergon's refining and marketing division, stated, "This transaction allows us to look at alternative feedstocks, as well as how the plant may be used for products beyond traditional ethanol production."

Ethanol producers are presently reaping attractive profits, due to a record 2013 corn harvest and a 30% decrease in corn prices over the past six months. However, ethanol's future in the US looks murky. The US Environmental Protection Agency (EPA) is expected to reduce the Renewable Fuel Standard (RFS), requiring ethanol to be mixed into gasoline, in early 2014.

The EPA has proposed that the volume of ethanol blended into gasoline be lowered to 13 billion gallons per year (Bgpy) from 14.4 Bgpy. The anticipated reduction would be the first since the RFS was defined in the Energy Independence and Security Act (EISA) of 2007.

The Vicksburg ethanol plant has been idled since December 2012, after an ongoing drought in the US severely reduced corn supplies. According to industry experts, the plant is also capable of producing ethanol from sugar cane or sorghum.

In another recent shake-up, the owners of a 125-MMgpy plant in Rochelle, Illinois announced on January 2 that the plant is for sale. The facility began production in 2006 and is operated by GTL Resources and Illinois River Energy.



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