1 MN Ethanol Plant Idles, Another Resumes Production

Biofuel Energy has idled its Minnesota ethanol plant; meanwhile, Gevo, which has been making bio-isobutanol at its Minnesota facility this year, will temporarily shift back to ethanol production.

Denver-based Biofuel Energy Corporation said Monday that it has ceased ethanol production at its Fairmont plant until further notice, citing a market surplus of ethanol and high corn prices caused by the Midwestern drought.

Meanwhile, Gevo, Inc., plans to switch back to ethanol production in the state while it seeks to improve its process for producing a different product.

Scott Pearce, Biofuel Energy’s president and CEO, said in a statement that the company’s Fairmont plant will “remain idle until we are able to secure local corn at price levels that support better margins.”

Pearce said that the company “will not be making any changes to our current operations team so that we can continue to operate the grain elevator and are in a position to re-start the ethanol plant on short notice.”

Chief Financial Officer Kelly Maguire on Tuesday told Twin Cities Business that the Minnesota plant employs about 60 workers, all of whom remain working at the site.

Biofuel Energy said that its Fairmont facility can produce up to 115 million gallons of ethanol per year. The company will continue to operate its ethanol plant in Wood River, Nebraska, which also has a production capacity of 115 million gallons annually.

Biofuel Energy last month reported a quarterly net loss of more than $12 million. Following news that the company has idled its Minnesota ethanol plant, shares of the company’s stock slid more than 16 percent Monday to close at $5.95. Shares were trading at $6.24 Tuesday morning.

While Biofuel Energy is ceasing ethanol production in Fairmont, another company plans to return to ethanol production in Minnesota while it seeks to refine its process for making a different product.

Englewood, Colorado-based Gevo, Inc., in May 2011 announced plans to retrofit a Luverne ethanol plant to produce bio-isobutanol.

Isobutanol is a naturally occurring alcohol that Gevo makes from corn. The company describes its Luverne plant as the world’s first commercial-scale bio-based isobutanol plant.

Gevo said Monday that it has for the past 17 weeks “successfully produced and shipped commercial-quality product” to customers—but it will temporarily shift back to ethanol production. Gevo said in May that it hoped to eventually produce 18 million gallons of bio-based isobutanol each year at its Luverne plant, but CEO Patrick Gruber said in a Monday statement that Gevo does not believe it will “achieve our desired year-end run rate” this year.

“While we have made significant progress towards economic production levels, we have decided to optimize certain specific parts of our technology to further enhance bio-isobutanol production rates,” Gruber said. “Implementing these adjustments while trying to produce product in a plant the size of Luverne makes no sense from a business or technical point of view, particularly when we have better options available. In order to maximize cash flow, we believe it makes more sense to temporarily shift to ethanol production.”

Shares of Gevo’s stock plummeted nearly 30 percent to $2.34 Tuesday morning following the company’s announcement that it planned to shift away from bio-isobutanol production.