VeraSun Energy (VSE) Suspends Ethanol Production At 3 Plants

Posted by | # |
09:49:22 am on January 13, 2009

More bad news for ethanol…VeraSun Energy has suspended production at 3 of its distilleries: Bloomingberg, Albion and Ohio. The plants stopped running in the latter part of December, with the company citing higher corn costs and less demand from ethanol as the reasons behind the closure.

Justice Sirikah over at HotStocked.com notes that this isn’t the first time this has happened:

This is the second time that VeraSun has taken such an extreme measure since late October, 2008 when it ceased operations at its $100 million South Dakota-based Linden plant for nearly two weeks.  The firm sighted the same operational reasons following a sharp 58% rise in corn price between January and July last year.

  By the end of October, the company and its subsidiaries had filed petitions for relief under chapter 11 of the U.S Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, having declared significant losses in the third quarter of 2008. On being asked when the company was likely to resume production, Mike Lockrem, VeraSun’s spokesperson said they had no exact time frame.
  “The company decided this is the best course of action while the crush margin is impaired and while interim financing and other contracts are worked through and finalised”, Lokrem is reported to have said.

  The closure of the plants is the latest of the ethanol industry casualties. Lately the industry, through the Renewable Fuels Association (RFA), pleaded for a bailout worth a billion dollars in order to sustain the current projects. Furthermore, RFA suggested that the forthcoming Obama-administration should come up with a $50 billion federal loan guarantee programme to attract more investment in the ethanol industry.

As Tate noted back in November when VeraSun first declared bankruptcy, ethanol is marvelously inefficient. I wouldn’t mind seeing them all go belly up, either, and I hope Obama ignores the RFA’s request.

Tags: , ,
 
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.

Comments  

No comments yet.

Leave a comment

(required)

(required)


*