VeraSun Idles Three Ethanol Plants
SIOUX FALLS, SD --- VeraSun Energy Corp., the second-largest American ethanol producer, has idled three distilleries in response to higher production costs, Bloomberg reported.
VeraSun terminated production at plants in Bloomingburg, OH; Albion, NE; and Linden, IN, VeraSun spokesman Mike Lockrem told Bloomberg. Each of the distilleries is capable of producing 110 million gallons annually.
Ethanol producers have struggled to turn profits at a time of fluctuating corn prices.
Pacific Ethanol Inc. said it plans to suspend output at its plant in Madera, CA. Earlier this month, Aventine Renewable Holdings Inc. said it stopped construction of its refinery in Aurora, NE, for up to 180 days, Bloomberg reported.
"There are very difficult operating conditions out there," Joseph Gomes Jr., an analyst at Oppenheimer & Co. Inc. in New York, told Bloomberg. "If you're buying corn solely in the spot market, you're probably break-even at best."
In 2008, corn rose 58 percent from January to July, before falling to 13 percent below year-ago levels in the past week.
VeraSun filed for bankruptcy protection in October, blaming unstable corn prices.
"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 finalized," Lockrem told Bloomberg. The "crush margin" is the difference between the cost of corn and the selling price of ethanol.
Lockrem added that there's no estimated timeline for the plants resuming production.
Production may become profitable again later in 2009 after more plants trim output, Gomes said.
The industry's struggles have taken a considerable toll on stock prices. Pacific Ethanol has declined 92 percent in the past year. Last summer, Microsoft Corp. co-founder Bill Gates sold his stake in the company. Aventine Renewable Energy's shares have plunged 99 percent since June 2006, when the company held its IPO. Biofuel Energy Corp. has lost 96 percent since its stock began trading in June 2007, Bloomberg reported.