Work halts at biodiesel plant
The rising cost of soybean byproducts forced North Prairie Productions to temporarily suspend construction on its biodiesel plant in Evansville, President Mike Robinson said.
“We always knew there’d be times when markets are good and markets are bad,” he said. “You’re most vulnerable as a company when you start, and you don’t want to start when times are bad. We just wanted make sure that we are secure when we enter the market.”
The economy in general also is a factor with credit tightening up, he said.
The board of directors voted unanimously to suspend the construction, and they sent a letter to their more than 900 investors last week.
“Since we commenced construction, commodity prices have risen to historic highs,” the letter stated. “Since August of 2007, soybean oil prices have increased approximately 7 cents per pound, or 20 percent. Given that site work is still in early stages, the decision (to suspend construction) is intended as a prudent course of action to conserve investor equity until commodity prices return to a level at which we can expect to operate profitably.”
A big push for corn to be planted last summer drove bean prices up, Robinson said.
“That’ll seem to point to a shift back to beans this year,” he said. “So we’re right back to where we’d like to be.”
Construction started this summer on the plant, which is expected to produce 45 million gallons of soy biodiesel a year. Following the official groundbreaking ceremony in March, the project experienced some unexpected delays related to financing and finalizing of construction plans.
The plant, along Union Pacific’s railroad east of County M, is expected to employ about 25 and operate 24 hours a day.
North Prairie wants to see the market adjust before moving forward and would likely resume construction in spring, though nothing is set, Robinson said.
“I have a good amount of confidence that we can,” he said. “That said, the problems facing us are with the broader industry, so it’s not a North Prairie problem specifically.”