Work on an ethanol plant in Mount Vernon has all but stopped.
Aventine Renewable Energy has been building the plant at the site of the Port of Indiana-Mount Vernon since late 2007. Jody Peacock, Ports director of corporate affairs, confirmed that work there ground to a halt recently, though he is uncertain exactly when the stop occurred. Aventine executives have told him they hope to resume the construction by the summer.
"Obviously, the market conditions will drive that decision," Peacock said.
The Mount Vernon plant is expected to cost about $250 million. Once built, it will produce 110 million gallons of ethanol a year.
Repeated calls to Aventine were not returned. Peacock didn't know the reasons for the halt.
Whatever they may be, the company's recent performance cannot have helped matters. In a recent earnings report, Aventine raised the possibility of bankruptcy.
The company, based in Pekin, Ill., said it lacks the money needed to pay $15 million in interest payments which will come due April 1. It also owes $24.4 million to Kiewit Energy Co., a contractor on the Mount Vernon plant.
In the same report, Aventine said it lost $36.9 million in the fourth quarter of 2008.
"There is substantial doubt as to our ability to continue as a going concern," the company stated. "We need additional financing or capital which may be unavailable or costly."
Aventine's stock price has likewise been battered. Last week, the New York Stock Exchange delisted the company after finding that the total value of its shares had fallen below $15 million.
Aventine is not the only ethanol producer to be in trouble. In October, VeraSun Energy Corp, based in Sioux Falls, S.D., filed for bankruptcy. The company agreed earlier this month to sell a number of ethanol plants - including an incomplete one in Reynolds, Ind. - to Valero Renewable Fuels, based in San Antonio.
Meanwhile, Abengoa Bioenergy, a St. Louis company, continues work on an ethanol plant near West Franklin, Ind., also in Posey County. The project, which will churn out 88 million gallons a year, will be finished by the end of 2009, says the company.
In the United States, closings of ethanol plants have caused producers to lose the ability to make about 2 billion gallons of the fuel a year, according to Wally Tyner, a Purdue University professor of agricultural economics. By March of 2008, domestic plants could make a total of about 7.2 billion gallons and were building the capacity for an additional 6.2 billion gallons.
Tyner cited the low price of gasoline as a chief cause of the sufferings of ethanol producers. On Thursday, a barrel of crude oil was going for $46.25. Only last summer, the price had been close to $140 a barrel. Ethanol loses some of its attraction once it no longer presents a cheaper alternative to gasoline.
Making matters worse has been the high price of corn, from which most ethanol in the United States is made. Corn now costs nearly $4 a bushel and had reached as high as $7 in 2008. In earlier times, a price of about $2 a bushel was more common, Tyner said.
Ironically, the high cost can be linked to government policies meant to help ethanol producers. In part as a result of federal mandates, about a third of the corn grown in the United States this year will be turned into fuel.
"That's up from 10 percent just a few years ago," Tyner said.
With more corn going into ethanol, less is left for traditional uses such as feeding livestock and exporting. Compounding the drain on supplies was an unexceptional harvest in 2008.
"We have still really tight stocks, so there is a lot of pressure on corn price," Tyner said.
Aventine's troubles have been felt in the local economy. Industrial Contractors, an Evansville firm, once employed 200 workers at the Mount Vernon ethanol plant. By November, when money troubles caused Aventine to lengthen its schedule for completing the project, the number had fallen to below 10. As first planned, the plant was to be in operation by early 2009. But that target has been postponed to the end of the year.
Alan Braun, Industrial Contractors president and chief executive officer, said the only workers now at the plant are there to perform maintenance. He hasn't heard if or when Aventine would resume the construction.
"I really don't know what they are doing," he said.