By Dan Shaw, Evansville Courier & Times
The schedule for completing an ethanol plant in Mount Vernon, Ind., is being extended.
On Friday, Aventine Renewable Energy announced it now hopes to finishing building the plant in the fourth quarter of 2009. The company had earlier planned to have to start producing ethanol by the first quarter of the year.
Ron Miller, Aventine president and chief executive officer, said the market for ethanol has been disappointing.
"Our capital expansion program was the largest single user of cash, so slowing this program was the most prudent cash management alternative," he said.
Aventine, based in Pekin, Ill., reported a net loss of $10.2 million through the first nine months of 2008. In the same period a year ago, it had a net profit of $30.5 million net.
The Mount Vernon plan is estimated to cost $250 million. It will at first be able to produce 113 million gallons of fuel-grade ethanol a year. The site on which is being built is on 116 acres leased from the Port of Indiana-Mount Vernon.
Les Nelson, Aventine director of investor relations, said ethanol had made a good alternative fuel to gasoline when the price of petroleum was high. But now the price has fallen, the demand for ethanol has dwindled.
"Margins are break even," he said.
On Thursday the Medill Reports at Northwestern University in Chicago quoted Micheal Tian, an analyst with Morningstar Inc., as saying that the outlook for the ethanol industry is "not good."
"Margins in the ethanol industry are tight at best, unprofitable at worst."
Aventine said it is working with the Kiewit Energy, the construction contractor for the project, to find other employment for its workers and equipment. Brad Kaufman, Kiewit president, said "We fully support Aventine's decision and prudent cash management, especially given today's difficult economic environment.
Beyond the Mount Vernon plant, Aventine is suspending construction of an ethanol plant it had planned to build in Aurora, Neb. The delay is expected to last six months.
The report of a slowing of construction of the Mount Vernon ethanol plant comes two days after an economic development official in Henderson confirmed that the $85 million ethanol plant proposed by Kentucky Five Star Energy LLC on the Henderson-Webster county line has been scrapped.
But Ineos Group, a large British-based chemical company, is interested in leasing the land at the same site for what Sheilley described as a "non-food-chain biofuels" plant.
Ineos says it is devising technology to convert municipal garbage into an ethanol fuel.
Aventine shares have tumbled from a 52-week high of $13.65 per share to $1.11 at the close of trading on Friday.
Contributing: Chuck Stinnett/The Gleaner