By Melissa Widner/Post-Tribune corresponded
Farmers know all about waiting out the odds and sticking it out through tough times. So there’s little question why supporters of Jasper County’s Iroquois Bio-Energy Company have hung in as long as they have.
This year, it looks like their patience is about to pay off.
After four years of rough starts and stops, the company plans to break ground on a $65 million ethanol plant within the next six weeks in Pleasant Ridge, a quiet rail stop of farm houses, a trailer company and a grain elevator about four miles west of Rensselaer in Jasper County.
“In 18 months I’d say we’ll be running full-tilt,” plant manager Keith Gibson said with confidence
Gibson said the start-up venture reached its goal of $20 million to $25 million in March after switching last year from public to private sources of financing. The company is now in negotiation with a bank in Omaha, Neb., that specializes in agribusiness and ethanol financing to secure the remainder of the start-up costs.
“As soon as we finish the loan with the bank, we can begin construction,” Gibson said. The construction process should take 12 to 14 months.
The company also is waiting to hear back from the state on an infrastructure grant for acceleration/deceleration lanes on Indiana 114 and a rail spur to the nearby Amtrak line. Gibson said the company applied for the grant two weeks ago through the new Indiana Economic Development Corp., formerly the Department of Commerce.
The progress is good news for a company that only a year ago had to start over from scratch.
Last June, the Securities and Exchange Commission told the company to withdraw a 14-month public offering and refund investors’ money.
Gibson said the company had obtained the goal money at the time, but the SEC would not grant an extension for the company to negotiate loan terms with a bank. Board members opted to go for private investment rather than attempt a second public offering.
About 75 percent of the equity has come from a small number of investors, out-of-the region sources enticed by a boom in state and federal promotion of alternative fuels.
“I think it’s a matter of diversification,” said Ron Gick, who took over as the new president of IBEC board of directors the last week of May.
“This industry may actually take off, and they are asking themselves, 'Do we want to get in on the ground floor?’ There is definitely an interest there for those people.”
According to the Renewable Fuels Association, the industry’s trade association, the market for ethanol has grown by 30 percent over the past two years. In 2004, the industry produced a record 3.41 billion gallons, more than double that produced in 2000.
Last week the Senate Energy Committee voted 21-1 to require 8 billion gallons of renewable fuels on the U.S. market by 2012.
The state of Indiana is also getting on board with bio-fuels and has made them a priority of the state’s new department of agriculture.
In April, Gov. Mitch Daniels signed a bill to offer tax incentives to boost Hoosier bio-fuel production, and in the past month, two bio-energy plants have announced plans to locate in Indiana. Lt. Gov. Becky Skillman recently announced as many as 11 plants are now looking at the Hoosier state.
The new investors in IBEC, Gibson said, “are very big and very private,” with a history of supporting energy projects. He declined to name investors, but said though the pool is smaller, several regional investors are still involved.
“By the numbers, I’d say three-fourths are within 50 to 60 miles of our plant.”
Mike Aylesworth resigned as president of the board last month to avoid a conflict of interest with his new job, which he began this week, as northern regional director for the Indiana Department of Environmental Management. But, he says he’s still one of the just fewer than 300 total investors in the plant.
“I’m still very excited about IBEC,” said Aylesworth, a retired corn farmer from Hebron and past president of the Indiana Corn Growers Association.
“Public interest in renewable energy is at a high-water mark. It’s never been this high, whether you’re talking ethanol, biodiesel, solar or wind. There is a higher level of recognition by the public that we need to explore every avenue of alternative fuels.”
IBEC started in early 2001 from an idea Aylesworth had while attending a conference in Texas on behalf of the Indiana Corn Growers Association.
Aylesworth took his idea home, talked it over with fellow farmers and tried that spring to launch a new farmer cooperative in which area corn farmers would own part of the company that processed their corn into ethanol.
Gick, a seed dealer and farmer in Benton County who has served as vice president for three years, said he was a supporter from the beginning, but the idea was a tough sell at first.
After more than a year of trying to promote a co-op, the company switched in 2002 from a to a limited liability corporation and in March 2003, sought investment from the public through the SEC.
Investors around Northwest Indiana and eastern Illinois were courted in a series of town meetings, where they could buy in for a minimum investment of $5,000.
The group had trouble meeting the SEC’s deadline.
“You have people who have been supporting it from the beginning and people who have been betting it will never happen for whatever reason. That’s just human nature,” Gick said.
“It’s been a matter of perseverance. For every step you take, you take one back, but you keep moving forward.”
Indiana has one ethanol plant in operation, New Energy Corp. of South Bend, which has been around since 1984 and sold $80 million in ethanol in 2003. The plant is ranked in the top 10 in the country for production. More are planned.
Gibson said he is not concerned by potential competition.
“They are far enough away we won’t be going after the same corn. As long as oil stays at $50 a barrel, there’s plenty of market for everybody.”