Valero to become ethanol powerhouse with three more plants

15 December 2009 17:44  [Source: ICIS news]

HOUSTON (ICIS news)--US energy company Valero confirmed on Tuesday it has agreed to acquire three more bankrupt ethanol plants, raising its total capacity by 43% to 1.1bn gal/year, making it a new US biofuels heavyweight.

The refiner announced it would pay $200m (€136m) for two plants controlled by ASA Ethanol Holdings and $72m for third unit controlled by Renew Energy.

The ASA plants - located in Linden, Indiana and Bloomingburg, Ohio - each have a 110m gal/year capacity and were previously owned by bankrupt VeraSun Energy, from which Valero bought seven plants at an auction in March for $477m.

The facilities are currently idled, but would be restarted within three to six months following the closing of the transaction, the company said.

Valero also said it received approval from a bankruptcy court to acquire a 110m gal/year plant owned by Renew Energy near Jefferson, Wisconsin

The company said that unit is currently operating at reduced rates, but is expected to increase to full production “over time”.

Valero said it would buy the three plants for roughly 41% of their estimated replacement cost.

In March, Valero said it bought the first seven VeraSun plants at 30% of those plants’ replacement cost.

The transactions, which are expected to close in early 2010, would make Valero the second-largest US producer of ethanol after POET, which has 1.5bn gal/year of capacity.

Agricultural giant Archer Daniels Midland (ADM) has 1.07bn gal/year of ethanol capacity, according to data from the Renewable Fuels Association (RFA).

($1 = €0.68)

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By: William Lemos
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