Agbengoa Bioenergy is restructuring itself in a series of moves which look to be designed to maintain its profitability at a time when oil is at or close to record highs, and the price of corn is in the same position .
On 23 September, my colleague Charles Shaw reported on ICIS News (Disclosure: I work for ICIS: About ICIS) that Abengoa would be stopping production at its 200,000 cbm/year Salamanca facility in Spain, citing high corn prices and cheap imports of ethanol from Brazil. This follows Abengoa seeing its first-half operating profits rise 20% to €31.2m ($43.2m) on strong ethanol demand and prices, the company said on 17 September and Abengoa is building its stake in low-cost ethanol production.
This is a tough time to be a biofuel producer in Europe, in August, German producer Verbio was forced to reduce capacity at its 200,000 tonne/year plant at Schwedt, citing inhibitive grain costs. But will be offsetting the price of the capacity reduction by selling the grain.
Abengoa at least is not calling for protection from more cost effective imports. and is moving at least part of its production to one of the world's lowest cost producers, Brazil, which exported 50m litres of ethanol to Europe in August 2007.
Perhaps the conundrum of to produce close to the user or in the cheapest part of the world is coming closer to a conclusion.