Ethanol Refinery in North Dakota Opening Delayed

VeraSun facilities

images courtesy VeraSun Corp.

Yesterday we reported on rapidly rising corn prices and the effects this could have on meat prices. Coming off that news it's not surprising to find out that VeraSun Energy Corp. will delay the startup of its 110 million gallon per year ethanol refinery in Hankinson, North Dakota. This marks the third facility this month which has had its opening delayed by the South Dakota-based company.

Volatile "Market Conditions" Are To Blame
The reason stated for the delays is "market conditions." Would those market conditions be the rising cost of feedstocks? Not in so many words, according to VeraSun CEO Don Endres: "Given the current volatility in the market, we believe that delaying all three of these startups is the prudent decision for the long-term benefit of our company and shareholders. Ethanol is currently being sold at a deep discount to unleaded gasoline, which has caused us to delay the start-up of these facilities until the outlook for ethanol selling prices and overall margins improve [emphasis is mine]. So basically, even though unleaded gasoline prices in the US are at historically high levels and show no sign of declining any time soon, VeraSun doesn't think it can turn enough of a profit to keep the doors open and shareholders happy. It's a craftily worded statement that at first glance seems to make gasoline prices the sticking point, but really means that feedstock prices for ethanol are the issue.

Endres ended the press statement, perplexingly, by saying, "Ethanol is a solution that is available today and will continue to have a strategic impact on diversifying our energy needs." Available today? Not from VeraSun. Is a change of preferred feedstock in order?

:: VeraSun Energy Corp.
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