Central Iowa Energy's (CIE) board chairman Jim Johnston cut the ribbon on the state-of-the art 30-million gallon biodiesel plant outside Newton, Iowa, 2 weeks ago which kad kicked off production on April 5th and was fully on stream 5 days later.
Financed by 533 investors who raised US$20 million the plant was built and is run by the Renewable Energy Group (REG) of Ralston , Iowa, it will ship to Safeway gas stations in California and to New England heating oil distributors. Currently REG has up to 45% of the national capacity for biodiesel fuel which with 2 plants to open later this year (Washington & Farley in Iowa) will increase to 212 MN Gallons capacity - more than the US produced last year.
Soybean oil that can make up to about 80% of a typical plant's production costs and is approaching record prices, although supplies are plentiful at present yet soyabeans at at record highs with nearby futures prices for soybean oil on the Chicago Board of Trade closed at nearly 33 cents per pound recently - industry guesstimates are 34 cents a pound is the maximum profitable feedstock price .
This reflects the way that biodiesel is now catching the investors imagination as the ethanol boom has peaked after recently overpriced IPO's - US Soyabean acreages are also down 15% so far this year as corn acreage has expanded by 18% and world demand is increasing as India, China and Europe are expected to import more soyabean oil according to the recent USDA OIL crops Outlook.
CIE have also opted to spend an additional $5 million on a fatty acid stripper allowing the use of animal fats as feedstocks (lower cost chicken guts basically) as well as soybeans.
REG are nearly ready to fire up the US$50 Mn ,multiple feedstock (vegetable and animal sources) Heartland Biodiesel plant at Rock Port, Missouri. Investment has been slower than hoped and Heartland's chairman, Stan Griffin, a Rock Port banker and manager of his family's farm is quoted saying ... "We're looking at a US$23 million goal and we're just short US$1.8 million - with minimum investments of US$20K"
A new Missouri state law kicked in last year that will give biodiesel plants with majority ownership by Missouri investors a tax credit. For the planned 30-million gallon plant at Rock Port , it will amount to $6 million per year for five years.
That gives Heartland an advantage. So does the fact that it, too, will be a plant capable of converting animal fats or vegetable oils to biodiesel.
REG are also breaking ground soon on a multiple feedstock 60 Mn Gallon a year plant at Emporia, Lyon County, between Topeka and Wichita on the Kansas Turnpike I-335.
In spite of the current high soybean oil prices, the outlook for soydiesel production remains good. Like the ethanol industry, biodiesel now has federal tax credit that cuts the cost of the renewable fuel for blenders. The tax credit is $1 per gallon.
REG are very positive, even with the prospect of high soya prices, "Fuel prices are going to be high and you can afford to pay high prices for soybean oil if gasoline is $4."
See www.biodiesel.org for further information on biodiesel.