To ethanol producers, the financial meltdown is like a rain storm beating down an already-flooded corn field. Combine this summer’s low corn prices with the political and public backlash against corn ethanol and add in the recent market conditions, and ethanol producers are finding themselves drowning. On Friday, ethanol producer Aventine Renewable Energy Holdings said it is suspending construction of a biorefinery in Aurora, Neb., and is extending the construction schedule of a biorefinery in Mount Vernon, Ind. We’ve added Aventine’s plant to our biofuels deathwatch map, and if the company decides to take its plant off hold, we’ll update it again.
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Aventine already has a biorefinery in Aurora that is producing ethanol, and the plant that is being put on hold was an additional plant, planned to produce 113 million gallons of ethanol per year. Aventine cited the “continued disappointing economics surrounding the production of ethanol,” as reason for the suspension and extended timeline and said the decision is “necessary to preserve liquidity.” The company, which says it supplied almost 690 million gallons of ethanol to the U.S. in 2007, saw its shares drop more than 12 percent in trading to $0.97.
Other ethanol producers are feeling the crunch as well. Waste-to-ethanol producer Bluefire Ethanol has said that the pullback from bank lending could slow down its production plans over the long term. At the end of October, VeraSun filed for bankruptcy due to what it said were “worsening capital market conditions and a tightening of trade credit” that led to “severe constraints on the Company’s liquidity position.”
Even if ethanol producers aren’t cutting back on expansion and suspending plants, most are buckling down to weather the storm. Cellulosic ethanol producer Mascoma told CNET that it is laying off staff, in an effort to hold onto cash as the public markets are difficult and institutional investors are cautious.