ADM to close North Dakota ethanol plant in April

Source: Michael Hirtzer • Reuters  • Posted: Tuesday, February 7, 2012

Feb 6 (Reuters) – Archer Daniels Midland on Monday said it will close its ethanol plant in Walhalla, North Dakota, marking the first such closure for the agribusiness giant that last month announced the elimination of 1,000 jobs.

The plant will permanently close in April, resulting in the loss of 61 jobs. ADM will supply its customers with ethanol and animal feed products from its six other ethanol plants in Iowa, Illinois, Nebraska and Minnesota, company spokeswoman Jessie McKinney said.

The North Dakota biofuel refinery is located about 5 miles (8 km) from the Canadian border and far away from the main corn growing areas in the U.S. Midwest. It was the northernmost U.S. ethanol plant, according to the Renewable Fuels Association.

“ADM determined that the Walhalla facility was not delivering sufficient returns because its geographic location and scale made it difficult to compete in the marketplace,” McKinney said.

The plant has a 30-million-gallons-per-year capacity while ADM’s six other plants have a combined capacity of about 1.72 billion gallons, McKinney said.

“This closure is to optimize our U.S. corn processing operations. It is not related to the expiration of VEETC,” she added.

The Volumetric Ethanol Excise Tax Credit, or VEETC, was a tax incentive providing 45 cents per gallon to blenders who mixed ethanol with gasoline. The credit expired at the end of 2011.

Ethanol futures slumped to the lowest levels in a year at the Chicago Board of Trade in the wake of the credit expiration, while ethanol inventories last week increased to 20.95 million barrels, a record high, the Energy Information Administration said.

About 40 percent of the U.S. corn crop is expected to be used this year in ethanol production, according to the U.S. Department of Agriculture.

ADM last week reported sharply lower earnings, with the company earning less money in almost all of its major units as it struggles with high commodity costs. Earlier in January, ADM said it was reducing its workforce by 1,000 jobs worldwide in the first broad reduction in company history.