DowDuPont shutters Nevada cellulosic ethanol plant, looks for a buyer

Source: By Donnelle Eller, Des Moines Register • Posted: Friday, November 3, 2017

DowDuPont plans to find a buyer for its ethanol plant in Nevada, a 30-million gallon, $225 million operation that uses corncobs, husks and stalks to produce the renewable fuel.

DowDuPont has shuttered operations and cut 90 workers.

The project has snagged $14 million in state grants since 2010, plus about $3.54 million in tax credits. The state’s reviewing what the company may need to repay.

Closing the plant was part of DowDuPont’s announcement Thursday that it will cut its global workforce by 5 to 7 percent, consolidate and shut down some buildings and facilities, and centralize purchasing.

DowDuPont, which finalized its $150 billion merger Aug. 31, plans to cut $3 billion in costs annually as it spins off three separate businesses: agriculture, material sciences and specialty products.

DowDuPont, the parent of DuPont Pioneer, the seed giant based in Johnston, said the restructuring will begin next year, although some job cuts have already taken place.

The company was unable to outline how Iowa workers might be affected. DuPont Pioneer employs about 2,600 workers in Johnston.

Part of the job cuts will happen through attrition.

Last year, the merging companies agreed to keep Johnston as a “global business center”after the ag company spins off, retaining at least 500 jobs.

The deal will provide the new ag company $17 million in state and local incentives.

DuPont Pioneer already had cut about 175 positions when the deal was announced.

Jim Sanders, Johnston’s city administrator, and Adam Plagge, the city’s economic development director, said DowDuPont recently agreed to maintain about 1,975 jobs in the community over four years.

The company updated at least a half dozen past expansion deals.

“The company’s invested a lot in the community, and that provides as much protection as anything,” Plagge said, adding that it has added about $73 million in assessed value to the city’s tax base since 2013.

“The buildings are built, the taxes are being paid, and employees are working,” Sanders said.

The DowDuPont cellulosic ethanol plant, which opened in 2015, is considered the next generation in renewable fuel production.

A skeleton crew will maintain the plant until a new buyer is found.

DowDuPont said the operation no longer fits its strategic plan.

“As part of DowDuPont’s intent to create a leading Specialty Products Company, we are making a strategic shift in how we participate in the cellulosic biofuels market,” the  company said Thursday after releasing its earnings.

“While we still believe in the future of cellulosic biofuels, we have concluded it is in our long-term interest to find a strategic buyer for our technology including the Nevada, (Iowa), biorefinery,” the company said in a statement.

It said “all affected employees will receive support services during this transition.”

Iowa has two other significant cellulosic ethanol plants. One is located in Emmetsburg and the other, Galva.

Matt Merritt, a spokesman for Poet, the South Dakota company that owns the Emmetsburg plant, said it remains committed to cellulosic ethanol production.

“Our optimism hasn’t dimmed,” Merritt said.

When asked if it would be interested in purchasing the Nevada plant, Poet said it explores “any opportunities for growth.”

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said a buyer of the Nevada plant would need to be a “substantial player to come in and not only buy the facility, but run it.”

“It wasn’t a cheap facility,” Shaw said.

DuPont has spent years and millions of dollars developing the technology needed to process crop residue and convert it into cellulosic ethanol, considered a more environmentally friendly biofuel.

Shaw said DowDuPont’s timing is unfortunate, given gains in cellulosic ethanol development.

“We’re starting to see commercial fruition following a lot of years of struggle,” Shaw said.

Merritt said Poet’s 20-million gallon plant in northwest Iowa is still ramping up to full production, but it overcame a couple of engineering challenges this year that will bring it close to licensing its technology.

The cellulosic operation, sitting next to a conventional ethanol plant, will employ 100 workers once it’s fully operational.

Poet received about $975,000 in tax credits in February to help with construction of a $29 million onsite enzyme production facility that will add 10 jobs.

The Nevada cellulosic project has had skeptics. Two years ago, Nelson Peltz , a New York activist investor, called out the plant as one of DuPont’s “speculative and expensive corporate science projects” that have “destroyed shareholder value.”

DowDuPont said it “will continue to participate in the overall biofuels market through specialty offerings including biofuel enzymes and engineered yeast solutions that improve yield and productivity for biofuel producers.”

DuPont received a $5 million state forgivable grant in 2010, a $9 million grant through the former Iowa Power Fund, plus close to $3.54 million in tax credits, to help with the cellulosic ethanol project.

The state plans to assess how many objectives were met in the weeks ahead as it determines whether DowDuPont must repay any state assistance, said Kanan Kappelman, an Iowa Economic Development Authority spokeswoman.

DowDuPont said it will “work with all parties to honor” its existing contracts, including farmers who might have provide stover for the plant.

The company said it has halted bale harvesting.

DuPont expected to buy 375,000 tons of corn residue annually from 400 to 500 farmers within 30 miles of the Nevada plant.

“We appreciate the support that we have received from the state, the county, the city of Nevada and its many constituents,” DowDuPont said. “We are committed to finding the best possible solution for the Nevada site and to continued good relations with Iowa.”