Six months later, DowDuPont still searching for a Nevada plant buyer

Source: By Dan Mika, Ames Tribune • Posted: Monday, May 7, 2018

DowDuPont’s ethanol plant in Nevada remains shuttered after the chemicals giant put up for sale its $225 million plant — heralded as the biggest cellulosic ethanol plant in the world.

The Midlands, Mich.-based company closed the plant and laid off most of its 90 employees last November. It was expected to produce 30 million gallons of cellulosic ethanol, fuel created by breaking down corn and soybean byproducts, but never advanced past its startup production stage.

Since then, not much has changed at the plant. According to local property records, DowDuPont still owns the plant, and a skeleton crew continues to come in for maintenance. There is no mention of the plant in the company’s latest quarterly earnings filing with the Securities and Exchange Commission.

Jan Konickx, DowDuPont’s global business director for biofuels, said a number of parties have visited the plant and looked at data regarding production, but he didn’t say how far along any of those parties are towards making a bid.

Konickx said the company “never saw a fatal flaw” with the plant, but chose to sell it because it didn’t fit under any of the three spinoff companies DowDuPont plans to divide itself into next year.

“Ideally, we’re looking for a strategic partner who will operate the plant either the way we designed it, or with some modification … that continues to build on what we have done,” he said.

Konickx declined to disclose how much it costs to keep the plant maintained. However, DowDuPont paid just under $657,000 in taxes last month in the second installment for their tax year 2016 bill.

The city of Nevada had originally agreed to offer up to $8.6 million in tax abatements by refunding the company 50 percent of its property tax bill from years three through 10 of operation. Nevada city administrator Matt Mardesen said DowDuPont is no longer receiving that abatement as they aren’t hitting various benchmarks set forth in their agreement with the city.

Iowa State economist Chad Hart said the plant, located between Ames and Nevada on East Lincoln Way, likely hasn’t been sold yet because the technology and policy environment for cellulosic ethanol hasn’t changed in the past several months.

He said DowDuPont’s plant was a “proof of concept” operation to show that cellulosic ethanol could be produced at industrial scale, but that process can take years to develop.

Hart believes there are two scenarios for the plant’s sale: a buyer may purchase it in the coming months for speciality parts, or a shift in Renewable Fuel Standard quotas for cellulosic ethanol makes the plant more attractive to a buyer.

“Technology is big barrier to overcome, but in this case, the reason DuPont built this plant, the reason POET (another cellulosic ethanol manufacturer) built theirs in Emmetsburg, a lot of that was driven by the policy behind it, not necessarily the economics,” he said.

Currently, RFS policy counts biogas created from landfills toward its quota for cellulosic ethanol, and those gases can be captured at a far cheaper rate than actually producing the ethanol. That puts the ethanol producers at a disadvantage.

Cellulosic ethanol production has struggled to reach commercial viability for years, Hart said, because it hasn’t received the same amount of support or the same level of subsidization that traditional grain ethanol got during its development.

“What you had there were folks in the corn industry that were willing to support that development over the decades to push through that, and that’s what the cellulose side is missing, if you will,” he said.