Tyson sells off half-ownership in renewable diesel venture

Source: Amanda Peterka, E&E reporter • Posted: Thursday, May 22, 2014

Tyson Foods Inc. is selling its 50 percent stake in a $150 million renewable diesel plant in Louisiana.

In a statement today, Tyson said that selling its stake in Dynamic Fuels LLC, a joint venture with Syntroleum Corp., would provide the company with capital “to redeploy into other opportunities.”Renewable Energy Group Inc., the nation’s largest biodiesel producer, has agreed to acquire the food giant’s stake for $18 million in cash at closing and up to $35 million in future payments. REG, which acquired Syntroleum last year, has also agreed to fund $12 million of Dynamic’s indebtedness to Tyson at the time of closing.

“It gives us the opportunity to further expand our production capacity into new product lines, while growing our overall advanced biofuel manufacturing capability, and bringing on other renewable chemical applications,” Renewable Energy Group President and CEO Dan Oh said in a statement.

Dynamic Fuels has built a biorefinery in Geismar, La., capable of producing 75 million gallons a year of renewable diesel made from animal byproducts such as beef tallow and pork and chicken fat. The company received $100 million in bonds through the Louisiana Public Facilities Authority for its construction.

While the plant is complete, operations were idled in late 2012 for maintenance and upgrades; according to a recent Securities and Exchange filing, the plant remained idle throughout all of last year.

“The plant has experienced mechanical difficulties, pre-treatment system performance issues and hydrogen supply disruptions, which have contributed to plant down time and higher than expected operational costs,” Tyson said in the SEC filing.

As of the end of fiscal 2013, the plant had incurred net operating losses of approximately $38 million.