Today in Biofuels: Bioenergy of America files for bankruptcy, Biodiesel Corp narrowly escapes; 86 percent of new Brazilian cars are flex-fuel; GM CEO says US needs 20,000 E85 stations
Submitted by Biofuels Digest
Top Story:
In New Jersey, Bioenergy of America filed for bankruptcy yesterday, listing assets of $1-$10 million and debts of $10-$50 million. The company represented 15 percent of US biodiesel supply in 2005, has been hit hard by the rise in soy feedstock prices and flat biodiesel prices. In related news, European-based Biodiesel Corporation avoided a bankruptcy filing when primary debt holder Barclay Bank agreed to a debt-for-equity swap.
Producer News:
In Idaho, Renova has completed a review of cost overruns of up to $13 million in the construction of its Heyburn plant, which drove overall project cost to as high as $59 and resulted in a liquidity shortage and suspension of the company’s shares on the London AIM exchange. The company has halted work on project development due to the cost overruns, and is negotiating with existing investors and lenders as well as potential sources of new financing.
In California, BlueFire Ethanol Fuels closed a $15 million financing round to provide working capital and project funds for its 17 Mgy cellulosic ethanol project in Southern California. In the financing agreement, the Quercus environmental trust acquired $15 million in common stock and warrants, while Aurarian Capital Partners and Aurarian Capital converted their senior convertible notes into common stock.
International News:
In India, the Chief Minister of Maharashtra state removed the 14 cents-per-gallon duty on export of ethanol to other Indian states, helping pave the way for increased supply of ethanol as India struggles to meet the E5 mandate. The state plans to export 475 million gallons of sugarcane ethanol to 11 states and three Union territories over the next three years.
In Australia, the New South Wales Government approved a $100 million, 79 Mgy ethanol plant at Coleambally. The Four Arrows project will also produce enough distiller’s grains to provide feed for 18,000 dairy cattle, making the local Riverina district home to the largest dairy operation in the country with a milk capacity of 20 Mgy.
In Brazil, 86 percent of all cars sold in Brazil in 2007 were ethanol enabled. The registration of 2 million cars in 2007 takes the total of cars running on ethanol blends or pure E100 to 4.6 million. Brazil now has 63 flex-fuel cars available in the market. The Brazilian government said that the flex-fuel vehicle numbers led to the investment of $4.3 billion in the ethanol industry, created 1.2 million jobs.
In China, General Biodiesel announced that it will construct biodiesel plants in Beijing, Shanghai, Guangzhou, and Wenzhou in a $100 million direct investment. The announcement comes as China increased its biodiesel production target to 200,000 tons by 2010 and two million tons by 2020.
In Thailand, the MFC Energy Fund has invested $670,000 to acquire a 25% holding in E-Ester, operator of a 4.8 Mgy palm oil biodiesel facility in Chiang Rai. The company plans to increase production to 14 Mgy as local palm oil supplies increase.
Research News:
U.S. ethanol production capacity has reached 7.5 billion gallons by the end of 2007, a 40 percent increase over 2006. National production capacity will increase to 13.3 billion gallons at 136 facilities in 2008 based on the completion of all existing projects.
Policy and Policymakers:
In South Dakota, Gov. Mike Rounds called for a 2 cent-per-gallons tax break for biodiesel fuel, saying that the proposed tax break would stimulate the biodiesel industry in the same way a tax package helped spur the South Dakota ethanol industry.
Consumer and Fleet News:
The CEO of General Motors, Rick Wagoner, said that the US needs to increase the number of ethanol stations by a factor of 10-15, from 1400 today to as many as 20,000. The US has 170,000 gas stations in total. He added that the company has been working with companies such as Wal-Mart and Target to add ethanol to their fuel distribution services.
In Alabama, Gadsden will launch a “Waste to Fuel” program based on grease recycled by restaurants and residents. The city will provide gallon jugs, and Auburn University is providing $14,000 in biodiesel producing equipment to the city. The city, after collection, expects to reduce the cost of fuel from $2.75 for regular diesel to 70 cents per gallon. The program is also designed to reduce the city’s clogged pipes problems from grease poured down drains.
Financial News:
The Biofuels Digest Index™ (BDI), a basket of public biofuels stocks, fell 2.29 percent yesterday to 129.46 as investors lost enthusiasm for biofuels across the board. For the day, decliners led advancers 16 to 1. Among diversified agribusiness, Archer Daniels Midland (ADM) fell 1.83 percent to $45.02, while US BioEnergy (USBE) fell 7.07 percent to $10.39 in parallel to a decline at proposed merger partner VeraSun Energy (VSE). Among small caps, Better Biodiesel (BBDS.OB) fell 34.84 percent to $1.01 in volatile trading surrounding its reverse merger with GAT, while Environmental Power (EPG) eked out a 2.22 percent gain to close at $4.60. Bluefire Ethanol (BFRE.OB) closed a $15 million financing but fell 3.50 percent to $3.86 on the news.
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