Ethanol plants in Fort Dodge, Charles City and Hartley came under new ownership just after midnight Wednesday. The Iowa plants were part of a group that also included plants in Minnesota and South Dakota that were sold by bankrupt VeraSun Energy to Valero Energy of San Antonio, Texas. Valero spokesman, Bill Day, says the change of ownership has gone smoothly.
Day says other than the new signs at the plants, there won’t be any visible changes to the people in the communities. He says they have visited the plants are working with the existing managers and employees, and they are all running and making ethanol. Valero also has purchased two other ethanol plants in Albert City, Iowa and Albion, Nebraska, and that deal is expected to close in the next several weeks.
Day says these are the first ethanol plants for the company, but he says they have lots of knowledge of ethanol as the largest oil refiner in North America. Day says they have 16 refineries, and their refining capacity of three-million barrels a day is more than Exon-Mobil, Chevron or Connoco-Phillips.
"So we are making a lot of gasoline, and because we make gasoline, we have to buy a lot of ethanol for blending into the gasoline," Day says, "so we were already into ethanol as a purchaser, but not as a producer." Day says they saw the financial troubles of VeraSun as a chance to get into ethanol production.
He says there were a lot of ethanol assets available at discount prices as the companies were in bankruptcy or had financial problems. Day says they were able to buy the ethanol plants for about 30% of what it would have cost to build them from scratch. Day says the problems that plagued VeraSun, won’t be a problem for his company.
Day says VeraSun got locked into hedging contracts that anticipated that corn prices would stay a certain level, and when corn prices fell, the company was trapped. He says Valero bought the hardware of the plants and not the existing corn contracts, so they can work with the corn suppliers.
Day says there are some 400 jobs the company was able to add or maintain by buying the plants. The company paid 477-million dollars for the five plants which it has already taken over. It is paying $72-million for the Albert City plant, and $55-million for the Albion plant.