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Valero to Buy Three More Ethanol Plants

Valero Energy Corporation, which purchased seven of the ethanol production plants formerly owned by VeraSun Energy Corporation last spring, just announced that its wholly-owned subsidiary, Valero Renewable Fuels Co., LLC, has agreed to buy two more VeraSun ethanol plants. They are located in Linden, IN and Bloomingburg, OH.

The company also has received approval to acquire Renew Energy, an ethanol plant located near Jefferson, WI, following a bankruptcy auction held last Friday.

Each of these three ethanol facilities has a production capacity of 110 million gallons per year.

In “Do Oil and Ag Mix?” (Farm Industry News, October 2009), I reported that one of the reasons the oil industry is getting more involved in biofuel production is that it has been able to capitalize on ethanol plant bankruptcies. In that article, Bill Day, Valero’s executive director of media, said that Valero was able to buy the seven VeraSun plants for only 30% of the replacement cost for those plants.

With this week’s announcement, Valero will buy the three plants for about 41% of their replacement costs—still quite a bargain. Valero will pay $200 million for the VeraSun plants and just $72 million for the Renew Energy plant.

The Valero purchases in Indiana and Ohio should be good for farmers in those areas because those plants had been sitting idle. Valero expects to get them running again in three to six months. The Renew Energy plant has been running, but at a reduced rate of production. Valero expects it will reach full production over time.

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