Sector News

Bunge sells stake in U.S. ethanol plant as biofuels industry struggles

January 6, 2020
Food & Drink

Bunge Ltd ended its 13-year ownership interest in an Iowa ethanol plant, the company said on Thursday, following industry struggles with thin margins and overproduction.

Southwest Iowa Renewable Energy, or SIRE, repurchased Bunge’s stake in the facility on Dec. 31, according to a statement.

U.S. ethanol producers say the industry has suffered from the Trump administration’s expanded use of waivers to exempt oil refineries from blending ethanol into gasoline. As of last month, some 13 plants had shut since November 2018, while others had temporarily reduced production.

“As Bunge focuses our resources on our core businesses, selling our shares in SIRE, while maintaining a relationship, is an attractive opportunity,” said Andrés Martín, North America country manager for Bunge.

Bunge had a 25% ownership interest in SIRE, which operates the ethanol plant near a Bunge oilseed processing facility in Council Bluffs, Iowa, according to an annual report Bunge filed last year with the U.S. Securities and Exchange Commission. The plant’s other owners are primarily agricultural producers in southwest Iowa, the filing said.

SIRE is permitted to produce 140 million gallons per year and Bunge will continue to buy all of its ethanol under a revised commercial agreement, according to Thursday’s statement.

But SIRE will assume responsibility for buying corn to produce ethanol and for selling a byproduct used for livestock feed, the statement said. SIRE will also continue to lease rail cars from Bunge, which named a new chief executive last year after being stung by slumping grain prices and a bruising U.S.-China trade war.

Bunge and rival merchants Archer Daniels Midland Co, Cargill Inc and Louis Dreyfus Co, known as the ABCD quartet of global grain traders, have restructured operations and cut costs after a years-long crop supply glut thinned margins and sapped profits.

ADM said last year it would move three dry ethanol mills into a wholly-owned subsidiary while the company evaluates strategic alternatives.

“While conditions in the ethanol industry are difficult, with Bunge’s capital support and strategic advice over the years, SIRE is and will continue to be a strong participant in the renewable energy industry,” said Mike Jerke, SIRE’s chief executive.

By Tom Polansek

Source: Reuters

comments closed

Related News

October 2, 2022

Drinktec 2022: In review

Food & Drink

In the lead-up to the world-famous Oktoberfest – which celebrates Bavarian tradition, beer and the festival spirit – Munich was already buzzing with activity by the time the doors opened to Drinktec 2022 on 12-16 September. The atmosphere was lively, with approximately 50,000 visitors from 169 countries in attendance.

October 2, 2022

Alan Jope to step down as Unilever CEO

Food & Drink

Unilever has announced CEO Alan Jope’s decision to retire from the company at the end of 2023, after five years at the helm. The announcement comes less than a year after a failed attempt by Unilever to buy GlaxoSmithKline’s consumer healthcare business and just months after activist investor Nelson Peltz joined the company’s board.

October 2, 2022

Lakeland Dairies names Colin Kelly as next group CEO

Food & Drink

Lakeland Dairies has announced that Colin Kelly will assume the role of group CEO following the retirement of Michael Hanley at the end of the year. Kelly will take up the position in January 2023, while Hanley will step down in December this year.