Galva ethanol plant on schedule for spring startup
Rumors that Big River Resources is planning to stop construction of its Galva ethanol plant, are just that - rumors. There's no basis to them, says Big River CEO Raymond Defenbaugh. "I'm glad you followed up on that," Defenbaugh told the Galva News on Monday. "We certainly want to nip that in the bud."
Despite the fact that construction hadn't stopped, and Big River is running advertisements seeking the hiring of an employee (grain merchandising assistant), it was rumored in Galva that the $172 million project was being scratched.
"No. We have not made a decision to do that," he stated. "We're committed to it."
As it stands, Defenbaugh said construction remains on pace to allow the plant to open this spring, perhaps in May.
"We're at the normal projected time frame, barring winter weather," he explained.
Meanwhile, Defenbaugh acknowledged that the ethanol industry is going through trying times, including having several plants cease operations. That's mostly because of oil and corn markets, which radically affect the ethanol market.
"Since August, it has gotten a lot tighter, with most plants now about at the break-even point," Defenbaugh conceded. "The oil people have hired agronomists and they know exactly the break-even point of ethanol."
"It used to be you could sell ethanol ahead, so you knew what you could pay for corn," he added.
"But the oil industry has stopped doing that. So, if corn (price) drops, ethanol follows it down. You can't forward-sell the ethanol so you don't know how to bid on the corn. That's what's gotten a lot of companies in trouble."
Defenbaugh said the oil industry is "putting the squeeze on the ethanol world, and the corn farmer, really," at this time.
But he said that as ethanol plants shut down, he expects the ethanol market to "correct itself."
Defenbaugh said Big River, which has an ethanol plant at its headquarters in West Burlington, Iowa, said his company did not "get caught up" in buying corn ahead, keeping the company financially sound.
"We had profit in excess of $25 million and did issue $5 million in dividends" recently, he said.
"We're not in trouble. I want to say that - though I don't feel I should have to. We're strong financially."