Bloomberg News

New Energy Idles Indiana Ethanol Plant on Falling Profitability

November 06, 2012

New Energy Corp. idled an ethanol plant in South Bend, Indiana, because making the fuel has become unprofitable.

The company is mothballing the 100 million-gallon-a-year operation as a supply glut, tepid demand and high corn prices in the aftermath of the worst U.S. drought since the 1950s cut profitability, Russ Abarr, president of South Bend-based New Energy, said in a telephone interview today.

“That’s all working against the margins,” Abarr said. “Unfortunately, it’s happening at a lot of places in the country and we’ll see more of it happen.”

New Energy’s decision to idle the plant until it’s profitable comes after Valero Energy Corp. (VLO:US), the third-biggest U.S. ethanol producer, said Oct. 30 that it shut distilleries in Albion, Nebraska, and Linden, Indiana.

Denatured ethanol for December delivery fell 2.2 cents, or 0.9 percent, to $2.332 a gallon yesterday on the Chicago Board of Trade. Prices have gained 4.9 percent this year.

Bunge-Ergon Vicksburg LLC plans to halt operations at its Mississippi mill by Nov. 30 and Biofuel Energy Corp. (BIOF:US) said in September that it closed a plant in Fairmont, Minnesota. Southwest Georgia Ethanol LLC stopped production at a Camilla, Georgia, operation last month.

Abarr said New Energy plans to sell the 28-year-old plant when the market improves.

Poet LLC, in Sioux Falls, South Dakota, is the largest U.S. ethanol producer, followed by Archer Daniels Midland Co. (ADM:US) in Decatur, Illinois.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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Companies Mentioned

  • VLO
    (Valero Energy Corp)
    • $48.35 USD
    • 0.49
    • 1.01%
  • BIOF
    (BioFuel Energy Corp)
    • $8.7 USD
    • 0.85
    • 9.77%
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