Bloomberg News

Gevo Sees Minnesota Biofuels Plant Breaking Even in 2014

August 01, 2014

Gevo Inc. (GEVO:US)’s biofuels plant in Minnesota, which has suffered production delays because of contamination, may break even by the end of 2014 as output of ethanol and isobutanol from agricultural waste increase.

Gevo hopes to raise isobutanol output at the facility to 1 million gallons annually by year end, and to 3 million gallons in 2015, Chief Executive Officer Pat Gruber said today in a telephone interview. The Luverne plant also produces 18 million gallons of ethanol.

Mass production of biofuels from plant waste has proven technologically and economically challenging. Alan Shaw, former chief executive of Codexis Inc. (CDXS:US), the first advanced biofuel company to be publicly traded in the U.S., last year called the industry a “nightmare.” He gave up and moved on to search for a process that uses natural gas instead.

“We want to increase isobutanol gallons on that site,” Gruber said. “It’s relatively inexpensive to switch the ethanol production back to isobutanol.”

Among the biofuel producers Gevo, Codexis Inc, Amyris Inc. (AMRS:US), Solazyme Inc. (SZYM:US) and Kior Inc., only one -- Codexis -- has posted a profitable quarter when it reported earnings per share of less than 1 cent in the fourth quarter of 2010.

Gevo fell to an all-time low in New York, dropping 6.4 percent at the close to 47.8 cents. The shares have declined 76 percent in the past year.

Gruber hopes to change that. Englewood, Colorado-based Gevo yesterday said it raised $18 million to support operations into 2015. The company’s two largest investors (GEVO:US) are billionaire venture capitalist Vinod Khosla and the French oil company Total SA (FP), according to data compiled by Bloomberg.

Mixed Bag

Khosla also backs Kior Inc. (KIOR:US), which may sell itself after missing a $1.88 million debt payment to Mississippi where the company opened the first commercial-scale cellulosic biofuel plant in 2012. That facility was shuttered in January.

Khosla pledged another $25 million to Kior, according to an April 1 filing with the Securities and Exchange Commission. Mojgan Kahlili, who oversees Kior investments for Khosla Ventures LLC, didn’t respond to phone messages or e-mails seeking comment on the company’s biofuels strategy.

Gevo originally sought to produce only higher-margin isobutanol, which is made from corn and plant waste and may be blended with gasoline or converted into fuels and chemicals.

Biofuel companies including Gevo and Solazyme may join a few closely held producers in separating themselves from the pack, Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston, said today in a telephone interview.

“It’s been a mixed bag,” Molchanov said. “Gevo was originally supposed to start producing isobutanol in 2012 and here it is 2014 and they’ve barely started producing -- but they’re making progress. Kior, sadly, is kind of a lost cause.”

To contact the reporter on this story: Justin Doom in New York at jdoom1@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Jim Efstathiou Jr., Tina Davis


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Companies Mentioned

  • GEVO
    (Gevo Inc)
    • $0.35 USD
    • -0.06
    • -17.23%
  • CDXS
    (Codexis Inc)
    • $2.3 USD
    • -0.04
    • -1.74%
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