Hungarian ethanol plant to expand capacity above 100 MMgy

By Holly Jessen | December 18, 2014

Nearly three years after construction was completed at a corn-ethanol plant in Dunafoldvar, Hungary, Pannonia Ethanol has signed a loan deal so it can expand its production capacity.

Pannonia Ethanol, which is a subsidiary of Ethanol Europe Renewables Ltd., originally started out with a capacity of 240 MMly (63.4 MMgy) and currently produces 280 MMlly. Now, with a $40.9 million loan package from an investment fund managed by Montreal's Cordiant Capital and with the Hungarian Export Import Bank, the ethanol plant will expand to 450 MMly, or 119 MMgy. With the expansion complete, total investment in the facility will reach $248.48 million.

“We’re very pleased to be able to deliver on our original business plan and commitments to this community made in 2010, even despite a challenging regulatory climate and the closure of other ethanol plants in Europe,” said Zoltan Reng, chief executive of Pannonia Ethanol, in a press release. “This investment will bring Pannonia's total direct and indirect job creation to 2,000.”

The ethanol and distillers grains produced at the facility are exported to 20 countries. The ethanol produced by Pannonia produces 70 percent lower lifecycle greenhouse gas emissions, compared to fossil fuels used in the European Union. And the distillers grains produced at the facility are GMO and antibiotic free.

The corn used to produce ethanol at the plant would have previously been used directly as an animal feed, exported or simply not grown at all, the company said. In fact, before the ethanol plant was built, some farmers were burning corn for heat, due to lack of tangible markets. “Pannonia has been a great partner to this community,” said Zsolt Horvath, the mayor of Dunaföldvar. “As a stable, large employer operating a pollution-free industrial asset, Pannonia has given this community the income and anchor investment necessary to enable our transition to a sustainable future based on the rural bioeconomy.”

Ethanol Europe Renewables is a joint venture of the Fagen and Turley families. Mark Turley, the catalyst behind the development company, determined that he wanted Ron Fagen, of Fagen Inc., as a partner. The idea was to build several ethanol plants in Europe. However, a second project in Mohacs, Hungary, was halted in response to a 2012 European Commission proposal to limit ethanol use. Project development of a third project in Prilep, Macedonia, is currently continuing, the company said, but is on uncertain ground due to regulatory uncertainty.