Granite Falls, Minn. project moves forward without state credits

By Tom Bryan | September 01, 2002
This month, the Granite Falls Community Ethanol Plant project took another step in the right direction. The organization, which is working to build a 40 mmgy plant east of Granite Falls, submitted a registration statement with the United States Securities and Exchange Commission (SEC) seeking to raise $30 million through the sale of 30,000 limited liability membership units. The filing also states that the organization would need to carry between $25 million and $37 million in debt to fund the proposed plant. SEC reviewers have 30 days to review the filing and request changes. The organization then must do its final filing prior to starting a major equity drive.

"If everything falls into place, it could be as soon as the middle of October that we begin the last equity drive," said Robin Spaude, project coordinator for the proposed plant.

Spaude said the project was in a "quiet period" while the SEC registration was pending, but speculated that builders could break ground on the plant as early as spring 2003, if everything goes smoothly. Granite Falls-based Fagen, Inc., a leading ethanol plant builder, will team up with ICM, Inc. on the design and construction of the facility.

The plant would use about 15 million bushels of corn a year and create about 30 jobs. In addition to producing ethanol, the plant would also produce about 130,000 tons of DDGS.

No producer payment from state
If built, the Granite Falls Community Ethanol Plant will not receive a producer payment from the state of Minnesota, which has capped its ethanol funding despite aggressive attempts by several groups to obtain producer credits.

Subsequently, Spaude said, that is why the project's steering committee decided to pursue a 40 mmgy plant.

"The plant was originally slated to be a 15 million gallon facility," he told EPM. "When we realized we were loosing the battle for funds, our plans changed to 40 million gallons. We realized that a 40 (mmgy) plant without credits was almost as profitable as a 15 (mmgy) plant with producer payments. . . it's the economy of scale factor."

Nevertheless, the project investors will aggressively pursue the state's producer payment as long as there is the slightest chance of recieving it, he said. "We will go after it until it's a dead issue."

Minnesota currently has 14 ethanol plants producing about 300 million gallons of ethanol a year.