ABE announces new ethanol marketer, increases grain storage

By Erin Voegele | August 09, 2012

Advanced BioEnergy LLC and Hawkeye Gold LLC have mutually agreed to terminate their ethanol marketing relationship for the sale of ethanol from ABE’s plants in Aberdeen, S.D., Hurbon, S.D., and Fairmont, Neb. ABE has entered into agreements with The Gavilon Group LLC to be the exclusive ethanol marketer for ethanol these facilities moving forward. Gavilon will also be the exclusive marketer for DDGS for the Aberdeen facility, effective Aug. 1, 2013. Hawkeye Gold will handle DDGS marketing for the Aberdeen plant until that time.

Richard Peterson, ABE CEO, noted that Hawkeye Gold’s professional service, attention to detail and innovative risk-management tools helped his company navigate difficult times over the past three years. Moving forward, Peterson also said that Gavilon will offer his company a comprehensive solution that will help it achieve risk management objectives in a competitive market.

“Our past relationship with Gavilon and their ability to provide a comprehensive solution for our marketing needs as well as a full railcar solution for our South Dakota plants makes them the right partner in today’s environment,” Peterson continued. “Gavilon was a solid business partner in the past and we look forward to our future relationship.”

According to Randy Ives, Gavilon’s director of ethanol services, his company is pleased to have been selected as ABE’s exclusive marketer. “This agreement leverages our core capabilities and will enable Advanced BioEnergy to tap into Gavilon’s extensive agricultural and energy networks,” he said. “By utilizing Gavilon's expertise in the commodity markets that drive ethanol production, Advanced BioEnergy will be able to more effectively manage its processing margins in both the spot and forward markets.”

Information ABE filed with the U.S. Securities and Exchange Commission specifies that the company’s two operating subsidiaries, ABE South Dakota LLC and ABE Fairmont LLC, entered into agreements with Gavilon LLC and affiliated companies. The ABE South Dakota agreement for ethanol marketing began August 1 and expires on Dec. 31, 2015. The DDGS marketing agreement becomes effective Aug. 1, 2013 and expires on July 31, 2016. The ABE Fairmont ethanol marketing agreement became effective August 1 and will also expire on Dec. 31, 2015.

In addition, the SEC filing noted that the ethanol marketing agreements with Hawkeye Gold for all three plants were set to expire April 30, 2013. On July 31 the companies entered into an amendment and settlement agreement under which an agreement was made to terminate the marketing agreements as of July 31. Under the settlement ABE South Dakota and ABE Fairmont have agreed to pay Hawkeye Gold a month fee on substantially all gallons of denatured ethanol sold through April 30, 2013.

ABE produces approximately 190 million gallons of ethanol per year combined at the three plants; 110 MMgy in Fairmont, 50 MMgy in Aberdeen and 30 MMgy in Huron. The Aberdeen plant produces approximately 130,000 tons of DDGS each year.

ABE has also announced it will increase grain storage capacity at its Fairmont location with the installation of two 750,000 bushel steel bins. Grant Johanson, ABE’s vice president of operations, said that the increased storage will allow the company to purchase additional grain from local producers during key times of the year.

The storage bins are expected to be in place in time for harvest. Salina, Kan.-based Habco Inc. is serving as the contractor for the project.