UPDATED: Minnesota ethanol plant shuts down

By Holly Jessen | March 16, 2010
Posted April 8, 2010

Minnesota Energy, an 20 MMgy corn ethanol plant in Buffalo Lake, Minn., has laid off workers and suspended production of ethanol, confirmed Buffalo Lake's Mayor Joyce Nyhus. The person answering the phone at the ethanol plant on April 7 said the company is not releasing any information to the press.

According to information at the company Web site, www.fromfieldtofuel.com, the plant began production in 1997. Minnesota Energy expanded in 2006, including grain handling and merchandising, agronomy sales and application, and home heat delivery in Buffalo Lake and five nearby towns. Three hundred shareholders provided the majority of corn for the ethanol plant, the Web site said, and, in total, the company employed 60 full time employees and 30 part time or seasonal employees.

The profit margins for fuel ethanol production were small because the plant was so small, Nyhus said. The company will continue to operate the agronomy business, however. She declined to estimate how many employees were laid off.

The plant closure is having a big impact in the small town, Nyhus said. At the 2000 Census, Buffalo Lake had a population of less than 800 people. Many families have been affected by the layoffs. "Of course that is the hot topic at the coffee shop these days," she said.

The closure of Minnesota Energy is a "double whammy" for Buffalo Lake. Last year a beef processing facility on the opposite end of town was also closed. The good news is there are plans in the works to restart the beef plant, possibly as early as this summer or early fall, and Nyhus is confident the ethanol plant will be purchased for alternate production. In fact, she's already had conversations with interested parties thinking about using the plant for something else—such as alcohol for human consumption. "I'm just really optimistic," she said. "… We will rebound."

On the other hand, other media outlets have reported that the shutdown is for an indefinite amount of time and that the plant could restart. In addition, the plant was one of many Minnesota ethanol plants fined by the Minnesota Pollution Control Agency. In 2009 MPCA fined the plant a civil penalty of $1.1 million for a variety of alleged air and water violations.

NOTE: Updated capacity and added information about alternate uses for the plant. Also, information about the fine.