Tate & Lyle won't complete Fort Dodge plant

By Holly Jessen | May 21, 2010
Posted June 2, 2010

For the past year, the Tate & Lyle ethanol plant in Fort Dodge, Iowa, has sat idle, with only a skeleton crew. The company announced recently that it doesn't plan to complete start up. "The continuing depressed and volatile outlook for ethanol, and uncertain conditions in industrial starch and corn gluten feed markets, do not provide any basis to complete and commission the plant," said Javed Ahmed, executive officer for Tate & Lyle.

The London-based food ingredients business made the announcement last week during a presentation on its year-end results, from March 2009 to March 2010. In addition, the company said, starting June 1, it planned to reorganize into three global business units: specialty food ingredients, bulk ingredients and sugars. Their main goal, Ahmed said, would be to grow the company's specialty food ingredients business. With that in mind a new unit, the innovation and commercial development group, will be established to develop and commercialize innovation in this area.

Construction halted on the Fort Dodge plant last March, with very little left to do to get it producing ethanol. "The plant was essentially complete as it was originally designed," said Chris Olsen, director of communication and government relations.

Tate & Lyle isn't saying exactly what it plans to do with the ethanol plant. "On a go-forward basis, we'll look at different alternatives to see what provides the best shareholder values," he told EPM. The company has one 60 MMgy ethanol plant in Loudon, Tenn.

The decision was made, Ahmed said, after a detailed analysis of changes in the feed and energy markets. Another consideration was what the company learned in the course of installing new equipment at the Loudon plant. New technology, along with remobilization costs, the company said, would put completing the Fort Dodge plant at about $85.4 million (70 million pounds). "Factoring in the risks associated with future returns from the plant, including the length of time to complete, regulatory uncertainty and a continuation of the current market conditions, we have concluded that the plant is highly unlikely to be completed or commissioned in the foreseeable future," he said.

Ethanol isn't the only area in which Tate & Lyle is pulling back. The company previously decided to mothball a Splenda Sucralose plant in McIntosh, Ala., and moved all sucralose production to a facility in Singapore. The company also wrote off 28 million pounds related to a Xanthan gum pilot plant after it decided not to pursue full-scale production.

Overall, the company reported a 22 percent increase in adjusted operating profits from core value added food ingredients. Profits within primary ingredients in the Americas and Europe, on the other hand, were 22 percent down from the prior year. That was impacted by lower coproduct income and weaker industrial profits, the company said.