REX to acquire interest in S.D. ethanol plant

By Holly Jessen | June 10, 2010
Posted July 7, 2010

If all goes as planned, by the end of July REX American Resources Corp. will have invested in its seventh ethanol plant. Formerly known for its retail stores, the renewable energy company's latest move is to enter a definitive agreement to acquire an approximate 48 percent equity ownership interest in NuGen Energy LLC.

According to the agreement, REX will acquire the 48 percent ownership for $9.2 million. In addition, the company will commit up to $6.2 million more, based on future profitability of the plant. Not counting this acquisition, the company has invested about $112 million in corn or sorghum ethanol production plants.

The Marion, S.D., ethanol plant currently produces 100 MMgy of corn ethanol. Central Farmers Cooperative purchased the plant in July 2009 from Marion Energy Investments LLC, which acquired the plant after VeraSun Energy Corp. went bankrupt. "The goal was to never to have the doors close again," Steve Domm, general manager of Central Farmers Cooperative, told EPM.

REX was the largest shareholder of Millennium Ethanol LLC, the former owner of the Marion plant. All in all, Farmers Cooperative is excited to have REX and its management team back in town. "It brings an experienced partner to the table," he said.

If all conditions are met and the transaction is completed, REX will own a total of about 191 MMgy of annual nameplate capacity at seven ethanol plants in South Dakota, Illinois, Iowa and Texas. The plants have a combined capacity of 632 MMgy. The company owns 56 percent in Levelland Hockley County Ethanol, Levelland, Texas, and 74 percent in One Earth Energy, Gibson City, Ill. It also has ownership interest in Patriot Renewable Fuels, Big River Resources West Burlington, Big River Resources Galva and Big River United Energy.