Big ethanol plant in Fairmont, Minn., is reopening

Minnesota's second-largest ethanol plant is reopening after a 15-month shutdown.

The plant in Fairmont, 130 miles southwest of the Twin Cities, has hired workers and about half the plant will be operating next week, said Todd Becker, CEO of Green Plains Renewable Energy, the plant's new owner.

"We should be cranking ethanol out of there by the first of the year," Becker said in an interview with the Star Trib­une on Thursday.

After a round of hiring this month, the company said it has 50 employees at the plant and expects the number to rise to 58. About half are former plant workers, the company said. The plant is expected to be at full operation by the end of January.

The plant, with an annual capacity of 113 million gallons, is one of two of Minnesota's 20 ethanol plants that remained closed after high corn prices in 2012 hurt the biofuels industry and shuttered 25 of the nation's 210 ethanol makers.

The Fairmont plant's previous owner was unable to reopen the plant after defaulting on payments to its lender. First National Bank of Omaha sold it to to Green Plains, the nation's fourth-largest ethanol producer, based in Omaha.

Becker said the market for ethanol looks strong even though the U.S. Environmental Protection Agency has proposed to scale back the 2014 requirement to blend ethanol into the nation's motor fuel.

"The fundamentals are still good for ethanol right now," said Becker, citing above-average driving trends, a strengthening U.S. economy and steady ethanol exports.

That view was echoed by Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association (RFA), an industry trade group. He said all but about 10 or 12 U.S. plants are back on line, many of them this fall, after the strong corn crop.

"Demand is extremely strong. Profitability is good in the industry," he said on a news conference call Thursday for the sixth anniversary of the signing of the federal law setting the renewable fuel standard.

The ethanol industry is fighting the EPA's proposed blending requirement, fearful that it will hurt development of next-generation ethanol plants that will produce fuel from nonfood plant material, like ­cornstalks. "It will not happen if this rule is finalized," RFA President Bob Dinneen said.

The Minnesota Agriculture Department, in an analysis of a lower blending mandate, projected that the state's ethanol industry — the fourth largest in the nation — could see its output reduced by 110 million gallons annually, a drop of more than $100 million in value-added processing. "I see that as quite significant," said the department's chief economist, Su Ye.

Becker said he views the Minnesota projections as a "worst case" that probably would cause ethanol producers to export even more fuel. "Global demand for ethanol is extremely good right now," he said, and about 10 percent of Green Plains' output is exported.

The Fairmont plant, and one in Wood River, Neb., were formerly owned by Colorado-based BioFuel Energy Corp. Its bank sold the plants to Green Plains for $53.5 million each. In Minnesota, the Fairmont plant is second only to Valero's 120 million-gallon-per year plant located five miles away in Welcome.

Green Plains also owns a plant in Fergus Falls, Minn., and 10 others across the Midwest.

Minnesota's other idle plant, in Buffalo Lake, also is working to reopen. West Ventures, a unit of a New York hedge fund, financed the plant's reopening last year after a four-year shutdown — only to shut down in March and be sold in bankruptcy court.

Jed Latkin, CFO of Buffalo Lake Advanced Biofuels, said in an e-mail that the company is making capital investments and the plant should be operating in a few months.

"We are actively looking to hire people for the plant," he added, with local workers preferred. "We are determined to make it work."

David Shaffer • 612-673-7090

Twitter: @ShafferStrib