A ‘Lower-Cost, Lower-Carbon Intensity, Multi-Feedstock’ Biorefinery
The Iowa-based Renewable Energy Group said Wednesday that it’s signed an asset purchase agreement with Sanimax Energy to acquire Sanimax’s 20-million-gallon-nameplate capacity biodiesel refinery in DeForest, Wisc.
“With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well,” REG president and CEO Daniel Oh said in a release. “This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries.
REG is to pay Sanimax approximately $11 million in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets. REG will also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be re-named REG Madison, LLC.
Feedstock Next Door
“Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages,” Oh said – Sanimax operates a grease-processing facility at the site and is expected to continue to do so.
Production at the facility just north of Madison started in 2007. Feedstocks include yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. The DeForest plant has both truck and rail capabilities.
“This agreement is in line with our business plan to improve focus on our core businesses,” said Sanimax president and CEO Martin Couture. “Our biodiesel employees will have an opportunity to pursue their career with an industry leader,” he said.
“We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship,” Oh said.
When the Sanimax deal is closed, REG will have 11 active North American biomass-based diesel refineries in seven states with a combined nameplate production capacity of 452 million gallons.
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Source: REG with Fleets & Fuels follow-up