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ADM to Double Capital Expenditures; Projects Include Renewable Fuels and Biodegradable Plastics

13 June 2006

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Nationwide demand for E10 would outstrip US production capacity. Click to enlarge.

Archer Daniels Midland (ADM) is preparing to double the size of its capital spending on a range of projects, including ethanol and biodiesel expansion, coal co-generation and bio-degradable plastic.

Speaking at the Deutsche Bank Global Retail and Consumer Conference in Paris, ADM CEO Patricia Woertz said that the company will spend between $3.5 to $4 billion over the next two to three years, doubling its capital expenditures from the last three years.

With about 25% market share, ADM is currently the largest producer of ethanol in the US. The company is already adding 550 million gallons per year of new ethanol production capacity that will be online by 2008.

Ethanol demand in the US could far exceed the amount mandated by the federal Renewable Fuel Standard, Woertz said, noting that a nationwide demand for E10 would be about double current and announced production capacity. She noted that ADM is not basing its capex plans on such a surge in demand, but did note the distinct possibility of such an increase, assuming that the price for ethanol drops below that of gasoline.

ADM’s four primary crops are corn, oilseeds, cocoa and wheat. Although it has announced no plans in this direction, the company is watching the production of ethanol from sugar cane, according to Woertz.

Questioned about the prospects for the US dropping its $0.54/gallon tariff on imported ethanol, Woertz said that she thinks that action unlikely.

Both political parties are more aligned on this subject than almost any other one, and that is to support a renewable fuels industry in the US, so even though there has been a fair amount of talks it doesn’t seem like there is interest in removing those tariffs at the moment.

ADM has been partnering with Metabolix to commercialize the Metabolix proprietary PHA (polyhydroxalkanoate) technology. The plant will have an initial annual capacity of 50,000 tons per year.

The PHA plastics are produced using a fully biological fermentation process that converts agricultural raw materials such as corn sugar into a versatile range of plastics that offer durability in use but are compostable in both hot and cold compost and are bio-degraded even in the marine environment.

June 13, 2006 in Biodiesel, Ethanol | Permalink | Comments (4) | TrackBack (0)

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Comments

Good news! Let's start the cellulosic stuff. Finally!!!

Why drop that tariff. Make it so foreign ethanol would cost roughly the same as domestic. Then national E5 or E10 could be achivable. Even make it adjustable to mean ethanol price in US.
But that would be to obvious for our politicians.
For our politicians everything need to be either black or white.

"Both political parties are more aligned on this subject than almost any other one, and that is to support a renewable fuels industry in the US, so even though there has been a fair amount of talks it doesn’t seem like there is interest in removing those tariffs at the moment."

Guess who is funding both political parties. Blatant protectionism at its finest.

A stopgap could be sweet sorghum. Sweet sorghum, yielding 600-700 gallons ethanol/acre (sources indicate as low as 400 to as high as 900 gallon/acre), needs more nitrogen than corn (crop rotate with Soy/legume), but a little less water (10-20% less). It has a range of 3.4-6.1 in its energy balance due to irrigation considerations.
_
____If celluostic ethanol yields 1,000 gallon acre with high to very high energy balance (min 7, objective 10+), then maybe we can start to talk about moving to green energy on ethanol.
_
____Until then, algae oil (5,000 gallon/acre) looks more promising. Sequestation possibilities (via dumping in offshore river sedimentation zones) are also intriguing.

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