Ethanol producers downplay potential provincial policy shift

Monday, July 28, 2008

By GEOFF DALE

"The statement by Premier (Dalton) McGuinty will not affect our plans," says Tom Cox, chairman of the Integrated Grain Processors Cooperative (IGPC), which owns the plant. "You need to set fairly ambitious targets to kick start this. The mandate for 10 per cent is nice to have but a small shift for the time being won’t change things.

Cox says the plant’s first shipment of corn is due mid-August. After testing and some preparation work, the plant will begin production in September.

What has many industry observers concerned are remarks in early July from McGuinty that he is rethinking his commitments to increase the ethanol content in gasoline to 10 per cent in 2010. "The issue for us is whether it would be in the public’s interest to stretch it to 10 per cent," the premier said. "I think we’ve got to pay attention to some of the other developments, including food costs."

With the province already investing $32-million in three major ethanol plants in Aylmer, Hensall and Cornwall, Cox suggests these comments don’t represent a shift in government policy.

Cox says the premier’s recent comments are largely based on worries over unstable corn prices. "The kind of hammering corn took recently is typical of summertime grain commodity pricing," he points out. "Some people watching the price fluctuations just don’t understand the market that well."

He believes the real challenge is trying to introduce ethanol into a petroleum market controlled "from one end to the other" by petroleum companies.

"Certainly I don’t want to see the government back away completely but in the short term, if officials want more time to look at the situation, I don’t have a problem with that because there is a lot of taxpayers’ money involved here," he says.

He says plans for the Aylmer plant remain the same: to produce about 150-million litres of denatured fuel-grade ethanol annually and 120,000 tonnes of Dried Distillers Grains with Solubles (DDGS). With a staff of about 38 (six in management and 32 in operations), the plant will use about 15-million bushels of corn yearly – about seven per cent of Ontario’s average annual corn production. A grand opening is likely four to six weeks after the plant has been running.

Meanwhile, representatives for Suncor Energy’s St. Clair ethanol plant got better news from the federal government in the form of a $25-million investment. That funding prompted an announcement the plant would double its yearly production of ethanol to 400-million litres. The plant, expected to be completed in September 2009, has also received equity investment from farmers to the tune of $12.5-million.

As for the premier’s comments, an optimistic plant manager Andre Boucher says it will have no effect on Suncor’s plans.

"We are proceeding with our expansion and I don’t believe it will have any effect on our plans," he adds. "We’re going ahead, absolutely. In fact, I see some foundations going in as we speak." BF