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Financing Available For Innovative Ethanol Plants
By Mr Ethanol | November 6, 2007
Grainnet:
Myth: With cash corn prices hovering near $3.60 a bushel and the price of ethanol down to $1.70 a gallon, financial institutions are shying away from financing new ethanol plants.
Fact: John May, Vice President of Stern Brothers and Co., St. Louis, a financial services company which acts as financial advisor to producers and developers of ethanol plants, said funding is available if developers have a plan that will survive lean economic times.
“Our view is we look now for clients that have technology like fractionation, higher output, lower operating costs, more flexibility and the ability to react to market factors,” May said.
“In short-we look for plants that are going to continue to do well even if we have a long period of low ethanol prices.”
May noted a sound strategy today is not to spend a great deal of capital in the early stages of production.
“Plants can have a strategy that allows for phasing in of these components such as fractionation,” May said.
“We are looking for clients that have a long-term view.”
Site location will continue to be a major factor.
Destination plants are now being proposed at the location where fuel is blended instead of plants sited where the feedstock is grown. “Finance markets are forcing developers to be a lot more thoughtful about what they do,” May said.
Topics: BizOp, Ethanol, Investing |
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