Biodiesel plant shuts down, Mississauga companies spared

Mississauga biodiesel companies have been spared  the economic repercussions that hit a nearby Hamilton plant, resulting in its temporary shutdown.

The shutdown by Biox Corp. was caused by weak U.S. biodiesel prices, but Mississauga-based Methes Energy Canada Inc. says it will continue operating its new biodiesel plant in the southwestern Ontario community of Sombra.

“We’re still producing, we still want to keep going,” Methes president and co-founder Nick Ng told YourMississaugaBiz.com. “So we’re not looking at shutting down.”

Meanwhile, Woodland Biofuels Inc., is also going ahead with its $12 million pilot ethanol project in Sarnia and isn’t affected by troubles in the biodiesel market.

At Methes, the company’s Sarnia-area plant makes biodiesel from used cooking oil and waste animal fats.

“The industry is fairly weak right now,” but the economics still make sense for Methes, said Ng, a finance and marketing expert who has been with the U.S.-owned company since he helped co-found it in 2004.

Ng, a University of Toronto grad, became president in February after years as head of business development at the company, a unit of Las Vegas-based Methes Energies International Ltd.

At Woodland, the company said it’s still going ahead with its $12 million pilot project in Sarnia to make ethanol from waste crops and wood.

“We’re looking at a completely different market,” said president Greg Nuttall . “We’re making ethanol that forms part of gasoline.”

Nuttall estimated the demand for ethanol is 15 times higher than the market for biodiesel. And it will only grow when the U.S. government raises ethanol levels in gasoline to 15 per cent from the current 10 per cent.

Woodland was founded in 2000 and currently employs 15 people, most of them at its head office on Superior Boulevard. The company began commissioning the Sarnia demo plant this week.

Ethanol output is expected by the end of the year and production, quality and cost data will be used by next spring to decide whether to go ahead with a full-scale plant.

If it decides to go ahead, the company will look in Ontario — where the provincial government is helping subsidize alternative energy companies — and the southeastern U.S. for a plant site.

Late Thursday, Oakville-based Biox (TSX:BX) said it had shut down its Hamilton plant and cut 17 jobs because of weak demand and low prices in the U.S. biodiesel market.

It said it will monitor that market to see when to resume production.

“Our proprietary technology is one of the lowest cost biodiesel production platforms in the industry, however based on the EPA, reported production volumes that have resulted in depressed prices and the volatility within the (renewable energy) market, we believe that temporarily suspending biodiesel production at our Hamilton facility is the responsible decision,” said Kevin Norton, CEO of Biox.

“Given our balance sheet, we are in a strong position to manage through this short-term setback. We remain confident in the long-term fundamentals of the broader biodiesel market, specifically given the 28 per cent increase in the mandated minimum volume of biomass-based diesel for 2013, and we expect to resume production in due course.”

Earlier this month, the U.S. Environmental Protection Agency reported that U.S. biomass-based diesel production was more than 90 per cent of what was mandated by regulations for all of 2012.

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