PROPOSED ETHANOL PLANTS LEFT HANGING

By ROBERT IRWIN

Uncertainty continues to shroud the province's
ethanol industry in the aftermath of the Ontario
government's cancellation of grants totalling $8
million originally promised for plants at Chatham
and Cornwall.
The cuts are part of $107.2 million, pledged by the
former NDP government for Ontario industry and
economic development, now withdrawn by the
Conservatives.
"Everything's going ahead as usual," says Seaway
Valley Farmers Energy Co-operative (SVFEC)
President Bud Atkins, when the long expected
cancellation of the co-op's $3 million was finally
announced in the provincial legislature earlier
this month.
Chatham may not continue, according to Commercial
Alcohols President Doug MacKenzie. "Short term we
are (continuing). We are examining all our legal
options.
"It was a surprise to us," he says of the
government's announcement. MacKenzie says the only
reason his company decided on Chatham was because
of a signed offer of $5 million and encouragement
from the provincial government which was anxious to
create jobs lost to agricultural office closings.
"We weren't actually looking for money. We had
selected  several other locations in the province
that were substantially more economical than
Chatham," he recalls.
MacKenzie estimates his plant would return $2.5 to
$3 million in sales tax to the provincial
government the first year of operation. "When you
add everything else up we would have 70 to 90
direct jobs and 400 to 500 indirect."
MacKenzie estimates his company has already spent
about $3 million on the Chatham site. "We've spent
about a quarter of a million dollars on a federal
environmental review and assessment," he
calculates.
Other site-specific expenses cited by MacKenzie
include: negotiation of a long-term natural gas
agreement; water treatment facility design; and
certificate of approval for ground-water
management.
MacKenzie says the week before the announcement,
his company commissioned another $1.5 million in
final design work. Construction was slated to begin
this spring.
Earlier this fall the company announced some delays
were expected due to construction bids which came
in higher than expected. MacKenzie says that has
been corrected and bids are now within four to five
per cent of original forecasts.
Atkins, who happens to be a neighbour of
Agriculture Minister Noble Villeneuve, has
repeatedly postponed a planned SVFEC shareholders
meeting since the Conservatives were elected. He
knew Seaway's highly publicized grant might be
cancelled during the Conservatives review of NDP
government promises, but was hoping for good news.
Atkins tried to see something positive when the
announcement came saying, "at least that ends the
speculation, now we can get on with the project."
He remained confident, however, that Villeneuve
would still find some money for his group. Within
days of the announcement, speculation was again
rampant after local farmers heard Villeneuve
announce during an interview on Ottawa's CBC Radio
Noon show that he "would leave no stone unturned,"
in his search for money for both ethanol projects.
When contacted following the radio show Atkins
wouldn't say when the long-awaited shareholders
meeting would be held. At press time Atkins had
just returned from another meeting with Villeneuve
and government officials in Toronto. He was hopeful
an announcement would be forthcoming. Government
officials reached by Farm & Country were confident
too, but again the expected announcement failed to
materialize.
Exceptionally high corn prices have pleased
growers, but the instability of both projects has
cast doubt on the viability of the ethanol
industry.
MacKenzie says Commercial Alcohols can still
service debt on their proposed 300-million-litre
plant with corn at $4.10 per bushel. He says the
key to cost reduction is volume.
Eastern Ontario corn growers were receiving more
than $170 per tonne at press time. Atkins says the
timing couldn't be better because many will be able
to afford to buy more shares.
SVFEC directors have decided one of the keys to
survival for their 50-million-litre plant is
finding commercial markets, which would pay higher
prices than for fuel.
Commercial Alcohols is already in that market
which, MacKenzie says, has no growth potential. He
estimates the total market for non-fuel use at
about 35 million litres per year. MacKenzie says
Tembec currently supplies about 25 million litres
of commercial product.

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