REG Buys Sanimax Biodiesel Plant

By Tina Caparella

Renewable Energy Group Inc. has purchased Sanimax Energy LLC’s 20-million-gallon biodiesel refinery located in DeForest, Wisconsin, for $11 million in cash and 500,000 shares of REG common stock. REG may also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which is now named REG Madison LLC. Sanimax will continue to own and operate its grease processing facility located next to the biodiesel plant.

“Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages,” said Daniel J. Oh, REG president and chief executive officer (CEO). “We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship.”

“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax’s president and CEO. “We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader. This is a reflection of the excellent work they have achieved over the past several years.”

The biorefinery is located just north of Madison, Wisconsin, and began production in 2007. Using the same REG patented and proven high free fatty acid processing technology as the company’s Seneca, Illinois, plant, it produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. The facility has both truck and rail capabilities.

With this purchase, REG now has 11 active North American biomass-based diesel refineries in seven states with a combined production capacity of 452 million gallons.

German Biodiesel Exports Drop

Although interest in biodiesel from Germany continues to be high, German producers exported just over 1.4 million metric tons (377.7 million gallons) of biodiesel in 2015, 16 percent less than 2014 record amounts of 1.7 million metric tons (451.7 million gallons), according to German Federal Statistical Office foreign trade figures. About 90 percent of exports went to European Union member states.

According to Agrarmarkt Informations-Gesellschaft mbH, the drop in German biodiesel exports last year was primarily due to a large decline in deliveries to the Netherlands, France, and Poland. Demand from the Netherlands, the top export market, plummeted 42 percent from the previous year, orders from Poland were down 38 percent, and exports to France dropped 26 percent, although the country did hold on to its second position after the Netherlands. Austria was the third largest importer of German biodiesel with a slight increase from 2014. By contrast, the volume of exports to Norway, Czech Republic, and Sweden increased significantly. Norway imported 50 percent more in 2015 than the year before at 128,000 metric tons (33.8 million gallons), while demand from the Czech Republic rose almost 80 percent to 111,000 metric tons (about 33.3 million gallons). 

In addition, German imports of biodiesel fell 11 percent to 517,000 metric tons (136.5 million gallons) last year, the lowest level on record, according to Agrarmarkt Informations-Gesellschaft. Malaysia supplied 132,000 metric tons (32.4 million gallons), just over one-third more than in 2014.

Argentina Increases Biodiesel Export Tax – Twice

The government of Argentina more than doubled export taxes on biodiesel in February from 1.6 percent to 3.9 percent then raised them again in March to 6.4 percent. According to reports, the move is a blow to an industry running at 60 percent of production capacity due to low oil prices, limited export opportunities, and a saturated domestic market.

Before the two increases, Argentina’s export taxes were at their lowest in January since the government implemented a sliding-scale system of export duties for biofuel in 2012. The country’s biodiesel producers have been lobbying Argentina’s new government for a fixed export duty.

Brazil Biodiesel Production Breaks Record in 2015

Brazil produced a record 1 billion gallons of biodiesel in 2015, up 15 percent from the previous year, according to the country’s Ministry of Mines and Energy. The top production region in the country was the Midwest with 44 percent of total production, followed by the south at 38 percent, and the northeast at 8 percent.

Soy oil was the primary feedstock used in the production of biodiesel last year. Beef tallow followed at 18 percent and cottonseed oil accounted for the rest, according to the Brazilian Agency of Petroleum, Natural Gas, and Biofuels.

Sentencings Continue in Biodiesel Fraud Schemes

Several more defendants involved in biodiesel fraud schemes in the United States recently learned their fate.

In Houston, Texas, Philip Joseph Rivkin, aka Felipe Poitan Arriaga, has been sentenced to 10 years in prison, three years of supervised release, and to pay more than $87 million in restitution. He was also ordered to forfeit $51 million for generating and selling fraudulent biodiesel credits in the federal renewable fuel program.

In June 2015, Rivkin pleaded guilty to one count of mail fraud and one count of making a false statement under the Clean Air Act. Beginning around February 2009, Rivkin operated and controlled several companies in the fuel and biodiesel industries, including Green Diesel LLC based in Houston. Rivkin claimed to produce millions of gallons of biodiesel at the Green Diesel facility and then generated and sold renewable identification numbers (RINs) based upon this claim. In reality, no biodiesel was ever produced at the Green Diesel facility. This scheme allowed Rivkin to generate over 60 million fraudulent RINs that were then sold to companies that needed to obtain them under the Environmental Protection Agency’s Renewable Fuel Standard, which resulted in millions of dollars in sales. Rivkin created false records and made false statements to conceal his fraudulent claims of biodiesel production, importation, and RIN generation. 

In Indiana, Chris Ducey was sentenced in mid-February to six years in prison for his role in a $145 million scheme in which he and others resold over 35 million gallons of biodiesel in order to illegally claim up to $35 million in fraudulent RINs. He was also ordered to pay $56 million in restitution. Ducey worked as a logistics manager for Indiana-based E-Biofuels LLC, the company at the center of the scheme.

Last year, Ducey, along with two of his brothers, pled guilty to a conspiracy to claim up to $35 million in federal tax credits for biodiesel that did not exist or qualify for the incentives. Ducey also pled guilty to false claims against the Internal Revenue Service, wire fraud, false statements under the Clean Air Act, and obstruction of justice.

From 2007 through 2012, E‑Biofuels owned a biodiesel plant in Middletown, Indiana. The company claimed to produce biodiesel when, in fact, it resold biodiesel that had been produced by others and already used to claim tax incentives. Ducey and his brothers conspired with executives of New Jersey companies Caravan Trading Co. and CIMA Green, who were sentenced earlier this year (see “Biofuels Bulletin” in the February 2016 Render).

United Airlines Flies with Biofuel

United Airlines is the first airline in the United States (US) to begin using commercial-scale volumes of renewable aviation biofuel for regularly scheduled flights from Los Angeles International Airport in mid-March. The launch marks a significant milestone in the commercial aviation industry by moving beyond demonstration flights and test programs to the use of advanced biofuels for United’s ongoing operations. 

The airline began operating daily flights between Los Angeles and San Francisco for two weeks using AltAir Fuels’ renewable fuel while also integrating the fuel into its regular operations at the airport. United has agreed to purchase up to 15 million gallons of biofuel from AltAir Fuels in Paramount, California, over a three-year period. The airline is using the renewable fuel in its daily operations at Los Angeles, storing and delivering it in the same way as traditional fuel.

In 2009, United became the first US carrier to perform a biofuel demonstration flight. In 2011, the airline became the first US carrier to operate a commercial advanced biofuel flight. Last year, United announced a historic $30 million equity investment in US-based alternative fuels developer Fulcrum BioEnergy Inc., a pioneer in the development and commercialization of converting municipal solid waste into low-cost aviation biofuel. The investment is the single largest by a US airline in alternative fuels.

April 2016 RENDER | back