The Andersons, Inc. announces that ELEMENT, LLC, a joint venture with ICM, Inc., was placed in receivership on April 18 as a result of market-based disruptions that have impacted profitability.
Opened in 2019, the ELEMENT ethanol plant, located in Colwich, Kansas, is currently in an extended maintenance shutdown and future operating decisions will be made by the court-appointed receiver. The Andersons owns 51% and ICM owns 49% of the facility.
“Despite the successful implementation of some of ICM’s latest technologies over the last 3 years, ELEMENT and its team have struggled to overcome the latest economic headwinds within the region,” said ICM president Chris Mitchell.
Operational and market-based challenges
Mitchell indicated the timing of operating a new plant in the face of reduced Low Carbon Fuel Standard (LCFS) values and some of the highest corn basis in the country have affected economic performance. The price of corn, which accounts for approximately 80% of the cost of operation, has risen due to severe drought conditions in the U.S. Western Corn Belt, noted Mitchell.
Mitchell also cited changes in California’s LCFS credit markets as a contributing factor. As a result, the cash flow required to service the debt was insufficient without further equity investment into ELEMENT.
These challenging conditions led to the failure by ELEMENT to make a required debt payment and receipt of a default notice in February 2023.
ICM interested in new potential investors
ICM has expressed an interest in partnering with new potential investors to make additional technology improvements to the plant to further lower carbon emissions and capitalize on new incentives, said Mitchell.
“We would hope to partner in some way with other investors that have an interest in helping ELEMENT achieve the next level of carbon reduction and operational efficiency,” Mitchell said. “We have laid the foundation for this plant to be a top tier plant among low-carbon biofuels producers for years to come.”
Since becoming operational in 2019, ELEMENT has been a showcase for efficient process technologies, including an enhanced distillation, evaporation and filtration system designed by ICM. Its combined heat and power (CHP) system, which includes a turbine and high-pressure boiler meets 92% of the facility’s electrical demand.
ELEMENT is also outfitted with ICM’s Advanced Processing Package, which is designed to produce five pounds of high-protein feed per bushel of corn.
“Although market economics were not favorable at ELEMENT, the technologies driving ELEMENT exceeded our expectations,” Mitchell said.
