Ceres Global Ag Corp., Minneapolis, MN, is suspending its previously-announced canola crush project at Northgate, Saskatchewan.
The company's decision to pause the project is due to a variety of factors, including inflationary pressures resulting in higher costs than initially projected and shifting macroeconomic conditions.
The $350 million state-of-the-art facility was announced in May 2021 and would have had the capacity to process 1.1 million metric tons of canola and refine over 500,000 metric tons of canola oil, for both food and fuel annually. The facility was expected to be operational by summer 2024.
Equipment design and supply contract also terminated
Ceres has also taken the step of terminating an equipment design and supply contract relating to the project, in order to reduce project-related contract liabilities.
Termination of this contract and suspension of the project will result in a fourth quarter impairment charge in relation to certain earlier expenditures made in connection with the project and which will be included when Ceres' reports its fourth quarter and fiscal year-end results later this fall. Ceres Global Ag currently estimates that the impairment will be in the range of $25 million to $30 million.
Ceres intends to continue to explore avenues to pursue a canola crush project of some form in the future, but there is no guarantee that such a project will come to fruition or would be similar to the previously announced project.
