South Dakota cooperative buys Marion ethanol plant

By Hope Deutscher | July 08, 2009
Report posted Aug. 4, 2009, at 3:34 p.m. CST

Central Farmers Co-op recently bought back the 110 MMgy ethanol plant it built in Marion, S.D., and has successfully been operating it the past five weeks. The plant is being renamed NuGen Energy LLC, which is a wholly owned subsidiary of Central Farmers Co-op.

The facility was purchased from Marion Energy Investments LLC, the banking group that bought the plant out of bankruptcy when its owner VeraSun Energy Corp. filed for Chapter 11 bankruptcy protection last fall, said Steve Domm, general manager of Central Farmers Co-op.

The Marion facility, which began production in 2008, was originally built and owned by Millennium Ethanol LLC, which was also a subsidiary of Central Farmers Co-op. "We built Millennium, sold it to U.S. BioEnergy Corp., subsequently U.S. BioEnergy sold it to VeraSun, VeraSun went bankrupt and we were able to negotiate a deal with the original lender on the facility that we felt gave us long-term staying power and gave us the opportunity for long-term success to make it work and we closed the deal," Domm said.

Central Farmers Co-op deals in energy and seed and is a 50 percent owner of Fremar LLC, the co-op's joint venture grain buying business with Archer Daniel Midlands Co. Domm, who is CEO of both entities, said the company feels very strongly that ethanol is here to stay for two reasons. The first - everyone talks about being less dependent on foreign oil; the second reason - there is demand for the co-op's products. "I think it's absolutely disgusting that the [Grocery Manufacturers] Association and some of these people keep bashing ethanol and talk about how this is a bad thing," Domm said. "Well, we live in a capitalistic society and that's what it is about - creating demand for something that you have and that's what the farmers did. That's why ethanol started, because of the farming groups and the farmers, and I really feel the industry lost track of that. And now we're bringing it full circle back into local farmers' cooperatives control."

Doug Anderson, who previously was the head of plant operations for RawHide Energy, is the CEO of NuGen Energy, effective immediately. According to RawHide Energy's Web site, Anderson has an extensive background in ethanol and was previously the vice president of operations for U.S. BioEnergy, where he was responsible for the operations of existing facilities. He also managed construction and start-up of a 45 MMgy facility in Ord, Neb., and a 100 MMgy site in Albert City, Iowa.

The price and terms of the sale were not released.