MT. VERNON (WFIE) - Once a growing industry, ethanol producers have hit some major road blocks.
The company building an ethanol plant at the Port of Mt. Vernon has now filed for bankruptcy.
Aventine Renewable Energy began construction on the Mt. Vernon plant in late 2007.
Since then, the ethanol industry has been battered by the slumping economy and lower crude oil prices.
Aventine lost about $37 million in the last quarter of 2008 and now is struggling to make payments on nearly $500 million of debt.
"That certainly could have been a real shining star if it got up and operating in terms of local employment," said Jon Neufelder with the Posey County Purdue Extension Office.
Construction was stopped in November due to economic conditions.
Now they're following in the footsteps of nearly a dozen other ethanol companies, filing for Chapter 11 bankruptcy.
Ron Miller, Aventine's President and CEO, said "We will use the Chapter 11 process to more rapidly restructure our overhead, pursue potential investors and definitively resolve our debt issues."
The plant was expected to have some big impacts not only on the Posey County job market but also on area farmers.
"We thought it was going to be a good partner in the area," Neufelder said. "I realize it isn't profitable right now but if energy prices go back up which they probably will, it will hopefully be viable again someday."
Whether or not Aventine is the one operating the Mt. Vernon ethanol plant remains to be seen.
Banks aren't willing to lend money to ethanol producers so they can reorganize, and industry analysts say it's likely Aventine will be forced to sell their plants.
Whatever happens, Posey County agriculture officials say local farmers have been taking a wait-and-see approach before planting crops that will feed the ethanol plant.
"It was another source for their commodity and certainly would have helped, but they're used to these kinds of set-backs and things, so they know the risk game and that's just one of those things that happen," said Neufelder.
He said local farmers won't suffer because grain prices in our area remain high due to easy access to rail and river ports.
Neufedler said ethanol plants have typically been built in farming areas where there isn't a big transportation hub to export grain.
That's because the ethanol plants can secure that grain for lower prices.
He theorized that higher prices in the Tri-State region alone could eventually cause profit issues for the plant.
"It's a little bit odd that you have an ethanol plant in an area that's as competitive as this is in my opinion," said Neufelder.
Aventine contends that filing for Chapter 11 will allow them to continue operating as normal and said they'll have the Mt. Vernon ethanol plant completed by the end of this year.
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