Biox acquires Methes Energies biodiesel plant in Ontario for $4.5m

Biox Corp., a Canadian renewable energy company, has acquired a 50 million litre nameplate capacity biodiesel facility in Ontario, Canada, from Methes Energies Canada.

The 21-acre facility in the village of Sombra, near Sarnia, with good logistics including on site rail, changed hands at a price of US$4.5 million (€3.9m).

Originally constructed in 2009, the facility has not achieved nameplate capacity due to working capital and market challenges, and is currently not in production.

Biox intends to spend an additional C$5 million over the next 12 months on upgrades to the facility to improve its efficiency and enable the use of a broader range of feedstock, specifically lower carbon intensity feedstocks such as animal fats and recycled cooking oils.

The purchase price and capital upgrades will be funded through a combination of cash on hand and Biox in discussions for a C$1.8 million mortgage on the facility.

“The Sombra acquisition represents a 75% increase in our production capacity and fits our strategy to control and distribute more gallons, leveraging our existing sales and marketing capabilities,” said Alan Rickard, CEO at Biox.

“The implementation of the Greener Diesel programme in Ontario, with its increasing blend rates and move toward lower carbon intensity fuels in 2017, made Sombra an attractive asset,” Rickard continued.

The province of Ontario implemented the Greener Diesel programme in April 2014 based on biofuel percentage and carbon intensity.

The programme will see the biofuel percentage for all diesel sold in the province increased from 3% in 2016 to 4% from 2017 onward.

The regulation requires the use of an estimated 240 million litres of bio-based diesel on an average greenhouse gas (GHG) adjusted volume basis in 2017.

‘Best performing source of biodiesel’

According to Rickard, Biox is already seeing with the increase in the Ontario mandate for 2016 that distribution of biodiesel from its Hamilton facility is “shifting quickly from dependence on the US market to fulfilling the demand in Ontario.”

“We expect this shift in distribution away from the US market to continue as the Ontario Greener Diesel mandate increases for 2017,” Rickard said.

Biox currently supplies biodiesel fuel to Shell Canada through an inter-terminal pipeline that feeds directly to the Shell distribution terminal in Hamilton located adjacent to Biox’s Hamilton facility.

The Sombra facility, once upgraded to handle lower carbon intensity feedstocks, will produce at a comparable GHG emission efficiency to the bio-diesel produced by Biox in Hamilton.

“With these low carbon intensity products, Biox expects to be the best performing source of biodiesel available to obligated parties in Ontario to meet the requirements under the Greener Diesel programme,” said Rickard.