Firm Pulls Plug on Royal Ethanol Plant

By Tim Mitchell, The News-Gazette, Champaign-Urbana, Ill.

Jun. 19–ROYAL — A Tennessee-based ethanol company has given up on its efforts to build an ethanol production plant in Royal.

Mike Craig, a spokesman for Heartland Ethanol, based in Knoxville, Tenn., announced Tuesday that his company has abandoned its proposal to build a corn-based dry mill ethanol plant at Royal.

The facility, which was to be called Illini Ethanol, was scheduled to be built by one of Heartland Ethanol’s subsidiaries, Illini Ethanol, LLC.

“Despite over two years of intensive development and expenditure, the current adverse economic conditions overall forced the majority owners’ voluntary decision to halt all efforts,” Craig said.

The Knoxville company owned 92.5 percent of the project, with the remaining 7.5 percent owned by local investors from Champaign, Pike and Adams counties.

Royal Mayor Robert Vilven said he was disappointed by the decision.

“Sure, it is disappointing,” Vilven said. “We were looking forward to expanding the village and our tax base, and we wanted to get more money to help our grade school district. It would get us some high-tech stuff and a few more homes.” Vilven estimated that Illini Ethanol would have generated $24,500 a year in property taxes for the village, $580,000 a year for the St. Joseph-Ogden High School district and $940,000 a year for the Prairieview grade school district.

Craig said the meltdown of financial markets made the efforts to get commercial loans for the Royal plant difficult, while the rising cost of corn made input costs too high.

“When corn got over $4.25 a bushel, I suspected the company wouldn’t be able to do very much to make this happen,” Vilven said. “Unfortunately, given the economy, it doesn’t make much sense to them.” In addition, high oil prices and questions over whether the next president would support ethanol made building an ethanol plant in Royal too risky, Craig said.

Craig noted that gasoline was selling for under $2 a gallon when the company first proposed building the Royal ethanol plant.

The proposed 100-million-gallon ethanol plant would have used about 40 million bushels of corn annually. At one time, the company said the plant would have provided between 40 and 45 jobs.

The Royal facility was one of seven ethanol plants abandoned Tuesday by Heartland Ethanol.

The other discontinued projects, all in Illinois, included Western Illinois Ethanol of Griggsville, National Ethanol of Vandalia, Gridley Ethanol of Gridley, Waverly Ethanol of Waverly, Access Ethanol of Ransom, and Mendota Ethanol of Mendota.

Craig said Heartland Ethanol was grateful for all the encouragement and support received from Royal, the Champaign County Board, state officials and other local governmental bodies.

Craig added that Heartland Ethanol President Walker R. Filbert, a Pike County attorney, and Vice President Derek L. Peine remain with the company to complete paperwork through Aug. 15.

Vilven said he is still hopeful that a switchgrass, miscanthus or ethanol plant may someday be built in his community.

“We’re not angry,” Vilven said. “We would welcome them with open arms tomorrow. Royal has the rails, Royal has the highways, Royal has the crops.” Other unrelated ethanol plants have been proposed for Champaign, Tuscola, Vermilion County, Charleston and Gilman, and One Earth Energy has begun construction of an ethanol plant in Gibson City.

—–

To see more of The News-Gazette, or to subscribe to the newspaper, go to http://www.news-gazette.com.

Copyright (c) 2008, The News-Gazette, Champaign-Urbana, Ill.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.