Western Canada is getting its first big canola biodiesel plant.
Archer Daniels Midland Co. and Canadian Bioenergy Corp. are proceeding with plans to build a 265 million litre facility in Lloydminster, Alta.
ADM will own 60 percent of the Northern Biodiesel Ltd. Partnership venture and Canadian Bioenergy the remaining 40 percent.
The facility will require oil from 500,000 tonnes of canola annually once construction is completed in the fourth quarter of 2013.
“It’s significant. Any time we see an increase in demand for canola, that’s good for the canola industry overall and canola growers,” said Cory McArthur, vice-president of market development with the Canola Council of Canada.
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“This is obviously a pretty good vote of confidence from ADM, who already owns U.S. (biodiesel) capacity, to be choosing to invest in Canada.”
The plant will be located next to ADM’s crushing facility, which exports oil to Asian food markets and European biodiesel markets.
“This new biodiesel facility will help support canola crush margins and capacity utilization at this facility,” said Mike Livergood, ADM’s vice-president of global oleo chemicals.
Canadian Bioenergy has been working full-time on building a biodiesel plant in Western Canada since early 2005. The original plan was for a 225 million litre facility in Fort Saskatchewan, Alta., but the company switched gears in 2009 and announced it had formed a partnership with ADM.
“It has been quite a journey,” said Canadian Bioenergy chief executive officer Doug Hooper.
“It’s a happy milestone and I’m very much looking forward to the ribbon cutting day.”
The road to commercialization has been full of challenges, including delayed rollout of biofuel policies, an economic recession, changes in government and a federal biofuel policy that fell short of expectations.
Hooper said the turning point came when provincial and federal biodiesel mandates were implemented and Alberta extended its provincial biodiesel production tax credit, extending an offer to Northern Biodiesel in October.
The company failed to secure a federal production tax credit through the ecoEnergy for Biofuels program, but it continues to work with Ottawa on making changes to that program, which expires in 2017.
Tim Haig, president of the Canadian Renewable Fuels Association, said the ADM announcement is a shot in the arm for the country’s floundering biodiesel sector.
The federal mandate, which was implemented July 1, will create a market for 500 to 600 million litres of biodiesel once it is fully developed. There are 200 million litres of production right now, little of which is canola based.
“This goes a long way to help reaching that (federal) demand,” said Haig.
It should also help boost canola prices, said McArthur. While ADM isn’t expanding its crush capacity, the company suddenly has a new market for 500,000 tonnes of canola and any demand creation is a good thing for growers.
Construction of the biodiesel plant is scheduled to commence next spring. ADM anticipates the project will create more than 100 construction jobs and 12 new full-time jobs once the plant is operational.
ADM recently announced plans to double its canola seed receiving capabilities and storage capacity at its Lloydminster facility, including the construction of five new storage bins and a second receiving system.
That project is expected to be complete by the end of 2011 and should substantially reduce unloading times for farmers.
