Former Grafton, N,D. ethanol plant sells for $525,000
GRAFTON, N.D. -- The former Alchem Ltd. Ethanol plant was sold at auction Wednesday for $525,000, just a fraction of the millions of dollars invested in the operation since it opened a quarter-century ago.
But whether the plant, which has been closed since October 2007, ever reopens may not be known until spring.
"I think there's a good chance. Everything is there. It just has to be reconfigured, lined up and run properly," said Jim Borchart, owner of Borchart Steel Inc., New Germany, Minn., who was the winning bidder.
One option is to convert it to another use, such as production of other agricultural byproducts, including biofuels or pharmaceuticals.
Still another alternative is to sell the property and equipment on a piecemeal basis, which would mean the end of the line for the facility.
He said he will winterize the facility and then make a final decision on what to do with the plant by March or April.
When it closed in 2007, Alchem had more than 30 employees.
Borchart was among seven registered bidders, but just one of three involved in bidding, which started at $300,000. The others were a petro-chemist from Texas and a representative of an Iowa company that operates plants that recycle a variety of materials, even trash, into bioproducts.
While the building, real estate, and major equipment and fixtures were sold Wednesday, supplemental items such as extra motors and office equipment will be auctioned today, beginning at 10 a.m.
Potato plant first
Alchem started as a Borden Foods potato flake plant in 1983. In 1985, it was purchased by a group of investors and converted into an ethanol plant with an annual capacity of 3.5 million gallons.
The plant was beset with financial difficulties, especially when operating without federal or state subsidies, with the bottom line ebbing and flowing as the price of corn and ethanol fluctuated.
When it was sold, the Grafton plant had a capacity of producing 9.5 million gallons of ethanol annually, according to the sale bill produced by Steffes Auctioneers of Fargo, which is handling the sale.
It reportedly was producing at a rate of about 8.5 million gallons when it closed in October 2007.
The Grafton ethanol plant was one of two that opened in North Dakota in 1985. The other, ADM Corn Processing in Walhalla, N.D., remains in operation.
Harold Newman, who sold the property Wednesday, was part of the original Alchem group. He later bought out the other investors and invested several million dollars into the facility, including between $6 million and $8 million in recent years.
Among the improvements were an automated coal-fired boiler and steam-generating system. It includes a thermal oxidizer system, an air-quality process, used in many chemical plants, that decomposes hazardous gases at a high temperature and releases them into the atmosphere. Newman also installed a methonator system, to help control odors from the plant's lagoon system.
Newman declined to talk about the sale Wednesday, saying only that he was "doing as well as could be expected."
Borchart said this is the fifth ethanol plant he has purchased over the past two decades, although he no longer owns any of the others. He also works with other industries to find other uses for the facilities.
"We do this all the time, update equipment and reconfigure it to make it usable for another product," he said. "You've got to be very careful. You have to try not to modify it too much, because the cost might exceed its value."
To make it work, an ag processing plant such as Alchem has to find uses not only for the source product, but also for the byproducts.
"You can't just raise a bushel of corn and turn it into ethanol," he said. "You have to get some other benefits out of it."
Sugar beets might provide another option, although the major Red River Valley product is not economically viable for ethanol production on a commercial scale, he said.
"It'd be a very good pilot plant for something like sugar beets, if science advances to that point," Borchart said. "There could be some funding for that."