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By Dave Fusaro, Editor in Chief | 03/26/2007
While most of our focus this month has been on food plants, Archer Daniels Midland Co. has several construction projects in the works that are turning corn and other crops into alternative fuels Ö and, in the process, fueling debate about future shortages or price increases of agricultural commodities.
Itís always been part food company and part ingredient company, but now ADM seems to be adding fuel company to its description, based on new plant construction plans for the next few years. It appears no coincidence that Patricia Woertz, who spent 30 years in the petroleum industry, was hired as CEO last April. And with the retirement of G. Allen Andreas, she also becomes chairman.
The Decatur, Ill.-based multinational is placing a big bet on ethanol and other biofuels as it ramps up its 2007 capital spending budget by about 47 percent (based on spending through six months of its fiscal 2007) to an estimated $1.12 billion. All of the estimated $358 million increase is planned for bioenergy projects, which will take more of the budget than food and infrastructure for the next three years ó thatís a first.
While the agribusiness giant does have a cocoa plant under construction in Hazelton, Pa., its other projects are:
Although not fuel-related, other ADM construction projects also will turn agricultural products into industrial products that may find uses in food packaging. A polypropylene and ethylene glycol plant awaiting permits in Decatur, Ill. ó those materials eventually find their way into polyethylene terephthalate (PET) plastic bottles for soft drinks.
And a polyhydroxyalkanoates (PHA) plant is being built in Clinton, Iowa. PHAs are plastics chemically related to polyesters but borne of renewable, plant-based sources. Theyíre close cousins to PLAs, polylactic acid, the compostable, corn-based plastic being developed for packaging use by NatureWorks LLC, a wholly owned business of Cargill Inc.
Through a strategic alliance with Metabolix Inc., ADM will manufacture PHAs using a patented process that converts corn-derived sugars into various PHA polymers. This is a natural biological process (as opposed to a chemical process) that uses sustainable, agriculturally produced raw materials.
In a recent presentation to financial analysts, ADM executives project ratcheting up capital spending again in 2008, with most of the increase again going to biofuel projects. Then it dips slightly in 2009 before returning in 2010 to approximately the $762 million spent in 2006. By that time, food and infrastructure projects will again take the majority of the capital spending budget.
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