May 25, 2006

Industrial

Ethanol plant planned for Ontario

IRWIN RAPOPORT

correspondent

VARENNES

Within the next three to four weeks, Toronto-based Commercial Alcohols Inc. will announce the Ontario site for its fourth ethanol plant.

“We are definitely going to be building a plant in Ontario,” said Bliss Baker, Commercial Alcohols’ vice president, corporate and government affairs, “but it will probably be three or four weeks before a decision is made on the location.”

A date for construction start has not been set. The company will only provide details of the size, scope and cost of the multi-million dollar plant when it makes a public announcement regarding the location.

The company has two plants in Ontario — Chatham and Tiverton — and is currently building a plant in Varennes, Quebec, that is expected to begin ethanol production in the first quarter of 2007.

Commercial Alcohols currently manufactures 215 million litres of ethanol annually and when the Varennes plant comes on-line, production will be boosted by another 120 million litres.

COMMERCIAL ALCOHOLS INC.

Construction is on schedule in Varennes, Quebec, where Commercial Alcohols Inc. is building an ethanol plant. The company is expected to announce an Ontario site in the next several weeks about its fourth ethanol plant.

Part of the funding for construction of the Varennes plant comes from the federal government via the Ethanol Expansion Program (EEP). In February 2004, the program’s first round announced $72 million in funding for seven projects:

The projects are for:

• Commercial Alcohols Inc. in Varennes;

• Seaway Grain Processors Inc. in Cornwall, Ontario;

• Suncor Energy Products Inc. in Sarnia, Ontario;

• Husky Oil Marketing Company in Minnedosa, Manitoba;

Husky Oil Operations Ltd. in Lloydminster, Saskatchewan.

• NorAmera BioEnergy Corp. in Weyburn, Saskatchewan; and

• Okanagan Biofuels Inc. in Kelowna, British Columbia.

At a press conference in Brantford on May 18, 2005, former Federal Agriculture and Agri-Food Minister Andy Mitchell provided additional subsidies worth $46 million for construction of new plants and expansion of existing plants with the announcement of a second round of EEP funding.

The projects to receive second round funding are:

• Commercial Alcohols Inc. — $15 million for a new plant in Ontario;

• Integrated Grain Processors Co-Operative Inc. — $11.9 million for a new plant in Brantford, Ont.;

• Power Stream Energy Services Inc. — $7.3 million to convert a recently closed starch plant in Collingwood, Ont.;

• Husky Oil Marketing Company — $10.4 million to build a plant in Minnedosa, Manitoba; and

• Permolex Ltd. — $1.1 million to expand its existing facility in Red Deer, Alberta.

The federal government expects an ethanol production figure of 1.2 billion litres annually by the end of 2007. Furthermore, the government’s target is to have 35 per cent of all gasoline in Canada to contain a blend of 10 per cent ethanol by 2010.

The $118 million in EEP funding, according to the government, will result in close to a $1 billion investment by the companies receiving the grants.

The three projects in Ontario, combined with the projects that received funding during the first round of the EEP, are expected to increase ethanol production in the province to almost 800 million litres annually.

This production, says the Ontario government, provides enough capacity to meet the provincial requirement that gasoline sold in the province contains an average of five per cent ethanol by 2007.

Construction is proceeding on schedule on the $100 million Varennes plant (the latest cost estimate, with SNC Lavalin as construction partner), which will occupy a 72-acre lot adjacent to the St. Lawrence River shoreline.

“The company (will) operate a large-scale fuel ethanol complex that will produce fuel grade ethanol, carbon dioxide (CO2), and Dried Distillers Grains (DDGS),” the company states.

The plant will consume 12 million bushels of corn.

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