Toronto oilseed processing firm BioExx has announced Minot, N.D. as the site for its second canola protein processing plant, about 650 km southeast of the construction site for its first facility at Saskatoon.
Minot appears set to provide BioExx with a healthy incentive package to site its new 80,000-tonne-per-year facility there, including offers of loans and/or capital leases for about half the facility’s US$50 million construction cost.
BioExx has already signed a letter of intent with the city’s Minot Area Development Corp. to build the facility on a 10-acre lot in Minot’s Value-Added Agricultural Complex, the company said in a release Wednesday.
Favourable loan terms could be available for qualifying companies through a program under which the U.S. Department of Agriculture guarantees a portion of the total debt package, BioExx noted.
“Favourable funding programs” and “local, regional and national support” were among BioExx’s given reasons for choosing Minot, along with feedstock supply, infrastructure availability and competitive costs (land, rail, energy, labour) and discussions with local utilities, design engineers and construction contractors.
“This allows us to meet our goal of expanding internationally and into a different growing region, while at the same time enjoying a reasonable proximity to our first plant location,” BioExx CEO Chris Carl said in the company’s release.
BioExx said it will now move into the final development stages for the project, including environmental permitting, site analysis, building design, and supplier and customer contracting.
Southbound cash flow
Expecting to complete its prerequisite development activities by late 2009, BioExx said it expects to finance the Minot project following a “successful ramp-up” of operations at the oilseed protein isolate plant it’s building at Saskatoon.
BioExx said it has completed its building and 40,000-tonne-per-year crushing facility at Saskatoon, with the extraction and protein processing portion of its facility there still under construction.
Construction would then start at Minot as soon as ground and weather conditions permit in spring 2010, toward a planned start-up of operations in early 2011.
While maintaining “conservative” debt service ratios, BioExx said, it intends to finance the balance of the requirement to the “greatest extent practicable” by leveraging cash flows from its Saskatoon plant once it has ramped up its protein production operations.
BioExx said it aims to finance the Minot facility using “traditional” forms of debt and to avoid any types of financing that would be “highly dilutive to shareholders or that would involve future oriented conversions to equity.”
BioExx bills its business as extracting oil and high-value proteins from oilseeds for the global food market, using patented low-temperature extraction and its own protein separation technology.
“Purified protein has become much more important in food and beverage production in order to satisfy growing global demand,” the company said. “The protein additive market is currently a US$16 billion industry, and is projected to grow to over $25 billion in the next seven years.
“The most significant trend within this market is the substitution of plant proteins for animal proteins, driven by improved economics and greater environmental sustainability.”