Inflationary pressures, shifting macroeconomic conditions push Ceres to halt canola-crush project
Minneapolis, Minnesota-based Ceres Global Ag Corp. is suspending its canola-crush project in Northgate, Saskatchewan, Canada, the company announced June 24.
“The corporation’s decision to pause the project is due to a variety of factors, including but not limited to, inflationary pressures resulting in higher costs than initially projected and shifting macroeconomic conditions,” Ceres stated, adding that it has terminated an equipment design and supply contract for the project to reduce contract liabilities.
“Termination of this contract and suspension of the project will result in a fourth-quarter impairment charge in relation to certain earlier expenditures made in connection with the project and which will be included when Ceres’ reports its fourth quarter and fiscal year-end results later this fall,” the company stated. “The corporation currently estimates that the impairment will be in the range of $25 million to $30 million.”
Ceres first announced the $350 million project in May 2021. The plan was to build a state-of-the-art facility with capacity to process 1.1 million metric tons of canola and refine more than 500,000 tons of canola oil per year for both food and fuel. The facility was expected to be operational by summer 2024.
The company stated that it intends to continue to explore avenues to pursue a canola-crush project “of some form in the future, but there is no guarantee that such a project will come to fruition or would be similar to the previously announced project,” Ceres stated.