Platinum Crush mulls renewable diesel feedstock deals with oil refiners, but may forgo option

Platinum Crush LLC, a $350 million soybean-crush project under development in Buena Vista County, Iowa, is prepared to start moving dirt next month for its 38.5-million-bushel-per-year facility after receiving an award worth more than $10 million in tax abatements and incentives Feb. 18 from the Iowa Economic Development Authority.

Kinley

According to Mike Kinley of Ag Development Group LLC, one of the two developers of the project along with Nick Bowdish of N Bowdish Company LLC, a large part of the IEDA award was use-tax breaks or credits on high-dollar equipment, with the balance of the award being incentives for providing good employment opportunities under IEDA’s High-Quality Jobs program. Kinley added that Platinum Crush is also receiving property-tax breaks from the county.

A project report obtained by Biobased Diesel Daily from IEDA shows that, of the nearly $10.2 million in the recent state award, more than $3.5 million is an investment tax credit with amortization over five years, while $6.6 million is a sales, service and use tax refund.

In November, when Platinum Crush announced it had received zoning approval and selected Fagen Inc. to be the project’s engineering, procurement and construction (EPC) contractor, the plan was to break ground in spring 2022—provided approval of state and local incentive packages. Now that those incentives have come through, Kinley said, “We are good to go. We’re actually ready to accept dirt-work packages from construction companies in the next week, so we’ll be awarding that soon and get started in March on moving dirt. We’re ready to roll.”

Another Iowa soybean-crush project Kinley is developing, Shell Rock Soy Processing LLC, struck an investment and bean-oil offtake deal last year with Phillips 66 in which Phillips 66 owns a minority stake in the facility and can secure 100 percent of the soybean oil produced for renewable diesel production at its Rodeo refinery near San Francisco.

Platinum Crush has made no such deal—yet. “We have multiple proposals—term sheets—from the oil industry, but we’ve not decided which way to go,” Kinley told Biobased Diesel Daily. “We may or may not sign an agreement.” With bean-oil prices skyrocketing recently, in some part at least due to demand and projected demand from the fast-growing renewable diesel sector, Kinley said being able to sell on the open market is “generally a positive way to go.”

“The buildout of renewable diesel is real,” he said. “And the companies putting projects on the board have the balance sheets and financial wherewithal to cross the finish line. These facilities need feedstock, and that’s driving [growth in the soybean-processing] sector.”

Kinley added that, when combined with other global soybean production and crude petroleum oil pricing factors, it’s “an incredibly high-pressure economic situation right now. But, the cure for high prices is high prices.”

In addition, Platinum Crush is “absolutely lining up deals” for the soybean meal to be produced from the Buena Vista County, Iowa, project, according to Kinley. “Franky, there’s been more interest in that, in terms of different parties wanting to market the meal,” he said. “Our arrangement with the railroad gives us the flexibility to hit the export gateways. We also have a large, local livestock footprint here in Iowa.”

Crushing 38.5 million bushels a year at Platinum Crush will yield enough crude, degummed soybean oil to manufacture about 61.5 million gallons a year of renewable diesel, Kinley noted, or 450 million pounds. “When you look at how much renewable diesel they’re predicting—maybe 4 billion gallons—61.5 million gallons is not much,” he said. “You’d have to build a lot these types of projects to hit that volume.”

Kinley pointed out there are still additional opportunities for new soybean-crush facilities in the Midwest. “But it’s getting more and more difficult,” he said. “You need bean supply, a railroad arrangement, and a good, local meal market if you can. One of the blessings [Nick Bowdish and I] have is we both possess a keen eye for where to put one of these. There are opportunities we are evaluating, but we’re not ready to announce anything yet. They’re getting more difficult to pull together. It’ll be interesting for the entire industry if we see petroleum companies pull back and prices get more reasonable. Then we may see a pause or slowdown in this big foot race for soybean-crush projects. It takes a lot of money to do these, close to $400 million, so it’s not for the faint of heart having to raise a couple-hundred million in equity. That’s not easy.”

Of the dozen or more newbuild or expansion soy-crush projects underway, Kinley noted that, “Nick and I represent the only true independent folks doing this development. All the others are large soybean crushers partnering with petroleum companies, or national grain companies. But we’re the only truly independent ones out here doing this.”