Aemetis: Biofuels Digest’s 2015 5-Minute Guide

March 8, 2015 |

Aemetis owns and operates 110 million gallons per year of ethanol and biodiesel facilities in the US and India, and is upgrading the plants using patented technology to produce lower carbon, higher value advanced biofuels and chemicals using lower cost, non-food energy sources and feedstocks.

Rankings

50 Hottest Companies in Bioenergy: 2014/15, #49

The Situation

The strategy of the company has generally been clear for years – which is generally summarized in Step One of our Bioenergy “five steps to success”: buy an existing ethanol or biodiesel plant (or, own one already), and begin to aggressively bolt-on technologies that improve the financials of the business.

We’ve seen a number of companies go that route. Amyris, Gevo, Raizen, POET, Green Plains, and REG among them, in addition to Aemetis. Some investors may feel that the “Add ingredients slowly and stir” part was to an extent overlooked at Amyris, KiOR, and Gevo — certainly, the pressure to keep up a very high pace towards commercialization is something that all VC-backed firms feel.

Virtually all ethanol plants have been bolting on and improving. Water efficiency, energy efficiency, corn oil extraction, and so on. Some more boldly than others. Diversification of feedstock has been a hallmark of REG’s successful strategy in biodiesel — but we hear less about it in the ethanol business.

“Our fourth quarter 2013 results reflect a year of record financial performance and significant progress for Aemetis,” said McAfee in a statement accompanying the results. “During 2013, we diversified our feedstock. After retrofitting and restarting our plant in May 2013, we processed about 84 million pounds (42,000 tons) of grain sorghum; became the first US ethanol plant approved by the EPA to produce lower-carbon, higher-value Advanced Biofuels (and to receive D5 RINs) using sorghum/biogas/CHP; and upgraded our India plant by constructing and commissioning a biodiesel distillation unit. These efforts translated into record levels of revenue from our India operations, and company-wide records for operating income and Adjusted EBITDA,” he added.

The company certainly benefited from the relatively high “crush” spread between energy and feedstock prices — but also, Aemetis put itself in a position to earn D5 RINs and utilize diversified feedstock. As Jack Nicklaus once observed, “If I played well and prepared myself properly, then all I had to do was control myself and put myself in a position to win.”

But we’re struck by the way that the Aemetis run adhered to the playbook based on all those interviews with industry back in 2010. Buy an ethanol plant. Add cellulosic feedstock. Think fuels, but also think chemicals and other high-value and high-demand markets (such as jet fuel). Think about monetizing CO2 via algae. Those were ideas that were — four years ago, everywhere, on everyone’s mind.

Major Investors

OTC: AMTX

Type of Technology

Distilled biodiesel; corn fermentation; corn oil extraction; CO2 liquefaction.

Top Past Milstones

In October 2014, the company has “entered into an agreement with Denmark-based Union Engineering to design and construct a 300 ton per day capacity (approximately 220 million pounds per year) liquified carbon dioxide facility.” The facility will liquify the CO2 produced at the Aemetis ethanol biorefinery in Keyes, California at an expected construction cost of approximately $15 million. The additional operating cost of the Liquid CO2 facility will be primarily comprised of electrical power consumption. The Company plans to sell the liquefied carbon dioxide to end users and distributors primarily in the Central Valley of California. Design and engineering work has begun, and liquid CO2 production is expected to begin in the fourth quarter of 2015.

The Keyes ethanol plant already uses a dual-pass wet scrubber to produce 99.9% pure CO2, and the compression process does not have significant yield loss. The process uses a “screw” design that compresses at a 750:1 gas:liquid ratio.

Also in October 2014, Aemetis announced $19 million in EB-5 program funds have been received into escrow from foreign investors, representing more than 50% of the maximum of $36 million to be raised in the offering. A total of 47 qualified investors at $500,000 per investor have subscribed for $23.5 million in the offering.

In July 2014, Aemetis announced that the company has received EPA approval for the issuance of D4 RINs upon the importation into the U.S. of biodiesel produced from waste fats and oils (WFO). The EPA also approved the issuance of D6 RINs when biodiesel is produced using other feedstocks. Aemetis built and operates a 50 million gallon per year capacity distilled biodiesel production facility on the East Coast of India.

In February 2014, In California, Aemetis announced that its 50 million gallon per year capacity biodiesel and refined glycerin production facility in Kakinada, India has been upgraded to produce high-quality distilled biodiesel. The Aemetis plant was built in 2008 using advanced technology to produce biodiesel and refined glycerin using large volumes of lower-cost, non-food by-products from the edible oil industry as feedstock to supply the biofuel, pharmaceutical, and industrial

In April 2013, Aemetis announced that its 60 million gallon per year capacity ethanol facility in Keyes, CA has completed maintenance and Advanced Biofuels retrofit, and is now restarting production. Last December, the EPA issued a final rule, determining that ethanol made from grain sorghum at dry mill facilities qualifies as a Renewable Fuel under the Renewable Fuel Standard — and that “grain sorghum produced at dry mill facilities using specified forms of biogas for…process energy and…electricity, qualifies as an advanced biofuel under the RFS program.” Accordingly, the Aemetis plant will start up using corn as the principal feedstock, with a transition to using grain sorghum when fully operational. Aemetis imported milo from Argentina in Q4 2012 at a cost savings of about $0.90 per bushel under corn. They require approximately 22 million bushels per year at capacity, so the milo savings are more than $18 million per year. Add $18 million to the $24 million additional cash per year from advanced biofuels RIN’s, subtract about $8 million for the increased cost of biogas, and the net increase in cash flow is about $34 million per year

Future Milestone Goals

Enforce the Renewable Fuel Standard to break the gasoline station monopoly.

Obtain debt financing in the form of high yield bonds for plant construction and upgrades

Upgrade byproducts: corn oil makes renewable diesel and jet fuel; DDG makes oil well chemicals; CO2 makes algal oils and dry ice

Business Model

Owner-operator

Competitive Edge

California location; high-end technology to improve yields and margins by accessing higher value RINs, lower cost feedstocks or value-added co-products.

Company website 

 

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