BIOX Corporation, a renewable energy company that owns and operates biodiesel production facilities, has acquired a 50 million litre nameplate capacity biodiesel facility in Sombra, Ontario (Canada) from Methes Energies Canada Inc. for US$4.5 million.
The Sombra facility is located on a 21-acre facility near Sarnia, Ontario and includes an on site rail. Originally constructed in 2009, the facility has not achieved nameplate capacity due to working capital and market challenges, and is currently not in production.
The company will expend an additional CAD$5 million (US$3.9 million) over the next 12 months on upgrades to the facility that will improve the facility’s efficiency and enable the use of a broader range of feedstock, specifically lower carbon intensity feedstocks, such as animal fats and recycled cooking oils.
The purchase price and capital upgrades will be funded through a combination of cash on hand and are in discussions for a CAD$1.8 million (US$1.4 million) mortgage on the facility.
Alan Rickard, Chief Executive Officer of BIOX, said:
“The Sombra acquisition represents a 75% increase in our production capacity and fits our strategy to control and distribute more gallons, leveraging our existing Sales and Marketing capabilities. We believe the Ontario market will play an increasingly important role in our distribution network. The implementation of the Greener Diesel program in Ontario, with its increasing blend rates and move toward lower carbon intensity fuels in 2017, made Sombra an attractive asset.”
The province of Ontario implemented the Greener Diesel program in April 2014 based on bio-fuel percentage and carbon intensity. The program escalates the bio-fuel percentage for all diesel sold in the province from three percent in calendar 2016 to four percent in calendar 2017 onward. The regulation requires the use of an estimated 240 million litres of bio-based diesel on an average greenhouse gas adjusted volume basis in 2017.
Alan Rickard continued:
“We are already seeing with the increase in the Ontario mandate for 2016 that distribution of biodiesel from our Hamilton facility is shifting quickly from dependence on the US market to fulfilling the demand in Ontario. We expect this shift in distribution away from the U.S market to continue as the Ontario Greener Diesel mandate increases for 2017.”
BIOX currently supplies biodiesel fuel to Shell Canada Limited through an inter-terminal pipeline that feeds directly to the Shell distribution terminal in Hamilton located adjacent to BIOX’s Hamilton facility.