Thu, Nov 26 2009
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RES faces new challenge According to company filings, there also have been other setbacks at the plant, including design shortcomings and “inadequate metallurgical selection and suboptimal equipment design” in the startup phase.
The company noted in filings that it is still in a dispute with the mechanical contractor and is suing the contractor for $5 million over equipment problems; the mechanical contractor, meanwhile, is countersuing Changing World Technologies. SEC filings also indicate the company is losing tens of millions of dollars per year, has not been able to operate the Carthage plant at full capacity, and has experienced times when the plant temporarily shut down. According to the filings, RES has the capacity to convert up to 78,000 tons of animal and food processing waste per year into between 4 million and 9 million gallons of renewable diesel fuel. Through September, the company generated about 1.1 million gallons and sold about 684,000 gallons. The average price for the fuel was $1.19 per gallon, which would produce nearly $814,000 in revenue. The Carthage plant was commissioned in 2005, but it wasn’t until 2007 that it began commercial sales of its fuel and it wasn’t until this year that it began to sell fertilizer. The company reported a net loss of $21.8 million in 2006, followed by a net loss of $19.9 million for 2007 and a net loss of $18.8 million through Sept. 30. The company had an accumulated deficit of $117.8 million as of Sept. 30, the filings state. Schreiber Foods is the company’s largest customer, accounting for between 73 and 78 percent of the sales last year and in the first nine months of this year. Schreiber uses the animal-based oil in industrial boilers at its plants in Monett and Mount Vernon. It recently extended its contracts with RES through May 2010. Meanwhile, Dyno Nobel just signed on to a two-year deal to buy about 2 millions of the renewable fuel annually. Advantages At the same time, the company argues in its documents that the need for its product will drive demand. According to the company’s filings, there are about 23.5 million tons of animal and food waste generated annually in North America, and another 18.7 million tons in Europe. And all of it can be converted into oil and other marketable products like fertilizer through the company’s patented Thermal Conversion Process (TCP). “Based on our analysis of optimal plant size, initially we intend to establish (TCP) facilities that can convert from 500 to 2,000 tons of animal and food processing waste per day and produce approximately 13 million to 54 million gallons of renewable diesel per year,” the company filings note. 
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