Railroad dispute halts ethanol plant
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SIOUX CITY, Iowa (AP)--Plans to build a $140 million ethanol plant are on hold after Union Pacific Railroad said it would not upgrade a rail spur needed to haul large amounts of corn to the plant.
Officials from the city and Baard Renewables, based in Washington state, learned in a meeting in mid-March with Union Pacific representatives that the rail spur needed improvements to handle increased traffic.
"Union Pacific said they were not going to spend the $2 million to $3 million necessary to upgrade," said Don Willoughby, Sioux City's business development coordinator.
Baard officials then told the city they no longer wanted the site if grain can't be delivered to the plant by rail. The company also planned to move grain by barge on the Missouri River.
Willoughby said Baard had been talking to Union Pacific throughout the planning stages for the ethanol plant, but those discussions took place with the railroad's rate division and not its industrial development division.
"Everybody's disappointed on this," said Craig Conner, Baard's vice president of finance. "Information like this coming up this far into the process usually doesn't happen. That's where our due diligence fell down."
Baard switched developers midway through the project, he said, which resulted in the rail spur issue not being thoroughly checked.
"That probably was a piece of information that didn't get handled real well," Conner said.
Baard is still interested in building an ethanol plant in Sioux City, he said.
Mayor Craig Berenstein said officials will continue to work with the company to find an appropriate location.
"There was a lot of hard work we put into this. We're not going to let it go. It's still viable," Berenstein said.
Baard announced plans in November for a Sioux City ethanol plant that eventually would produce as much as 100 million gallons of the fuel additive.
The city planned to buy 60 acres needed for the project at $10,000 an acre and sell it to Baard for $1. In return, the company agreed to a minimum assessed valuation and the creation of about 50 new jobs.
Baard Renewables is the renewable fuels division of Baard Energy, a Vancouver, Wash.-based company.
Date: 3/23/06
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