Examining the Product Streams Costs of Corn Fractionation

Examining the Product Streams & Costs of Corn Fractionation Systems 2009 AACC International Annual Meeting Baltimore, Maryland September 14, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate. edu 515 -294 -9911 Department of Economics

Ethanol Production Based on the pace over the 1 st 5 months of 2009 Department of Economics Sources: Renewable Fuels Association, Energy Information Administration

Ethanol Margins Department of Economics Source: ISU -- CARD

Corn Composition Why Fractionate? Department of Economics Looking for: üImproved efficiency üReduced energy usage üReduced water usage üDiversified product stream Source: 2009 FEW Conference presentation by Reg Ankrom (CPT)

Information from Reg Ankrom’s ppt at the FEW conference Department of Economics Source: Dave Elsenbast, REG

Relative Prices (Jan. 2007 = 1) Department of Economics

Fractionation Technologies Ø Ø Ø MOR Technologies Corn Value Products Langhauser Associates FC Stone Carbon LLC and Maize Processing Innovations Buhler Inc. Cereal Process Technologies FWS Technologies American Milling Group ICM Inc. POET Renessen LLC Delta-T Corporation Department of Economics

MOR Technologies Ø Combines wet and dry milling techniques Ø Outputs: ØEthanol ØHigh protein distillers grains ØHigh oil germ (food use, 42% oil content) ØBran (60% for food and 40% for feed) Ø Offers oil extraction technology as well Ø Claims a 2% starch loss from process Department of Economics

Langhauser Associates Ø A wet fractionation approach Ø Outputs: ØEthanol ØHigh protein distillers grains ØHigh oil germ (food use, 48 -50% oil content) ØBran (80% for food and 20% for feed) Ø Includes oil extraction technology Ø Operating costs roughly 10% higher than traditional plant Department of Economics

FC Stone Carbon & Maize Processing Ø A wet fractionation approach Ø Outputs: ØEthanol ØHigh protein distillers grains (47% protein) ØHigh oil germ (food use, 42% oil content) ØBran Ø Includes oil extraction technology Department of Economics

ICM Ø A dry fractionation technology Ø Outputs: ØEthanol ØHigh protein distillers grains ØHigh oil germ (food use, 26% oil content) ØBran ØSnack grits ØCorn meal Ø Can include oil and protein extraction technologies Department of Economics

Capital Costs Ø Range from $10 million to $40 million for a 50 million gallon ethanol plant Ø The inclusion of corn oil extraction technologies moves costs to the higher end of the spectrum Ø Most vendors point to a payback period of under 3 years Variable Costs Ø Decreased energy needs per gallon for: ØLiquidification and cooking ØDistillation ØDrying of distillers grains and solubles Ø Possible energy generation from bran Ø Could reduce energy demand by nearly 50% Department of Economics

Product Streams Corn costs: $3. 14 per bushel, Illinois ethanol plant report (USDA-AMS, as of early Sept. 2009) Traditional ethanol plant: 2. 8 gallons of ethanol @ $1. 60/gallon 17. 75 lbs. of DDGS @ $92/ton Revenues per bushel = $4. 48 = $0. 82 = $5. 30 Ethanol plant w/ fractionation: 2. 72 gallons of ethanol @ $1. 60/gallon 13. 5 lbs. of high protein DG @ $102/ton 5 lbs. of germ @ $115/ton 3 lbs. of bran @ $65/ton Revenues per bushel = $4. 35 = $0. 69 = $0. 29 = $0. 10 = $5. 42 Department of Economics

Tapping into Many Markets Department of Economics Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)

Ethanol Margins Department of Economics Source: ISU -- CARD

Thank you for your time! Any questions? Iowa Grain Quality Initiative: http: //www. iowagrain. org/ My web site: http: //www. econ. iastate. edu/faculty/hart/ Department of Economics