ABF in £98m write down on stake in UK bioethanol and animal feed facility
ABF owns around 47% of Vivergo, the UK’s largest biofuels plant, through its subsidiary AB Sugar.
The facility, located in Hull in northeast England, ferments animal feed grade wheat, supplied under contract by UK growers, and then produces bioethanol and feed from that substrate.
ABF said its results for the 24 weeks ending 28 February will include a non-cash exceptional charge of £98 million as a result of the impairment charge.
A spokesperson for the company told FeedNavigator the bioethanol and feed facility “is running at its rated capacity and is cash generative.” He said the plant is running in a tough business environment and that ABF is working hard to see it “do its best” under those circumstances.
Bioethanol prices are reported to have declined over the past few months from over 62p to just over 32p per liter, with a significant drop occurring in the past four weeks due to the decline in crude oil prices.
In 2013, Vivergo reported a loss, after taxation, of nearly £50m, with the company blaming the shortfall on a number of design and commissioning challenges at the Hull biorefinery that it said resulted in lower than expected output volumes of bioethanol and animal feed for a period.
That year also saw ABF and joint venture partner, BP, inject a total of £40m in funding to the business, on an equal basis.
Replacement for soy imports?
Vivergo’s process is said to involve the delivery of 1.1 million tons of animal feed wheat annually to generate around 500,000 tons of feed pellets high in protein and fiber.
The producer says the finished feed supports 20% of the UK dairy herd in terms of protein supplementation and can help reduce the UK’s dependence on imported soy products.
“We supply the protein required for 340,000 dairy cows every day, which equates to nearly 20% of the UK dairy herd. This displaces South American imported feed which has been identified as a food security risk,” said the firm.
AB Agri manages the marketing and distribution of all of Vivergo’s feed products which are sold in dry pelleted, moist meal, and liquid soluble form.
