KiOR Natchez facility on hold? Second Columbus plant may come first in company’s plan

Published 12:15am Tuesday, August 13, 2013

NATCHEZ — Company officials with KiOR say they’ll be deciding in the coming months if they will build a second plant in Columbus before they build their announced facility in Adams County.

Officials with KiOR — a renewable fuels company that announced in 2012 plans to build a large-scale production facility in the Natchez-Adams County Port — have in the past said that a successful startup of a similar facility in Columbus was necessary before the company broke ground in Adams County. The Columbus plant entered into production earlier this year.

But the company’s chief executive officer, Fred Cannon, said during the company’s investor’s conference call last week that what the company has learned from the existing Columbus facility have opened an option for an alternative that can help the company develop its cash flow more quickly and cheaply.

That learning includes developments in KiOR’s research regarding plant operating efficiency and the potential development of new feedstocks, he said.

“We are beginning to see traction on the commercial development of feedstocks other than Southern Yellow Pine, including hardwood, energy crops and waste products such as used railroad ties, all of which we expect to be able to procure at lower prices without negatively impacting the overall growth to drain in the basin,” Cannon said.

Officials have in the past said Natchez was chosen in part because of the availability of pine resources to serve as feedstock for KiOR’s operations.

Adams County Board of Supervisors’ President Darryl Grennell said the evaluation process is out of county hands.

“This is a sit-and-watch situation,” Grennell said. “I don’t know if there is anything we can do to entice them to start on Natchez before (Columbus 2).”

While the company evaluates the two options, Cannon said KiOR is still refining its design plans for Natchez, and estimated the Natchez project will cost between $560 and $600 million.

“We’re evaluating both (Natchez and Columbus) alternatives right now because of some of the research and development and technology improvements that we’ve recently developed are very innovative, and they’ve opened the door to do this Columbus 2 alternative,” Cannon said.

“So this quarter, our goal is to make a decision — do we do Columbus 2 first, get us to a cash flow positive position in the company much sooner, and then do Natchez, or do we do Natchez first? We will evaluate both those alternatives and have a clear plan forward by the end of this quarter.”

While Cannon emphasized that the company is still in the evaluation process, he said the KiOR was excited about the Columbus 2 prospects because it could reduce start-up costs and commissioning risks by using experienced personnel and sharing site infrastructure, equipment and operational knowledge.

“First, we expect that it would provide the ability to incorporate the most recent improvements to our technology and devote our current facility in Columbus and a new facility, enhancing both reliability and yield for both facilities,” Cannon said. “Second, we anticipate that we would be able to reduce cost and time for design, engineering, construction of the second facility because we can leverage our experience and existing design from the current Columbus facility.”

The company’s Natchez project as announced is expected to create 320 direct and indirect jobs.

The Natchez project is planned to be larger than the initial Columbus plant, which was a converted paper mill. Natchez will be built from the ground up on the site of the former Belwood Country Club.

During the second quarter of 2013, KiOR suffered a net loss of $38.5 million, or $0.36 a share, compared to a net loss of $23 million for the same quarter in 2012.

The company had $5.1 million in capital investments, which officials said were primarily related to the front-end engineering of the Natchez project.

KiOR’s stock fell 11.99 percent to $3.67 a share Monday. The stock was $4.76 a share Thursday morning.