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KiOR suspension in Columbus shouldn’t affect Natchez plans

NATCHEZ — KiOR has temporarily suspended operations at its Columbus facility, but local economic development officials say the measure shouldn’t ultimately affect the company’s plans for Natchez.

KiOR announced during a production update last week the company would be suspending its operations at its commercial-scale plant in Columbus and would instead focus on bringing the plant to full production capacity during the first quarter of the year.

Though the plant has been producing cellulostic fuel for the last year, it has not been able to achieve its projected full production capabilities.

Chief Executive Officer Fred Cannon said the company would continue to spend money — approximately $22 million — on research and development.

“We will focus on bringing the Columbus plant to design focus,” Cannon said during the update. “This provides the strongest foundation for the future growth of KiOR. We expect the successful execution of this plant will allow us to develop, finance and build future facilities.”

Natchez Inc. Executive Director Chandler Russ said there is nothing from his standpoint to view the measure as a negative.

“This is their first plant, and they are continuously learning through and through, and it is in our best interest for them to get everything running smoothly and in good accordance before they come here,” he said.

Cannon said financing the company’s planned second Columbus facility has been difficult because of the history of production at the existing facility, the departure of Chief Financial Officer John Karnes in December and new proposed government regulations.

The Columbus II facility was announced last year, and officials said at the time it would be a forerunner to KiOR’s Natchez project.

Cannon said the effort to optimize the Columbus plant should position the company to run the plant in the second quarter with many of the planned optimizations. However, because of the plans Cannon said he did not feel it was prudent to forecast how much fuel the plant would produce in 2014.

“We have identified through our operating experience what we expect will bring Columbus to steady-state operations,” he said. “We believe we have a focused execution plan in 2014 and we can deliver.”

KiOR announced in mid-2012 plans to build a cellulostic fuel production facility on the site of the former Belwood Country Club in the Natchez-Adams County Port. The Natchez facility was meant to be larger than the existing Columbus plant, and was projected to create 320 direct and indirect jobs.

The planned late 2013 Natchez groundbreaking was later pushed back, and in September KiOR announced it would be constructing a second plant in Columbus for cost-saving and logistical reasons before pursuing the Natchez project.

KiOR had the Belwood property under contract, but the option on the land has since expired, Adams County Board of Supervisors Attorney Scott Slover said.

KiOR has spent approximately $10 million on the Belwood site, mostly in engineering, Slover said, adding he communicates with the company on a regular basis.

“Even though it is not happening as quickly as we, or KiOR for that matter, would like it, we are still holding on to the land, and our belief is (KiOR) is going to be here,” he said.

Adams County Supervisors Vice President Mike Lazarus said KiOR paid for the clearing of the Belwood property and has had a number of seismic bores completed, but he would like to see some kind of financial incentive for the county to hold on to the property.

“I know we are committed to KiOR, but we haven’t received any funds, so I don’t see why we are obligated,” he said.

“The county is to the point we are not putting money into it until they do.

“If someone comes along and wants that property and has the money, I want to give it to them.”

The county has previously committed to building a levee to keep the Mississippi River out of the low-lying property, though the plan is contingent on the a finalized commitment from the company. The levee has been estimated to cost between $5 and $7 million, and will be funded largely through economic development grants.

Supervisor Calvin Butler expressed a similar sentiment to Lazarus, saying, “If they are coming, that is fine, but they need to show us some good faith by giving us some kind of income for holding (the land) for them.”

While the initial option on the property has run out, Russ said a final agreement for the property is actively being worked on.

“None of what is happening in Columbus is affecting our continued progress there,” he said.

KiOR’s stock closed up 2.21 percent Wednesday at $1.39 a share.