Iowa-based Renewable Energy Group Inc. will buy Tyson Foods Inc.’s half of Dynamic Fuels LLC, a Geismar biofuels plant that makes diesel from animal fat, in a deal that could be worth up to $65 million.
Renewable will pay Tyson $18 million in cash and up to another $35 million, with those payments tied to production over 11½ years. Renewable will also pay Tyson $12 million that Dynamic Fuels owes to the food-processing giant.
The Geismar facility began as a $160 million joint venture between Tyson and Syntroleum Corp. Completed in 2010, the facility was the first large-scale biorefinery in the United States and can produce up to 75 million gallons of renewable diesel.
However, the plant has not operated since late 2012, when it shut down for maintenance. But Syntroleum was reluctant to invest the $10 million needed to restart the facility. In January, Renewable Energy Group announced it would acquire Syntroleum’s half of the Geismar facility in a stock deal valued at $40 million.
Wednesday’s announcement will make Renewable the owner of the entire facility and marks a milestone in Renewable’s effort to grow its advanced biofuels business, said Daniel J. Oh, president and chief executive officer.
“It gives us the opportunity to further expand our production capacity into new product lines while growing our overall advanced biofuel manufacturing capability and bringing on other renewable chemical applications.”
Andrew Rojeski, vice president-renewable energy for Tyson, said Renewable Energy Group is a long-term customer, buying fats, oils and greases to make renewable fuels.
Tyson hopes to continue that relationship, Rojeski said.