Giant ethanol producer - Archer Daniels Midland Co. - last week said it will double its capital spending to between $3.5 billion and $4 billion over the next few years on investments in new ethanol and biodiesel plants, as well as other projects.
This will be profitable even if the price of oil drops below the current $70 per barrel, says ADM president and CEO Patricia Woertz. Speaking recently at a Deutsche Bank conference in Paris, she said profits from the renewable fuel plants "will be quite robust at something less than that."
Although government goals ensure increased ethanol production over the next several years, Woertz is optimistic "ethanol demand in the United States will go beyond what is mandated by the current set of laws."
She says ADM's investment in adding new ethanol production also includes rail cars, barges and tractor trailers to create transportation infrastructure for the ethanol ADM produces. Woertz says the investments also allow ADM to market ethanol for other producers of the fuel.
ADM is the largest producer of ethanol in the U.S., with a 25% market share. "There are a number of new competitors in the market," she says. "But ADMâ€™s advantage is built around experience, networking capabilities and cost advantages."