BioStreet Inc Canada opening

[wd9]

Was the official announcement and opening of BioStreet today in the biggest egg in the world city, Vegreville. The plant will be built on the east side of Veg between the tracks and the Hwy 16 off ramp. They will crush canola using hexane based crush and produce biodiesel using FAME. Utilization of about 400,000 tonnes of canola annually. Burn the glycerine for heat and co-gen while the meal needs to be yet defines as new protein technologies are coming up, also co-gen is a possibility.

At the opening were Ed Stelmach, priemier of AB, Leon Benoit, MP Veg Wainwright, Mayor Coleman of Veg, and the rest of us. Small, high level event.

This is exciting to say the least. Value added processing with ag products and the opportunity to invest in the company coming shortly. Will this help stabilize the price of canola? You bet.

[Zaphod]

Do these guys have real money behind them?

[wd9]

A good business plan as in the selection of this and a couple other companies out of 47 for BOPI funding means a lot more than a poorly run operation with supposed 'deep pockets'.

Not sure what you mean by real money - you either have it and actually build the plant or don't. You don't fake infrastructure.

http://www.biostreetcanada.com/about.php

[Zaphod]

I agree that BOPI funding is a positive signal, but there's no mention about who the investors are. Biodiesel plants are cheaper than ethanol to put into action, but a crush plant is probably in the $40-60 million range. I'm sorry if I sound skeptical, but there have been a lot of announcements and the only construction I've heard of is at Aldersyde. And even that one is still looking for investors. I'd love to see the industry take off, but I'm falling into the wait-and-see camp. Ethanol is a little different story.

[wd9]

There are those who will invest in plants, maybe make some money, maybe loose their shirt; and there are those who will wait and see.

Like buying real estate in Edmonton or Calgary, there are still those waiting and seeing if the price will come down so they can buy. In the mean time they want rent control and shun those who invested and took some risk.

[melvill]

wd9, I guess I'm a little skeptical like Zaphod when he wants to know if these announcements are backed by "real money". I'm not putting words in his mouth but there have been a lot of value added announcements that weren't backed by full financing so the plants have either not started construction or stopped part way. That sort of problem is showing up stateside with ethanol plants that, months ago, stopped construction long before that phase was finished.

[Zaphod]

I'm not arguing with making an investment. I'm just curious whether this a real project or just another web site and press release. If they're the real deal, fantastic. Otherwise, I'm getting tired of the promoters who provide lots of smoke but little fire. There have been at least a dozen announcements about biodiesel but only one is actually underway.

[wd9]

The other thing to remember is it takes time to get zoning, permits, water permits, even investors lined up. This plant in Veg is only opening late 2009.

The other thing is the policy on biodiesel and the budget. Announcements were made but the rules and decisions on whether to build in Canada or the Us based on tax credit were still to be determined. A lot of the details still are fuzzy with respect to claw backs and length of time the credit will run. That is what is causing probably the most grief in terms of planning and mvoing forward.

Whether these guys will make it happen, no guarantee. That is true for every announcement in every industry. People try to start up a business and don't go into it without at least the objective of sustainability and profit - except maybe for farming. If gov policy changes negatively that too can have a huge influence on the success. Many pipelines are built with huge government subsidies, the public just doesn't know about it.

At least there is some announcements in this industry so that is a positive. If nothing comes of biodiesel (extremely unlikely) then it was still worth all the effort and time just trying to get the industry going. Other countries will continue forward even if Canada doesn't and for that alone canola will be a winnner because of its properties.

There is no way to answer your question. Wait and see.

[Zaphod]

Good points. It's got to start somewhere. I agree that the uncertain time horizon on incentives is a real cloud hanging over these plants. I can't understand why the feds added this clause, but I think it would be pretty hard for them to back away from the industry if the help is still needed. But even if the industry becomes profitable on its own, taking away the incentive would seriously screw up the ROI.