By SCOTT NILES Courier staff writer
October 09, 2007 12:44 am
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OTTUMWA — A new ethanol facility in Wapello County could cost an extra $30 million to build.
While it may surprise some, investors and project officials said the news is anything but unexpected.
Unity Ethanol LLC officials said the biggest factor in this price hike was the cost of nickel and steel, two main components of stainless steel, which is what a majority of the plant will be built from. Along with the price of the raw construction material, the price of labor has also increased.
“We figured that the price of steel and labor would go up when we were doing the figures,” said Laura Martino, Unity Ethanol project manager. “We adjusted our numbers accordingly and added the extra cost into the project proposal. Our figures are for the worst-case scenario, so when we get project bids, they will probably be lower than what we budgeted.”
Unity Ethanol’s Chief Operating Officer Jason Egli said they are not concerned with the costs at this point.
“Right now it is roughly $30 million more than what we thought it would be originally, but that cost will go down. It has already started to,” he said. “We are still going ahead with the project as scheduled.”
Martino said the two facilities in Wapello and Louisa counties, which will be operated by Unity Ethanol, are estimated at nearly $520 million combined.
“This includes the higher costs, but we don’t think it will be that much,” she said. “When we did the cost estimates, steel and labor weren’t as high. But the trend in the industry has been for those costs to go up, so we figured on a higher budget.”
Egli said the other costs, such as corn and ethanol prices, are not a concern at the moment considering the facility is only at the beginning of the construction phase. Martino said it may become an issue later once the facility begins operation in 2009.
“It is all a matter of when you enter the market. The cost of corn doesn’t affect the construction stage, so we don’t have a concern with that right now,” she said.
The ethanol facility in Wapello County is expected to bring 40-50 jobs to the area.
Besides jobs, the officials said the plant will boost economic productivity.
“We are going to get all our raw materials locally,” Egli said. “Most of the corn will come from the local elevator markets.”
The Wapello County site will be built off 120th Street just north of Ottumwa.
“We are getting ready to do the bidding for the construction work soon,” Egli said. “Everything is still going according to plan.”
Scott Niles can be reached at (641) 683-5360 or via e-mail at sjniles@mchsi.com.
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