Gevo plans to cut isobutanol cost, boost production in 2016
Commercial bio-based isobutanol plant at Luverne. Source: http://www.gevo.com
In 2016 Gevo Inc (NASDAQ:GEVO) will make upgrades to its plant at Luverne, Minnesota in order to cut by about 50% the variable cost of producing isobutanol, and then boost production.
The US company said Wednesday it wants to bring down the variable cost of producing isobutanol to between USD 3.00 (EUR 2.67) and USD 3.50/gallon, while the expected average selling price for the product is USD 3.50-4.50 per gallon. To achieve that goal, Gevo plans to spend about USD 5 million on upgrades at the plant over the coming three to six months.
The next step will be to increase isobutanol production at Luverne to 750,000 gallons-1 million gallons in 2016, or seven to 10 times more than expected 2015 production levels. The company already has the capability of producing higher isobutanol volumes, but it is limiting production because of the existing isobutanol cost structure.
Once isobutanol production goes up, Gevo believes it will be in a stronger position to boost sales into the marina, off-road and solvents markets. The increased production will also mean there is feedstock for the firm’s hydrocarbons biorefinery in Silsbee, Texas, so Gevo can continue to make jet fuel for testing purposes with commercial airlines.
In 2016, the company will also aim at an average quarterly corporate-wide EBITDA burn rate (excluding stock-based compensation) of USD 3.5 million-USD 4.5 million per quarter, versus around USD 6.0 million/quarter over the first half of 2015.
In August it was announced that Gevo and Butamax Advanced Biofuels LLC have reached patent cross-license and settlement agreements, putting an end to all lawsuits between the two US companies. This move allows Gevo to focus on the commercialisation of isobutanol.