GRANITE FALLS, Minn. (AP) -- A cooperative in this western Minnesota city has received government approval to begin raising equity for a proposed $55 million ethanol plant.
The venture marks the first major ethanol project to be undertaken in Minnesota without the promise of the state's producer credit, said Ralph Groschen, a marketing specialist with the state Agriculture Department.
Some of the state's first, smaller plants were developed before the producer's credit was offered. Since then, the 20-cent-per-gallon credit has been considered an instrumental factor in the development of all of the state's major ethanol plants.
But the credit has come under attack of late. Gov. Tim Pawlenty recently reduced the credits by more than $20 million due to the state budget deficit. And there's debate in St. Paul whether to continue the producer's credit in the next biennium.
With or without the credit, Granite Falls wanted to get into the ethanol industry.
"It's a big step for us," said Paul Enstad, chairman of the Granite Falls Community Ethanol LLC.
The federal Securities Exchange Commission and the state of Minnesota gave final approval Wednesday.
The company has been waiting since late last year for the go-ahead, but Enstad said the timing couldn't be better. The company can begin seeking investors before farm fieldwork begins.
Many of the investors will be area farmers, Enstad said. The company wants to raise 40 percent of its estimated project costs, or at least $22 million, through the equity drive. Private lenders would cover the rest.
If successful, Granite Falls Community Ethanol will begin construction later this year on a plant capable of producing 40 million gallons of ethyl alcohol and 130,000 tons of distillers dried grains annually. It will grind 15 million bushels of corn annually.
The facility would be built on a 31-acre site east of Granite Falls and would create 30 jobs.
There are currently 14 ethanol plants in the state with the capacity to produce 360 million gallons annually.
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