BIOX Temporarily Suspends Biodiesel Production
TSX symbol: BX
TORONTO, Oct. 25, 2012 /CNW/ - BIOX Corporation (BIOX) (TSX: BX), a renewable energy company that designs, builds, owns and operates biodiesel production facilities, today announced it has temporarily suspended production of biodiesel at its Hamilton facility based on the existing conditions within the U.S. biodiesel market. The Company will monitor biodiesel market conditions, including biodiesel production volumes as well as trading liquidity and pricing, to determine the appropriate time to resume production. Concurrent with the suspension of biodiesel production, BIOX has reduced its operations group by 17 positions on a temporary basis. During the temporary suspension of biodiesel production, BIOX will continue to operate the recently commissioned stand-alone glycerin refinement system to upgrade crude glycerin in inventory to technical grade glycerin.
"Our proprietary technology is one of the lowest cost biodiesel production platforms in the industry, however based on the EPA reported production volumes that have resulted in depressed prices and the volatility within the RIN (Renewable Identification Numbers) market, we believe that temporarily suspending biodiesel production at our Hamilton facility is the responsible decision," said Kevin Norton, CEO of BIOX Corporation. "Given our balance sheet, we are in a strong position to manage through this short-term setback. We remain confident in the long-term fundamentals of the broader biodiesel market, specifically given the 28 percent increase in the mandated minimum volume of biomass-based diesel for 2013, and we expect to resume production in due course."
Earlier this month, the U.S. Environmental Protection Agency (EPA) published U.S. biomass-based diesel production through September 30, 2012. In the first nine months of 2012, U.S. biomass-based diesel RIN generation exceeded 90 percent, or 1.356 billion RINs of the minimum volume of 1.5 billion RINs, mandated under the Renewable Fuel Standard 2 (RFS2) for 2012. As a relatively nascent industry, the production volumes reflect that producers have been slow to respond to the temporary supply/demand imbalances. BIOX expects these imbalances to be resolved in the near term, particularly in light of the increase in the minimum volume requirement of biomass-based diesel to 1.28 billion U.S. gallons, or 1.92 billion RINs in 2013 that was recently confirmed by the EPA.
RIN prices have fallen from $1.50 in January 2012 to as low as $0.40 in October 2012. As of October 24, RINs traded at $0.51. For each U.S. gallon of biodiesel sold in the U.S., 1.5 RINs are issued. RINs are required by obligated parties in the U.S., which includes all refiners and importers of transportation fuel, to show compliance with RFS2.
The current market conditions are impacting the construction timeline of BIOX's second facility in New York Harbor. BIOX has deferred procurement of certain long-lead time, capital intensive components and reduced its project planning team related to the construction of the New York Harbor facility. BIOX will update the market with an estimated commission date of the second facility in a timely manner.
About BIOX Corporation
BIOX is a renewable energy company that designs, builds, owns and operates biodiesel production facilities. BIOX currently owns and operates a biodiesel production facility in Hamilton, Ontario, Canada with a nameplate capacity of 67 million litres per year. BIOX has an innovative, proprietary and patented production process that is capable of producing the highest quality, renewable, clean burning and biodegradable biodiesel fuel utilizing a variety of feedstocks - from pure seed oils to animal fats to recovered vegetable oils with no change to the production process. BIOX's high quality biodiesel fuel meets North American (ASTM D-6751) quality standards. BIOX is Canada's largest biodiesel producer and is focused on building, owning and operating a network of commercial scale biodiesel production facilities in jurisdictions where clearly defined renewable fuel standards policies exist.
Certain statements in this press release constitute "forward-looking" statements that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, objectives or achievements of BIOX, or industry results, to be materially different from any future results, performance, objectives or achievements expressed or implied by such forward-looking statements. Such statements relate to, among other things, the resumption of biodiesel production at BIOX's Hamilton facility and BIOX's long-term expectations for the biodiesel market in light of current market conditions. These statements reflect BIOX's current views regarding future events and operating performance, are based on information currently available to BIOX, and speak only as of the date of this press release. These forward-looking statements involve a number of risks, uncertainties and assumptions and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such performance or results will be achieved. Those assumptions and risks include, but are not limited to, the fact that BIOX's results of operations and business outlook are highly dependent on a mix of legislation and producer payment programs and tax credits and upon commodity prices, which are subject to significant volatility and uncertainty. Many factors could cause the actual results, performance or achievements of BIOX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including factors described in this press release and those discussed in BIOX's publicly available disclosure documents, as filed by BIOX on SEDAR (www.sedar.com) except as updated herein. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Unless required by applicable securities law, BIOX does not intend and does not assume any obligation to update these forward-looking statements.
SOURCE: BIOX CorporationFor further information:
Executive Vice President & CFO
Phone: (905) 337-4970
Phone: (416) 815-0700 ext. 238