ADM Still Committed to $2.6B Investment in Seven Major Capital Projects, Executives Indicate
Herald & Review (Decatur, IL) -- DECATUR -- March 3, 2009 -- Despite uncertain economic conditions, Archer Daniels Midland Co. is moving ahead with a planned $2.6 billion investment in seven major capital projects.PAID ADVERTISEMENT
The projects are expected to create 550 new jobs, ADM chairman, CEO and president Patricia Woertz said during the company's annual shareholder meeting in November. The company did not specify how many jobs would be created where.
As part of the capital investment, ADM plans to build a propylene/ethylene glycol facility in Decatur. The facility is now expected to be completed during the fourth quarter of 2009.
Original estimates showed the facility opening as early as the first quarter of the year and then it was pushed back in November to the third quarter.
The company said in its 2008 annual report it was proceeding with construction of a 100,000 metric ton per year commercial propylene/ethylene glycol facility. The products are principally used in industrial applications such as antifreeze and coolants, the manufacture of certain plastics, and paints and coatings, according to the report.
The Decatur facility and a polyhydroxy alkanoate, or PHA, natural plastics plant in Clinton, Iowa, are two examples of how ADM is trying to diversify the products it makes, said John Rice, executive vice president for commercial and production. Rice said the company currently makes 24 products from corn.
"Every additional product we manufacture enhances the total value of these processing operations," Rice said. "That's why we keep working to add new products that respond to market demand. We're seeing a lot of interest from our customers for these products."
In addition to the Decatur and Clinton facilities, the company is constructing two ethanol plants in Nebraska and Iowa, a cocoa facility in Pennsylvania and two cogenerations facilities in Nebraska and Iowa.
As of June 30, 2008, the company had entered into purchase commitments totaling $557 million with third parties related to construction of those facilities, according to the report.
Construction of these plants is expected to be completed during the next two fiscal years, the report stated.
Construction of the plants continues to move ahead despite the economy, Rice said. However, some of the projects have slowed. The pace has slowed at the Cedar Rapids, Iowa ethanol facility to be able to save on labor and material costs in light of what has been seen in the ethanol market and also in the labor and material markets, Rice said.
The Cedar Rapids plant combined with a plant in Columbus, Neb., which is expected to be online this fall, would produce an additional 275 million gallons of ethanol per year once both plants are online, Rice said.
ADM doesn't plan on closing facilities in the tight economic conditions, Woertz said. It did, however, announce last week plans to eliminate positions at a plant in Jackson, Tenn. after a business partner's decision to relocate to another facility. The ADM plant will continue to operate, spokesman Roman Blahoski said.
"We always try to match processing capability with the market conditions so we have slowed some plants, but we're not looking at entire plant closures at the moment," Woertz said. "We think we're actually well matched in certain regional markets where demand has perhaps shrunk."
The major capital projects have affected the company's balance sheet. Its net property plant and equipment in invested capital continues to increase due principally to spending on the major seven capital projects, said Steve Mills, chief financial officer. The net property plant and equipment increased by $287 million from $7.125 billion in June to $7.412 billion in December, Mills said.
Woertz said during the analysts' presentation quite a few of the projects have been moved out a quarter as far as completion, which could change renegotiated prices to complete them.
Author: Chris Lusvardi, Herald & Review, Decatur, Ill., clusvardi@herald-review.com|421-7972
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