Velocys tumbles as Oklahoma plant operations suspended

Renewable fuels company Velocys saw its share price dive on Monday after confirming that operations have been suspended at its plant in Oklahoma City, USA.

The decision was made by Velocys’ joint venture partner ENVIA after an investigation into a leak at the plant from May of this year pointed to the ancillary coolant system as the root cause, with operations at the facility now being reviewed.

The plant uses Velocys’ technology, which was not at fault for the leak, to produce renewable jet fuel and diesel from forestry by-products.

David Pummell, chief executive of Velocys, said: "We are working with ENVIA to find a strategic alternative that will realise the maximum value potential inherent in the facility."

The plant has been running at a reduced capacity since the leak, exacerbating ENVIA’s operating losses, and will continue to do so until the second reactor can be restored to operation.

A statement from Velocys said the board fully supports ENVIA's decision given the capital requirements of the plant and stated that Velocys' capital would be better invested in progressing its Mississippi Biorefinery and UK waste to jet projects, which have the potential to generate significant value for shareholders.

Velocys has a minority shareholding in ENVIA and has supported the joint-venture by advancing secured loans totaling £15.2m.

"Without the Velocys team, the decision that has now been made by the ENVIA board, would likely have been made many months ago. Nonetheless, the Oklahoma City plant has demonstrated the scalability and commerciality of our technology, providing a strong strategic foundation for Velocys to deliver our UK and US biorefinery projects," said Pummell.

Velocys’ shares were down 15.69% at 5.27p at 1651 BST.