Velocys picks Mississippi site for first US biorefinery

Renewable fuels company Velocys announced on Friday that it has signed a site option agreement with Adams County in the State of Mississippi for its first US biorefinery, to be located in Natchez, Mississippi.

The AIM-traded firm said it has been offered economic development incentives from Adams County estimated to be worth the equivalent of $42m.

It said the project expected to qualify for additional incentives worth up to $15m, provided via Mississippi's Advantage Jobs Act and other statutory tax incentives.

The incentive packages would reduce the company's future tax liabilities, and were subject to Velocys meeting “certain minimum requirements” for capital investment and local employment opportunities.

Velocys said it also received commitments from Adams County worth approximately $4m relating to the land and upgrades to the site, and $1m site upgrade commitments from local utility suppliers, further increasing the attractiveness of the site.

“This is an important step towards the development of our first biorefinery in the US to address the attractive and growing renewable fuels market,” said Velocys CEO David Pummell.

“We welcome the significant support for this plant at the local level, including the future financial support that further enhances plant economics.”

Pummell said Velocys and its partners were continuing to make “significant progress” towards completing other work packages needed to deliver a successful USDA loan guarantee application, which it was targeting in 2018.

“We look forward to updating our stakeholders on the progress of this transformational project in Mississippi.”

Velocys said the site and local area benefitted from an attractive regulatory and tax regime; the availability of an abundant local supply of low cost forestry residue that will form the feedstock of the plant; and advantaged transportation infrastructure including barge, rail and road.

It also featured “accessible” utilities; land that met all required criteria including space and terrain to support an industrial development; a local workforce skilled in servicing the forestry industry; and a local community with facilities and amenities that will attract additional skilled personnel during construction and ongoing plant operations.

The 100-acre Natchez site was confirmed after the company analysed a “broad set” of operational and tax considerations at 12 possible sites in four states, all in the southeastern United States.

Due diligence, including site visits, was completed at each of the sites and incentive offers were received from each state in question.

That analysis laid the “foundation” for future biorefineries, Velocys said, adding that it was maintaining its list of other advantaged sites in the region, which could host plants with capacities totalling 100 million gallons over the next 10 years.

Velocys said it remained in “close contact” with the economic development officials in the other states regarding the locations and timing of future renewable fuels facilities.

“The Mississippi Development Authority wishes Velocys continued success in their new venture in Natchez and Adams County,” commented Billy Klauser, the authority’s chief economic development officer.

“With its strategic location and close proximity to a major waterway, Natchez was a natural fit for this proposed capital investment of several hundred million dollars.”

Velocys said the announcement also completed one of the work packages required for the US Department of Agriculture loan guarantee application announced in June.

Site permitting activities had now begun for the Natchez site, it confirmed.

“We are pleased to have Velocys join our growing industrial family,” said president of the Adams County board of supervisors, Mike Lazarus.

“These quality jobs, significant investment and purchases of area forestry products will have a huge and meaningful impact on our area and local economy.”