St. Paul-based CHS Inc. is acquiring the PICO Northstar Hallock LLC canola plant in Hallock, Minnesota for $127 million.
To many, the deal, which will be effective in third quarter 2015, does not come as a big surprise as PICO expressed its intent in February of this year to seek an alternative course for the plant. Since being constructed in 2012 for $165 million, the facility, which is 87.7% owned by PICO Holdings and 12.3% owned by Northstar Founders LLC, has been only intermittently profitable. A range of difficult conditions including crop issues in Canada and delays by the U.S. Environmental Protection Agency (EPA) in releasing alternative fuel mandates have put pressure on crush margins.
Initially built to process 1,000 tons of canola per day, the plant was eventually expanded to process 1,400 tons per day, but the local owners and management found themselves without the resources to run a project of that scale. PICO stepped in to take over the operation in 2010, but market conditions since then have been uncooperative, leading PICO to decide to divest itself of the facility.
Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at email@example.com.