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Client News
Primafuel cashes in on state's support of alternative-fuel industry
$640,000 grant helps fund $90M biodiesel plant at Port of Sacramento
By Melanie Turner
July 27, 2008, Sacramento Business Journal
Primafuel Inc. has been awarded the state's largest-ever grant for biodiesel production, the startup's latest as it plans a massive biodiesel plant at the Port of Sacramento.
The Long Beach company received the $640,000 grant from the California Air Resources Board, a relatively small amount compared to the $90 million projected cost, said Rahul Iyer, executive vice president of Primafuel.
The grant is "proof positive" that the California regulatory environment supports biodiesel, an alternative fuel produced from animal fats or vegetable oils, he said. "This award indicates CARB's support for biodiesel being an important part of California's energy mix," Iyer said.
In May, the Port of Sacramento's governing board approved the 60 million-gallon plant, which could produce three times more than the biggest-capacity biodiesel plant operating in the state today.
Funding commitments for the high-profile project have been made, but "details of the financing of this project are not yet public," Iyer said.
The company raised about $6 million in an initial round of funding last year, according to documents filed with the U.S. Securities and Exchange Commission.
Iyer would not disclose the company's revenue or whether it's profitable.
Primafuel plans to begin operations at the port in 2008.
The grant will help pay for the first phase of construction, which involves building a plant with the capacity to produce 20 million gallons per year, Iyer said. The local plant would have the ability to "scale up as quickly as the market demands," Iyer said.
Primafuel would be the port's first new business since it changed its business model last year and created an alliance with the Port of Oakland.
"It's going to be a great addition to our customer mix and provide a green technology, which is one of the target industries to not only the port, but to the city of West Sacramento," port manager Mike Luken said.
Primafuel, which is working with the University of California Cooperative Extension and U.S. Department of Agriculture to evaluate crops for biodiesel fuel, hopes to acquire some feedstock from local crops, Iyer said.
Primafuel's arrival marks the beginning of a "business renaissance" with an environmentally sound business that will increase shipping operations at the port, Mike McGowan, chairman of the Sacramento-Yolo Port District Commission, said in a prepared statement.
The plant would likely increase cargo at the port by about 15 percent to 20 percent, Luken said. The port's cargo -- mostly cement, bulk fertilizer, rice and steel -- is projected to hit 1.1 million tons in fiscal year 2008-09.
The company plans to lease about 10 to 14 acres for a research and production facility from the port along Industrial Boulevard. The project still requires a conditional-use permit from the city of West Sacramento, and it also must pass state and local environmental reviews.
The commission's earlier approval of the Primafuel operation came on the heels of the port's announcement to build new Pan Pacific Cement and Cemex Cement distribution terminals.
Pan Pacific began operations at the port in May. The company can import up to 800,000 metric tons of cement per year.
The Cemex facility, the largest of the two terminals, is under construction and should open early next year.
Cemex can handle up to 1 million metric tons of cement per year. The company also will operate a batch plant where wet cement will be mixed for construction purposes, Luken said. Cemex will operate on private riverfront property and 6 acres at the port.