"THE owners of a dormant North-East refinery have been stung by losses of more than £40m.
CropEnergies AG says the suspension of production at its Ensus bioethanol plant, in Wilton, near Redcar, has conspired to turn an annual profit of £8.5m into a near £42m deficit.
The announcement comes after The Northern Echo last week reported the company’s admission it did not know when Ensus would restart.
The factory, seen as a key factor in the UK meeting renewable fuel targets, was shutdown three months ago, after bioethanol prices were hit by slower European markets and the fallen oil price.
Bosses say the losses mean it will not be offering a payout to shareholders.
However, they have confirmed Ensus’ 100-strong workforce has not been affected by the slump, with staff retained across the Wilton site, as well as at a base in Yarm, to carry out maintenance.
In a trading update for the year to February 28, the German firm said its Ensus problems had delivered unexpected costs of about £26m, despite production, helped by the Teeside site, rising to more than one million cubic metres for the first time.
A spokesman said: “We were able to increase revenues by six per cent to £597m in the financial year, with the main reason being the increase in bioethanol production.
“However, very low bioethanol prices, which could not be offset by lower raw material prices, put a strain on the result.
“In addition, the consolidated result was burdened by non-recurring expenditures of £26m by the temporary standstill of Wilton.
“All in all, the company closes the financial year with a net loss of the year of £42m, compared to the previous year’s £8m profit.”
The plant uses wheat to create bioethanol, which is added to petrol.
The remaining protein and grain is used to make thousands of tonnes of animal feed and carbon dioxide for the soft drinks and food market every year.
However, the Ensus site has endured a chequered history, with low demand, poor harvests, rising energy costs and even a bad smell forcing closures and hindering production since it started in 2010.
But, speaking to The Northern Echo, Paul Brannen, Labour MEP, said EU talks had taken place to lift bioethanol use in petrol and help producers, which CropEnergies said it is keen to take advantage of.
A spokesman added: “The bioethanol prices have risen significantly over the last few weeks, but they are still very volatile.
“The European Parliament's agreement on a compromise for the amendment of the Renewable Energies Directive is an important step forward and ends uncertainty.
“We expect this decision to offer growth impulses to the European market in the medium-term, and with this, revenue and earnings should improve.
“We are well prepared for this growth.”