Groundbreaking with Presidential Proportions

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Alterra Bioenergy Holdings Corp. stands apart from the pack for reasons other than the fact that it has the backing of a former U.S. president and is building a plant in his hometown. The company bypassed the major contractors and process designers to design and build its own plants-something you might expect from a seasoned biodiesel producer, not a brand new company. Its financial backing is unique, as well, involving Norwegian investors with links to South America.

CEO and founder Wayne Johnson, a Macon, Ga., native, is the man behind Alterra's inimitable background. Now in his mid-50s, Johnson worked for a number of years as a senior executive for Visa. He was introduced to Argentina by the people who own Master Card, and he started a bank that became the largest Argentine bank to issue credit cards.

When he started looking for new opportunities he was initially drawn to the hot ethanol market. "I always look for something that satisfies a fundamental need," Johnson says. "I saw that ethanol was being aggressively pursued, but I found the whole biodiesel development effort in the United States was lagging significantly behind and just needed capital investment."

The connections he made in Argentina resulted in the development of an investor group that Johnson is pleased with. "There is a large amount of capital that these folks have made available for the development of the business and to make it grow. We will be producing biodiesel fuel, selling blended fuel and we're doing our own plant development and design, and our own marketing."

Johnson officially organized Alterra Bioenergy Holdings Corp. with headquarters in Macon, Ga., in October 2006 and the company broke ground on its first plant in December that same year. The 15 mmgy biodiesel plant is currently under construction in Gordon, Ga., and is called Alterra Bioeners of Middle Georgia.

In late February, Alterra held a groundbreaking ceremony for its second plant, a 30 MMgy plant at Plains, Ga., which will be called Alterra Bioenergy of Plains. Both companies are subsidiaries of Alterra Bioenergy Holdings Corp.

The former president was actively involved in the meetings with Alterra's investors, Johnson says. "When President Carter lends his influence to something it really captures the attention," he says. "He was excited about us doing this for two reasons. It brought a meaningful business to Plains, which he's very protective of and very supportive of. Also, he likes it because it furthers what he said when he was president: 'We all need to be striving for energy independence.'"

The wide publicity surrounding the groundbreaking because of Carter's involvement resulted in many new contacts for Alterra. The company already has plans to expand the Gordon and Plains facilities, and to build larger plants at two other unnamed locations, Johnson says. Alterra is also completing negotiations to acquire an Argentine biodiesel plant and boost that facility's production from 3 MMgy to 15 MMgy. Johnson says his goal is to have 200 MMgy of biodiesel production capacity by the end of 2008 through building and acquiring plants, and partnering with others.

Christian Langaard is one of the Norwegian partners involved in Alterra. He is president of Euro-Latin Capital, a corporate financial advisory firm with headquarters in Uruguay, and offices elsewhere in South America and Europe. The company also manages private equity funds in South America. In the past 18 months, Euro-Latin Capital has made a concentrated effort with its cornerstone investors to study biofuels, according to Langaard. "We believe biodiesel is particularly interesting," he says. "We think it's an underdeveloped market, he says. "The biodiesel entry cost isn't enormous, but you need to be involved where you can get the raw materials. Argentina, Brazil and the United States together have about 90 percent of the world soybean production."

Feedstock Flexible
Soybeans aren't the only feedstock that Alterra is considering. The company may use palm oil if it makes sense, and it may build port facilities if it's advantageous, Langaard says. The availability of a variety of feedstocks was one factor that persuaded Alterra to build plants in the southeastern United States. "One of the beauties of Georgia is that it has an ample supply of soybean oil, cottonseed oil, peanut oil and even potentially canola oil," he says.

Alterra will initially produce biodiesel from soybean oil crushed at Georgia's two soybean crushing facilities; one is 100 miles from Plains and the other is 250 miles away. "We're starting with soybeans while looking at alternative feedstocks, particularly the ones of South America-jatropha or castor oil," Johnson says. "One of the things we'll be doing at Plains is looking at cottonseed oil, peanut oil and also canola as a winter crop. The Southeast is well-known for its chicken fat, as well."

Peanut oil is generally considered too expensive to be used as a feedstock for biodiesel, compared with soybean oil, but Johnson says there are new varieties being developed that may make it more economically feasible. Peanut farmers' planting decisions are based primarily on federal programs, Johnson explains. As big producers of cotton, Georgia growers welcome a new use for cottonseed, which was once crushed for oil but now is used primarily as livestock feed. Cottonseed has a chemical issue when used as a biodiesel feedstock, which is being studied at the University of Georgia, Johnson says.

Canola may be a promising new crop for the area. Georgia was briefly the nation's largest producer of canola in the 1990s, but farmers dropped it when markets didn't develop. Canola can boost farmers' bottom lines because it can be double cropped, which means it can be grown as a winter crop, followed by a summer-season crop planted after the canola is harvested.

Locating plants and sizing them according to the availability of feedstocks and the potential market are major parts of Alterra's business strategy, Johnson says. "In October 2006, I went in search of where I was going to do this and concluded that Georgia was a good place," Johnson says. Not only is it a center of oil crops, but the state uses 2 billion gallons of diesel fuel and has a very small amount of biodiesel being produced either in Georgia or in the whole of the southeastern United States.

Taking advantage of the initial publicity, Alterra is already selling blended fuel by purchasing biodiesel elsewhere until its own plants are operational. The Gordon plant is expected to come on line early this fall with the Plains plant following a couple of months later. Carter's involvement is appreciated, Langaard says. "Carter has helped us by putting us on the map," he says. "To establish a new company is one thing. Establishing recognition and credibility sometimes takes longer."

Investor Backing
The desire to enter the market quickly was the major reason behind Alterra's decision to design and build its own plants. "It tremendously reduces our lead time and saves a lot of money," Johnson explains. "When we made the decision to do this, we went out to the large integrators and each had a backlog of projects. We're not inventing anything. We're not taking any speculative risk. The equipment we've selected we know works."

"Wayne's assembled a fabulous team of engineers and chemists that have experience in building biodiesel plants," Langaard says. We learned from a Euro-Latin biofuels project in Argentina. "We spent a lot of time negotiating," he explains. "They want to sell you a turnkey project. We may buy the centrifuge system or the ethanol recovery unit from the Rolls Royce, but we don't need Rolls Royce to pave the road or build the building." Langaard says they're also willing to buy some used components, such as stainless steel tanks, without compromising quality.

Euro-Latin Capital, Olympia Holding AS of Norway, Next Business Development Group of Argentina and Johnson are the four investors in Alterra Bioenergy Holdings Corp. In order to accelerate growth, they may bring in a second round of investors or even go public, Langaard says. "I think that Alterra has very committed shareholders," he says. "We have a very respectable businessman running an investment vehicle from Norway who is committed to the region, and we have a very committed manager in Wayne, who is very visionary and has put together a fantastic project. Euro-Latin and Olympia Holding are willing to fund the growth. Now that we have a very powerful endorsement from President Carter and we have very powerful investors from Norway that can show they're committed to financial growth, it takes away the doubts of sustainability."

Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at [email protected] or (701) 746-8385.