bzh1111

Verasun Energy: Expect Future Growth and Profitability

Very Good Article. However, there are few points missing. 1) The trouble with Ethanol first generation in the US is that there profitability is directly linked to Corn (also down from its highest level, is still above 6.5USD a bushel). VSE had to shut down a brand new plant recently because of this low profitability and this will probably hang over earnings for the quarter. 2) Sugar Ethanol from Brazil. I am working closely with people involved in Ethanol trading (physical) and the best trade recently was to ship the brazilian Ethanol in the US despite the 0.54c per gallon tax. Brazil has a fantastic track record with ethanol and is now building up capacity (much cheaper than in the states) to be sold in the US in the years to come. So the 500mg you mentionned is more 3bng now (nearly 25% of the first generation cap). 3) From the beginning, it is obvious that the first generation ethanol is an ecological disaster and I was personnally not surprised to see Bush pushing for that solution in the US...More importantly, politicians are now realising their mistake and voted the 2007 EISA Mandates on Cellulosic Ethanol. This mandate will cap first generation until 2022 and will benefit Cellulosic Biofuel (like VRNM). The only smart way for the VSE guys now is to buy or develop cellulosic ethanol...