August 1, 2014 / 7:02 PM / 3 years ago

Valero buying corn to restart Indiana ethanol plant -trade

Aug 1 (Reuters) - Valero Energy Corp is buying corn ahead of the expected startup within the next month of the company's 110-million-gallon a year ethanol plant in Mount Vernon, Indiana, U.S. cash grains sources said on Friday.

The plant is the largest corn-based ethanol plant not currently operating in the U.S. and will add capacity to an industry that produced a record amount of the biofuel earlier this summer.

"They are starting to take corn already and hope to be grinding by early September," a cash grain trader in southern Indiana said.

Valero spokesman Bill Day declined to comment on exact timing for the plant's restart. "We expect to have the Mount Vernon plant in operation and making ethanol sometime this quarter, but I don't have a specific date," he said in an email.

The quarter ends on Sept. 30.

The company, the largest U.S. independent oil refiner which bought the ethanol plant earlier this year from privately held Aventine Renewable Energy Holdings Inc, nearly doubled its profits from ethanol production in second-quarter earnings that matched Wall Street expectations.

The facility in southern Indiana, located along the lower Ohio River, has been shut down for about two years and will compete to buy corn with a nearby ethanol plant operated by Abengoa Bioenergy Corp.

Ethanol makers that reduced operations amid high corn prices last year were now running near-capacity as the lowest grain prices since 2010 resulted in big profit margins.

Valero has 10 other ethanol facilities - another plant in Indiana as well as plants in Iowa, Minnesota, Nebraska, Ohio, South Dakota and Wisconsin. Valero is the No. 3 U.S. ethanol producer, behind Archer Daniels Midland Co and POET LLC.

Reporting by Michael Hirtzer; Editing by Bernard Orr

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