Firm invests in Hallock canola plant
FARGO -- The goal of building the $168 million North Star Agri Industries canola oil processing plant and refinery in Hallock, Minn., took a big step closer to reality Wednesday.
PICO Holdings, Inc., of La Jolla, Calif., announced they would invest $60 million into North Star Agri Industries, based in Fargo. The canola plant and integrated refinery will be built four miles south of Hallock.
Officials said they expect the plant to be operational by late 2012. If completed as planned, it would be the largest "green field" agricultural processing venture in the Red River Valley since the ProGold LLC corn processing venture at Wahpeton, N.D., in 1996.
North Star Agri Industries anticipates as many as 250 temporary construction jobs and 50 permanent jobs in the region, when the company gets started.
Neil C. Juhnke, president of North Star Agri Industries, is a former executive for American Crystal Sugar Co., who has been working on the project since August 2006.
Juhnke spent 16 years at Crystal, including as agricultural operations manager for three years, before joining the project. Juhnke will be chief operating officer and president of the holding company formed to develop the facility, pending the closing of the deal. The facility will be known as North Star Agri Industries, Juhnke said.
"From my perspective, we're very happy to have formed a relationship with PICO and look forward to bringing the project to fruition," Juhnke told Agweek.
PICO announced it will have an 88 percent ownership. The rest of the ownership is the original founding investors of North Star Agri Industries, which includes about 100 people -- farmers, business people and community residents in the Red River Valley.
Their investment is contingent on successful debt-financing, Juhnke said. A $100 million non-recourse construction loan is in process, but expected to be completed in the fourth quarter of 2011. He declined to name the lender.
North Star Agri Industries will be about "average" for industry capacity. Two other plants recently started operation -- both in Yorkton, Sask. The only other large plant is operated at Velva, N.D., initially built to handle sunflowers in the 1980s.
The plant is expected to process 365,000 tons of canola seed, accounting for 450,000 acres annually. It will produce more than 280 million pounds of high-value, food-grade canola oil and 195,000 tons of canola meal. All products and byproducts will be marketed through Land O'Lakes Purina Feed of Shoreview, Minn.
In a news release, John Hart, PICO president and chief executive officer, said the project is a "business segment with compelling demographics" and has the potential for "significant recurring cash flow and a return on investment similar to a venture capital project but with Greenfield risk." He hinted at "other similar niche opportunities" which could provide further growth in the segment for PICO.
PICO describes itself as a diversified holding company. It acquires, builds and operates businesses where "significant value can be created from the development of unique assets," and acquires undervalued businesses where its management and operations assets can add value. Among others, the company has Vidler Water Co., a water resource development business, and Union Community Partners, a developer of residential lots in certain California markets.