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Minnesota Energy says it plans to close ethanol plant in Buffalo Lake

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BUFFALO LAKE -- The Minnesota Energy ethanol plant in Buffalo Lake is closing, putting 20 people out of work.

The decision to suspend ethanol production was a difficult and painful one, but necessary, according to Randy Byro, chairman of the board for the farmer-owned ethanol plant and grain handling cooperative.

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"Margins, margins, margins,'' he said. The operation has been losing money in recent months and its near-term financial prospects continued to look negative, he said. It's the only ethanol plant in the state's top corn-producing county.

The closing doesn't affect the company's grain handling and agronomy operations in Buffalo Lake, Steward, Cosmos, Lake Lillian, Eden Valley or Darwin.

Byro said the ethanol plant will reopen if market conditions improve. He said the cooperative would need to see a 50-cents-to-75-cents-per-gallon upswing in prices before it would consider reopening the facility.

The facility opened in 1997 and has a rated capacity of 19 million gallons per year, making it one of the smallest ethanol plants in the state.

The plant's closing was difficult news for Buffalo Lake due to the loss of jobs and economic activity it represents, according to Mayor Joyce Nyhus.

It comes exactly one year after the community saw the closing of its largest employer, Minnesota Beef Industries, formerly known as North Star Beef.

Nyhus, however, remains optimistic. She said the possibility now exists for the ethanol plant to be sold and would likely be suitable for other types of production.

One idea being floated around the Renville County community is the possibility of copying the example of the Chippewa Valley Ethanol Company in Benson, which makes Shaker's Vodka. Some have even speculated about converting a portion of the county's sugar beets into rum, she said.

In an ironic twist, it's also possible that the ethanol plant's troubles could ultimately benefit the community in ways unforeseen. As part of an agreement with the Minnesota Pollution Control Agency involving air emission violations, Minnesota Energy has sold a well it developed when it was considering an expansion to the city of Buffalo Lake.

It will provide the community with high quality, arsenic-free water. Buffalo Lake has invested in a variety of technologies to remove the natural occurring arsenic from its municipal water source, all without success, according to the mayor. The arsenic issue was also considered the final blow to a string of problems that led Minnesota Beef Industries to close its plant, she noted.

The city will be opening bids later this month for developing a seven-mile pipeline to the new well. The city gains access to both a large quantity and high quality water source: Nyhus described the well's raw water as being of higher quality than the treated water from the existing city supply.

Partly due to the availability of arsenic-free water, the city has received inquiries from prospective buyers for the meat processing facility. The city is working with the Renville County Economic Development Agency and the Minnesota Department of Employment and Economic Development in hopes of seeing the facility reopened.

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