LINCOLN, Neb. (DTN) -- A western Nebraska city is looking for a partner to build a soybean crush plant at a newly developed industrial rail park, after local and state government entities completed preliminary work on the site.
The North Platte Chamber and Development Corporation outlined the details of the type of business partner it is looking for in a news release, pointing to exploding growth in demand for feedstocks to support renewable diesel producers as a driving force behind the project.
The North Platte Chamber said its economic studies found the 300-acre industrial park site eight miles west of North Platte near Hershey could house a 3,000-metric-ton-per-day soybean crushing plant.
The chamber said it has acquired options to purchase the land for the site and successfully secured a $30 million grant through the Rural Projects Act from the state of Nebraska. Access to the main line has been granted by Union Pacific for use by the park, according to the news release.
"The soybean processing industry is experiencing tremendous growth across Nebraska and the Midwest," said Doug Saathoff, farmer and Nebraska Soybean Board chairman.
"Global and domestic demand for sustainably grown soybean meal and oil continues to grow and we are excited to discover and help research new value-added opportunities right here in Nebraska."
In May, DTN Crops Editor Matthew Wilde reported there were at least 14 new soy-processing projects in various stages of construction, expansion or development. Altogether, about 450 million bushels (mb) of additional soybean demand is expected to occur in the next few years, although the number is likely tens of millions of bushels low since Cargill and Ag Processing Inc. (AGP) are increasing crush capacity at three existing plants but declined to provide bushel figures to DTN.
A study conducted on behalf of the chamber found a number of economic benefits expected from a crush plant built at the location.
"Preliminary findings indicate that a capital investment of $285 million provides a pre-tax 18.8% ROI," Massachusetts-based RLA Consulting said in its study.
"Overall, North Platte appears to be in an enviable and dominant position with a regional strategic location and flexible transportation connections."
The chamber said an initial environmental assessment conducted on the site found "no significant findings." In addition, the industrial park qualifies for tax benefits.
"The park development will qualify for tax-increment financing and will be developed in stages," the chamber said, "with an estimated $60 million in infrastructure development to be done by the chamber after an anchor partner is chosen, with the overall rail and utility infrastructure designed for the needs of the anchor partner.
"Over three years of planning with Union Pacific Railroad, the Nebraska Legislature, Lincoln County Commissioners, the Village of Hershey, the City of North Platte, Greenbrier Rail Services, various utility partners and local landowners has positioned the project to move forward."
The economic study found a crushing plant would have "sufficient soybean production" near the location as well as from northwestern Kansas to support the plant. The North Platte location would have access to about 21.9 mb of soybeans annually.
"Analyzing Nebraska's three most western crop reporting districts and applying calculations from when other new soybean plants were built," the news release said, "the study concludes acreage expansion theoretically increase the soybean production total for the three districts from 20 million in year one to 46 million bushels by year five.
"Marketing soybean meal locally, the study suggests a North Platte crushing plant could have access to up to an estimated 665,000 tons of soybean meal demand annually, or approximately 78% of the plant's meal production."
The growing demand for renewable diesel is sparking a large appetite for soybean oil as the main feedstock. Right now, most renewable diesel plants are located in Gulf of Mexico states and in the West.
"North Platte would benefit from the standpoint of its transportation proximity to these markets," the consulting firm found in its study.
"With the adoption of the RD policy in California and the petroleum industry's rush to build out the refining infrastructure, we no longer consider soybean oil demand to be a concern and it is in fact now a considerable benefit for the economics of the proposed plant site given its proximity to the California market."
Read more on DTN:
"Renewable Diesel Spurs Soy Crush Expansion," https://www.dtnpf.com/…
"Soy Crush Rapidly Expands, Bringing Opportunity and Worries," https://www.dtnpf.com/…
"Soy Crush Expansion Brings Supply and Export Questions," https://www.dtnpf.com/…
"Soaring Soy Crush Spawns Opposition and Benefits," https://www.dtnpf.com/…
Todd Neeley can be reached at todd.neeley@dtn.com
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