March 11 (Bloomberg) -- Poet LLC, the second-largest U.S. ethanol maker by production capacity, agreed to process sorghum from Chromatin Inc. into ethanol at its largest plant.
Poet’s Chancellor plant in South Dakota will use sorghum from as many as 4,400 acres grown in the state, Chicago-based Chromatin said today in a statement. Terms weren’t disclosed.
The deal is Chromatin’s fourth with a U.S. ethanol producer this year, and its first outside California, following supply agreements with Calgren Renewable Fuels LLC, Aemetis Inc. and Pacific Ethanol Inc. Shifting some production from corn to sorghum will let Poet better manage costs and feedstocks, the biofuel producer said in the statement.
The Chancellor plant, about 20 miles (32 kilometers) southwest of Poet’s Sioux Falls, South Dakota, headquarters, produces about 110 million gallons (416 million liters) of fuel a year from corn. The companies didn’t say what percentage of that will be made from sorghum. Closely held Chromatin is backed by investors including BP Plc.
Ethanol made from sorghum may qualify as an advanced biofuel according to the U.S. Environmental Protection Agency. U.S. gasoline and diesel producers must blend 2.75 billion gallons of advanced biofuels with their products this year.
Archer-Daniels-Midland Co. is the largest U.S. ethanol company by production capacity, according to data from the Renewable Fuels Association, a Washington-based trade group.
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