By Tom Polansek
CHICAGO, Jan 2 (Reuters) - Bunge Ltd BG.N ended its 13-year ownership interest in an Iowa ethanol plant, the company said on Thursday, following industry struggles with thin margins and overproduction.
Southwest Iowa Renewable Energy, or SIRE, repurchased Bunge's stake in the facility on Dec. 31, according to a statement.
U.S. ethanol producers say the industry has suffered from the Trump administration's expanded use of waivers to exempt oil refineries from blending ethanol into gasoline. As of last month, some 13 plants had shut since November 2018, while others had temporarily reduced production.
"As Bunge focuses our resources on our core businesses, selling our shares in SIRE, while maintaining a relationship, is an attractive opportunity," said Andrés Martín, North America country manager for Bunge.
Bunge had a 25% ownership interest in SIRE, which operates the ethanol plant near a Bunge oilseed processing facility in Council Bluffs, Iowa, according to an annual report Bunge filed last year with the U.S. Securities and Exchange Commission. The plant's other owners are primarily agricultural producers in southwest Iowa, the filing said.
SIRE is permitted to produce 140 million gallons per year and Bunge will continue to buy all of its ethanol under a revised commercial agreement, according to Thursday's statement.
But SIRE will assume responsibility for buying corn to produce ethanol and for selling a byproduct used for livestock feed, the statement said. SIRE will also continue to lease rail cars from Bunge, which named a new chief executive last year after being stung by slumping grain prices and a bruising U.S.-China trade war.
Bunge and rival merchants Archer Daniels Midland Co ADM.N, Cargill Inc and Louis Dreyfus Co, known as the ABCD quartet of global grain traders, have restructured operations and cut costs after a years-long crop supply glut thinned margins and sapped profits.
ADM said last year it would move three dry ethanol mills into a wholly-owned subsidiary while the company evaluates strategic alternatives.
"While conditions in the ethanol industry are difficult, with Bunge's capital support and strategic advice over the years, SIRE is and will continue to be a strong participant in the renewable energy industry," said Mike Jerke, SIRE's chief executive.
(Reporting by Tom Polansek; editing by Richard Pullin)
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