Cenovus enters corn and wheat market with Husky takeover

Western Canada’s largest ethanol producer could soon be operating under a different banner, following the announcement of Cenovus Energy’s $3.8 billion acquisition of Husky Energy on Sunday.

The deal will see the two Canadian energy industry rivals join forces and operate as Cenovus Energy Inc., with headquarters in Calgary, Alta.

In addition to its oil and natural gas assets, Husky Energy owns two of Western Canada’s largest ethanol production facilities, at Lloydminster, Sask., and Minnedosa, Man.

Together the two plants, which operate as Husky Grain, process up to 700,000 tonnes of corn and wheat each year, according to the company.

Both plants — at Lloydminister and Minnedosa — can produce around 150 million litres of ethanol and around 130,000 tonnes of dried distillers grain with solubles (DDGS) each year, giving Husky total capacity to make around 300 million litres of ethanol to blend into gasoline and 260,000 tonnes of DDGS to sell into the animal feed market.

The Lloydminster plant, which was built in 2006, mainly uses wheat as a feedstock, while the Minnedosa plant mainly uses corn from southern Manitoba. The plant at Minnedosa was built in 2008, replacing an older ethanol facility operated by Husky since 1981.

The deal is still subject to regulatory and shareholder approvals, however two companies that together own a controlling stake in Husky — both owned by Hong Kong billionaire Li Ka-shing — have indicated they will support it. It’s expected to close in the first quarter of 2021.

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