VeraSun to raise annual ethanol capacity

By Mark Weinraub

CHICAGO (Reuters) - VeraSun Energy Corp. (VSE.N: Quote, Profile, Research, Stock Buzz) plans to boost its annual ethanol production capacity to about 700 million gallons by the end of 2008, Chairman and Chief Executive Don Endres said on Tuesday.

Endres, while speaking to reporters at the Reuters Global Biofuel Summit, declined to name the site of a new proposed plant, which will produce an additional 110 million gallons of ethanol a year.

"We do think it is important that we diversify as weather patterns change," Endres said. We just think it is to our advantage to be spread out to have flexibility in the markets we serve."

Spreading the company's plants across the U.S. corn belt would help keep down VeraSun's cost of acquiring corn and make it easier to transport ethanol to customers.

Shares of VeraSun, which is the second-largest ethanol producer in the United States, fell more than 6 percent in New York Stock Exchange trading on Tuesday after UBS cut its price target on the company's stock to $21 from $28.

Continued rapid expansion was key to improving the company's fortunes on Wall Street, Endres said.

"I think what we need is for investors over time to really get comfortable with VeraSun, and get comfortable with our industry," Endres said. "We are convinced as we more than double the size of our business by the end of the first quarter 2008 that investors our going to respond positively."

VeraSun, which produces 230 million gallons of ethanol a year, had previously announced plans to boost its annual capacity to 560 gallons a year.  Continued...