VeraSun Energy Corp. has shut down one of its ethanol plants in Indiana, prompting an equity analyst to reduce the company's share price target by nearly 56 percent.

Jeff Osborne at Thomas Weisel Partners issued a research note Monday night that reduced the price target from $4.50 per share to $2 per share and pointed to VeraSun's trouble as indicative of the difficulties faced by the ethanol industry.

"Reports of other players halting ethanol production abound and point to tough times in the markets where some producers undone by poor corn hedging strategies may be better off not producing at all than producing at a loss," Osborne wrote in his note.

Sioux Falls, S.D.-based VeraSun (NYSE: VSE) shut down its Linden ethanol plant last week, yet another bad sign for the troubled company, reported The Paper, a newspaper in Montgomery County, Ind., where the ethanol refinery is located.

The story, picked up by the Oil Price Information Service on Monday rattled investors, leading VeraSun's stock to close 72 cents, down roughly 37 percent.

The $100 million Linden plant launched operations in July 2007. VeraSun bought the plant along with two others from ASAlliances Biofuels for $725 million a month later. The Linden plant was capable of producing up to 110 million gallons of corn-based ethanol per year. The plant is one of 17 listed on VeraSun's Website.

VeraSun spokesman Michael Lockrem would only confirm Tuesday that the company did shut down the plant and plans to have it "back to production shortly." The company reclaimed some of its losses by climbing about 26 percent to 91 cents per share in recent trading.

VeraSun is one of several ethanol producers that have shuttered plants, at least temporarily. Abengoa Bioenergy said last week it was closing its plant in Portales, N.M. for now and was laying off some of its 40 employees. Glacial Lakes Energy also said last week it was temporarily shuttering its plant in Mina, S.D., citing a shortage of corn from areas close to the plant.

Even before the news of its shuttered Linden plant, VeraSun hadn't been faring well. The company last month canceled its plans to offer 20 million shares of its common stock and issued a terse press release saying it had hired Morgan Stanley to "evaluate strategic alternatives" that hinted at the company being for sale.

In June, VeraSun said it would delay starting up a 110-million-gallon-per-year plant in Hankinson, N.D., which is the third plant in the month that the company said would be delayed (see Biofuel to More Than Double by 2030). The company has $1.5 billion in debt and little in cash, Osborne said.

The slumping economy is just more bad news for ethanol producers who have already had to deal with high corn prices and low profit margins – along with the controversy about the impact of ethanol production on food prices – in recent years.

On Tuesday, corn ethanol studies sponsored by the Illinois Corn Marketing Board concluded that growing corn and producing ethanol has caused a minimal level of conversion of non-farmed land for corn planning and contributed less to global warming than the fossil fuel industry.

The first study, by Steffen Mueller at the University of Illinois at Chicago, examined results from a survey of 29 corn growers about their farming practices as well as satellite images that depicted land-use changes and nitrogen and carbon emissions data from the land's agricultural production.

Ross Korves, an economic policy analyst at ProExporter Network, projected in the second study how corn-yield increases from better framing practices could meet biofuel needs between 2016 and 2030, when experts in the biofuel industry expect corn-based ethanol to give away to biofuels made from nonfood sources, such as switchgrass, wood chips and algae.

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