Enerkem’s Edmonton plant delayed by lawsuits filed by suppliers and contractors

Ten plaintiffs, made up of six suppliers and four subcontractors that worked for a bankrupt seventh supplier called Métal Énergie, are suing Montreal’s Enerkem Inc., eight of which are also suing the city of Edmonton, for a total of nearly $7.4 million.

Enerkem’s main plant in Edmonton, the $80 million price tag of which was partly funded by the province of Alberta, was meant to launch in 2012, transforming no-value garbage from landfill and other types of chemicals and materials into fuel such as ethanol.

This is in addition to a $40 million waste-preparation facility built specifically to supply feedstock for the Enerkem plant, paid for by the city.

Papillon et Fils, of Trois Rivières, Quebec, is suing both Enerkem and the City of Edmonton for $1,062,000, after designing and delivering several modules for the Edmonton plant, some of which are awaiting payment.

“Once the drawings were done and submitted for manufacture, (Enerkem) would re-engineer to see where they could cut costs, and would change the drawings for things that had begun to be built or were already done,” Papillon et Fils president Stéphane Champoux told the CBC. “As soon as the modules had all been delivered, the payments stopped.”

Champoux estimates that 20% of Enerkem’s bill has yet to be paid.

“It is still a large-scale plant, so we’re making sure that it functions properly, step by step,” Enerkem spokeswoman Annie Paré told the CBC, adding that the growing pains accompanying the plant’s successful operation were “part of the nature of launching cutting-edge technology, a completely new innovation, on the world market.”

“Since the very beginning of this plant’s construction, we have worked with 256 suppliers. Of these, there are seven with whom we are in dispute, so there are 249 suppliers with whom we have a healthy and good business relationship,” said Paré.

Last September, Enerkem raised $152.6 million Cdn. to initiate production of biomethanol from non-recyclable garbage at the Enerkem Alberta Biofuels facility in Edmonton.

Speaking with Bloomberg TV in January, CEO Vincent Chornet hinted at a potential future IPO for the company, saying, that the company was “Looking at market conditions before any IPO”, adding, “We’ve been quite successful running our business as a private enterprise. We’ve raised close to $400 million in private equity and finance. So, so far, we’ve not seen any need to look at the public markets. We’ve got a number of options to fund the next Enerkem facilities. Obviously, we’re always interested in the public markets, and we’ll be tracking how they evolve this year, and how the IPO market more specifically evolves.”

A spokeswoman for the city of Edmonton said that Enerkem has received $18 million of a total $23.35 million in grants transferred from the province, adding, “The city is confident that it has fulfilled all the conditions of its grant agreement with the province for this project.”

Métal Énergie sued Enerkem for more than $1 million before declaring bankruptcy for unpaid work and supplies.

Four subcontractors who had been working under Métal Énergie successfully transferred its claim and are now suing both Enerkem and the city of Edmonton for more than $800,000, alleging that Enerkem never fully paid Métal Énergie.

Enerkem is challenging that suit on the grounds that Métal Énergie couldn’t document the work it was billing for, and that Enerkem has no direct contracts with Métal Énergie’s subcontractors.

Additionally, Enerkem intends to countersue several of the suppliers, alleging that they are responsible for the project’s delays through their nonconformity and negligence.

While the issues surrounding the plant roll through the court process, the plant is now slated to be open for production in 2017, five years behind schedule, at an upwardly revised cost of $100 million.