Company: REX
Filing Date: 2025-09-02
Form Type: 10-Q
Source: 0000930413-25-002856
Chunk: 32

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-09-02
Form: 10-Q
Item: Part I, Item 1
Chunk 32
---
 with the various government agencies involved to obtain
all required permits and approvals, with no assurance of the ultimate success or timing of the project. Also see the discussion under
“Trends and Uncertainties” of certain recently proposed legislation that, if enacted, could impact our carbon sequestration
project.

We are also expanding the One Earth ethanol plant.
We received a construction permit from the EPA to increase production from 150 million gallons of ethanol per year to 175 million gallons
of ethanol per year. Once we achieve that level of production, we intend to apply for another permit to increase production to 200 million
gallons per year.

28

We continue
to work to identify ways to reduce our CI score at the One Earth plant with the intention of maximizing tax credits
available under the IRA. The IRA created a new Clean Fuel Production Credit under Section 45Z, originally available for
calendar years 2025 – 2027 which, based on proposed rulemaking by the United States Department of Treasury, will
establish a credit that utilizes a sliding scale where credits can be earned in ten-cent increments between $0.10 and $1.00
per gallon of non-SAF fuels based on an ethanol plant’s GHG reduction below a 50 CI score threshold, with the first ten
cents earned upon achieving a CI score below 47.5, to incentivize further increases in plant efficiencies within the
industry. In July 2025, Congress passed the budget reconciliation bill known as the One Big Beautiful Bill Act, which was
subsequently signed into law by the President. The law extended the time period which 45Z credits can be claimed by two
years, through December 31, 2029. The U.S. Department of the Treasury has not yet issued final rules on qualification for 45Z
tax credits.

We currently budget capital expenditures for both
the expansion and sequestration projects at One Earth to be approximately $220 million to $230 million, subject to further refinement
as we move forward. We plan to pay for all expenditures from available cash. As of July 31, 2025, we had spent $57.4 million since inception
toward the carbon sequestration project. If the carbon sequestration project is successful, we believe we will qualify for tax credits
under section 45Q, based on tons of carbon sequestered, and section 45Z, based on gallons of ethanol produced, as outlined in the IRA
and