Company: REX
Filing Date: 2025-06-04
Form Type: 10-Q
Source: 0000930413-25-001941
Chunk: 73

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-06-04
Form: 10-Q
Item: Part I, Item 8
Chunk 73
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 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 also intend to concurrently expand 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.

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, available for calendar years 2025 – 2027, which established a credit of approximately
$0.02 per ethanol gallon per CI point reduction below a 50 CI score threshold to incentivize further increases in plant efficiencies
within the industry. The U.S. Department of the Treasury has not yet issued final rules on qualification for 45Z tax credits.

26

We currently budget capital expenditures
for both projects 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 April 30, 2025, we had spent $56.3 million since inception and were contractually
committed to spend an additional $0.9 million 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. However, 45Z credits are only available for calendar years 2025
– 2027 and the regulations have not yet been finalized by the U.S. Department of the Treasury. Companies may elect either
the 45Q credit or the 45Z credit in periods in which both tax credits are available. As of April 30, 2025, we had spent $66.4
million since inception and were contractually committed to spend an additional $8.3 million toward plant capacity expansion and
ongoing efforts to reduce our CI scoring.

In May 2023, NuGen, our majority owned
ethanol plant in Marion, South Dakota, signed