21 July 2011 13:41 [Source: ICIS news]
LONDON (ICIS)--US-headquartered bioscience company Metabolix expects significant interest and investment in bio-based materials over the coming years as players continue to struggle with volatile oil prices, the company's CEO and president Richard Eno told ICIS on Thursday.
Although volumes are still comparatively small, chemical companies are increasingly eyeing bio-based materials to reduce their exposure to high raw material costs. The sector is currently in a transition period but uptake is improving, said Eno.
“It’s still a very early stage and biomaterials have not been in the market all that long. Any time you introduce a new material it takes time for people to understand its strengths, weaknesses and potential applications,” he said. “It’s hard to predict whether that turning point for rapid acceleration is six months, a year or 18 months from now, but investment will grow and there will be some very clear winners.”
Eno added: “For example, if oil does go up to $150/bbl and you’re competing against someone who has made a very significant investment in products based on cellulosic sugars at 12 cents/lb, you’re going to be at an incredible disadvantage. There’s a need to at least observe the bioindustry and participate where it strategically makes sense. It’s not just the small companies that are investing, the big companies are looking into this too.”
With these bio-based materials often costing a premium, they are largely being targeted at applications that can benefit from their unique properties rather than substitution of traditional petroleum-based materials.
“This is an embryonic industry but most people are quite clear that in the long run they don’t expect to pay a premium,” said Eno. “As we look at our strategy we’re assuming that all our biochemicals technologies will have to compete head to head with petroleum-based chemicals – but if we can get a premium in the near term, that just helps us justify our investment and recoup it sooner than we would otherwise.”
Metabolix vice-president of strategy and commercial development Johan van Walsem pointed out that for its entry level products to generate attractive returns, oil prices needed to be above $60–70/bbl, and $80–90/bbl for the larger-volume materials. The company said it is working aggressively to drive competitiveness at even lower oil prices.
The outlook is extremely positive, said Eno, with the sector managing to sustain research and development investment throughout the global financial downturn.
“To make this industry really take off, all the various steps in the value chain really have to move in tandem with one another – from raw materials and technologies to consumers getting comfortable with the products. Over the last three years a lot of those pieces have started to align, and as a result it’s now moving very quickly. That bodes very well for bioplastics and biochemicals because the industry can do things now that it couldn’t have conceived of doing a few years ago.”
The Massachusetts-based company produces various materials based on its polyhydroxyalkanoate (PHA) technology. It markets its Mirel bioplastic through Telles, its 50-50 joint venture with US agribusiness Archer Daniels Midland.
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