Market outlook: Putting steel in the ground

07 June 2013 10:02  [Source: ICB]

BioAmber's recent IPO will fund scale-up of its succinic acid and BDO bio-based production technologies

BioAmber's listing on the New York Stock Exchange (NYSE) and the NYSE Euronext in Paris, France - after last month's successful initial public offering (IPO) of 8m shares (and warrants for the sale of an additional 4m shares) - is a significant vote of confidence in the company and a sign it is meeting its milestones, says CEO Jean-Francois Huc. The US-based start-up, which uses proprietary industrial biotechnology and chemical catalysis to convert renewable feedstocks into chemical intermediates, will use most of the $80m (€62m) raised to fund investment in a commercial-scale plant for production of bio-succinic acid.

 BioAmber's plant in Pomacle, France

But some of the money will be used for scaling up BioAmber's process for converting succinic acid into 1,4-butanediol (BDO) and gammabutyrolactone (GBL), and for further development of its C6 technology platform, still in early phase development. It will soon begin toll manufacture of BDO in the US, says Huc.

Unlike other start-ups, BioAmber "has an aggressive plan to build and operate plants", says Huc, so it can "capture the value". He argues that the usual model of licensing technology once proven limits revenue flow.

FLAGSHIP PRODUCT
The company's flagship development is its bio-succinic acid, produced by fermentation of sugars. Over five years it has scaled-up production from 5,000 litres to 350,000 litres, and now has three years' experience of operating a demonstration plant at this scale in Pomacle, France.

It is now pressing ahead with construction in Sarnia, Canada, of a 30,000 tonne/year commercial facility in partnership with Mitsui & Co, which has taken a minority equity stake in the joint venture formed for the investment. The facility is scheduled to be up and running by the second half of 2014. Interest and demand for its bio-succinic acid have been growing strongly, says Huc, so the capacity of the Sarnia plant has been increased from the originally planned 17,000 tonnes/year. In future, BioAmber and Mitsui have plans to build and operate two further facilities, one in Thailand and another in either the US or Brazil. Mitsui will also help market the product in Asia.

"We have an attractive value proposition, over three years of large scale manufacturing experience and proven economics, with strong margins, which together have enabled us to tap into public markets to raise capital," says Huc.

He believes the IPO represents a number of firsts. It is the first by a pure-play renewable chemicals company, rather than a biofuels/chemicals hybrid; the first to list on the NYSE, not the NASDAQ; and the first to have a dual listing in both the US and EU. On top of the $80m raised initially, if all the warrants are exercised, a further $44m will be forthcoming, he says. The IPO leaves BioAmber with a public ownership of around 40%.

DEVELOPMENT PARTNERSHIPS
Interest in the bio-succinic acid is coming both from existing uses for chemical succinic acid, a market Huc estimates at around 50,000 tonnes/year, but more importantly from emerging new applications where derivatives of bio-succinic acid are a potential replacement for traditional products, offering improved performance or cost.

BioAmber is engaged with many partners in developing the market for such derivatives as part of its strategy to take the product to market. There is potential, Huc explains, in personal care markets, food and flavours, polyurethanes (PU), plasticizers, coatings and bio-based polymers, such as polybutylene succinate (PBS).

It is working with Mitsubishi Chemical and automotive component specialist Faurecia to develop PBS-based interior trim applications in the automotive industry, and is working with LANXESS to commercialise non-phthalate plasticisers based on aliphatic and aromatic esters of bio-succinic acid. It is also working with SolVin to validate the use of succinate-based plasticisers in polyvinyl chloride.

Huc is keen to stress that BioAmber is not just a fermentation technology specialist. Its BDO/GBL development, now progressing to demonstration scale, uses a classic catalytic process to convert the succinic acid feedstock. The hydrogenation catalyst technology was licensed from DuPont in 2010, and BioAmber is now working with Evonik to improve the catalyst system and develop the next generation of catalysts.

Pilot quantities of BDO have been produced in Germany so far, and in the second half of next year production at a 3,000-4,000 tonne/year scale will be achieved on the US Gulf Coast. Full commercial production is expected in 2016-2017.


By: John Baker
+44 20 8652 3214



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