The Dow Chemical-Mitsui biopolymers joint venture has created a lot of buzz in the chemical, renewables and business communities given that:
a) this is Dow’s biggest investment in Brazil (even though the company did not disclose any financial info),
b) this is Dow’s biggest and largest investment in renewables,
c) this follows the previous Dow-Crystalsev biopolymers collaboration that fell through, and
d) Braskem’s green polyethylene investments are getting successful (according to Braskem).
According to Dow’s press release, the JV (pending regulatory approval) will operate a sugarcane plantation, build a sugarcane-to-ethanol facility and then all of these will be integrated into a biopolymers facility producing sugarcane-based polyethylene plastics for use in high-performance flexible packaging, hygiene and medical markets.
Mitsui will acquire a 50% stake in Dow’s 100% subsidiary Santa Vitória Açúcar e Álcool Ltda (“SVAA”) with initial investment of $200m. Dow already grows sugarcane on around 42,000 acres in Brazil. The JV could also expand to other sugarcane-derived chemicals aside from plastics, according to Mitsui’s press release.
The blog has been able to get information from Dow spokesman Greg Baldwin who said that the biopolymer products will be mostly linear low density polyethylene (LLDPE) and high density polyethylene (HDPE).
The first phase of the project includes the construction of a new sugarcane-to-ethanol production facility with a capacity of 63m gal/year (240m liters/year) in Santa Vitória, Minas Gerais. Construction is expected to commence in the third quarter of 2011.
Baldwin said engineering and design assessments for the ethanol to ethylene and polyethylene production facilities are expected to commence in the second half of 2011, and construction is expected to begin in 2012 although he did not disclose when the biopolymer facility will start production. Several news reports indicate around 2013.
Dow Chemical also did not disclose how much capacity the biopolymer facility will have but said that it will be a “world-scale plant.” According to several news reports, capacity could be around 350,000 tonnes/year – the same as the original plans from the Dow-Crystalsev announcement in 2007.
The blog, of course asked Dow about this, and the company refused to comment.
When asked how the JV expects to compete against Braskem, which is already producing sugarcane-based PE at its 200,000 tonne/year plant in Rio Grande do Sul since late last year, Dow’s Baldwin said there is plenty of market for biopolymers “where consumers are more and more turning to sustainable solutions.”
Not to mention that Dow’s planned biopolymers facility will be back integrated into sugarcane ethanol production unlike Brazil’s current green PE facility.
Braskem, however, is also planning to build a world-scale green PE plant that will be fully integrated into sugarcane ethanol facility, according to an ICIS news article in April (subscription only).
Braskem’s second green PE facility could be completed by late 2014 to 2015 with a capacity in the range of 900m lbs/year (408,000 tonnes/year).The facility will likely be in the middle of a large sugarcane field, according to Braskem.
[Photo from Dow Chemical]