Bio-based materials: Sarnia plant feeds demand

John Baker

05-Dec-2014

With annual sales of over $1bn targeted within eight years, bio-based chemicals producer BioAmber is embarking on an aggressive capacity build-out over the next few years. Construction of its first commercial-scale plant, in Sarnia, Canada, to produce 30,000 tonnes/year of bio-succinic acid, is well under way, with mechanical completion scheduled for early 2015.

Sarnia

The Sarnia plant is due to be completed in 2015

BioAmber will follow this with a second facility planned to start up in 2017 at an as-yet undecided North American location. Originally planned to produce 100,000 tonnes/year of bio-based 1,4-butanediol (BDO) from succinic acid feedstock, the plant has just been extended to include a further 70,000 tonnes/year of bio-succinic acid.

A third succinic acid plant, of 200,000 tonnes/year, is scheduled in for late 2020 start-up, based on the projected development of the succinic acid market. A fourth is already in the pipeline for 2022 completion.

CONFIDENCE AND MARKET GROWTH

The rapid scale-up is based on confidence in the growing market for succinic acid and a cost-competitive position with which to penetrate the established $4bn/year BDO market, which is also showing good growth, says BioAmber executive vice president Mike Hartmann.

“We are seeing lots of new applications emerging for our succinic acid as chemical companies and end users begin to realise there will be secure bio-succinic acid availability in the future, at lower cost and with good functionality. We can formulate the product into places where people are using adipic acid at present and can lower carbon footprint.”

On BDO, Hartmann points out that Bio-Amber’s new capacity will represent about 5-6% of the global BDO market. “We can step into this market with a renewable and cost-competitive offering with the same performance.”

BioAmber, whose core expertise is in technology development, has approached the sale of its products through a series of take-or-pay contracts, notably with US-based Vinmar and PTTMCC Biochem (a joint venture between Mitsubishi Chemical and PTT of Thailand).

As a result, the sale of half of Sarnia’s 30,000 tonne/year production is guaranteed during the first three years of operation, and 33% for the following 12 years. The other half of output is more than sold out, says Hartmann, through 20 supply and distribution deals and seven memoranda of understanding.

Vinmar has additionally undertaken to sell all the BDO from the second plant, and a proportion of succinic acid from this unit and the third, amounting to 210,000 tonne/year of offtake in total for a 15-year period. Vinmar has committed to invest in BioAmber’s second and third plants, at a minimum 10% equity level.

“We expect demand for succinic acid and its derivatives to continue growing going forward,” explains Hartmann. “We signed up another eight new customers last quarter in China, North America and Europe and see uptake really accelerating. Having BASF and DSM ­active in this area also helps.”

In China, for instance, Xuchuan Chemical has just signed a five-year supply agreement to use bio-succinic acid initially to produce cast polyurethane (CPU) elastomers. The company, which specialises in polyester polyols, has four production facilities in China with a total capacity of 150,000 tonnes/year. BioAmber estimates the market opportunity for bio-succinic acid at Xuchuan is in the range of several thousand tonnes/year.

SUBSTITUTE FOR ADIPIC ACID

By replacing adipic acid with bio-succinic acid, says BioAmber, Xuchuan can produce CPUs that offer better properties, including better abrasion/scratch resistance, and improved solvent resistance. Xuchuan is expected to extend its use of succinic acid to shoe soles, coatings and synthetic leathers over coming years.

With sale of products largely tied up, all attention now is on bringing the Sarnia plant safely onstream. “It’s largely an execution issue,” says Hartmann. “On the technology side, things are going well and we are confident of the scale up of the process.” BioAmber has been operating the process in France under a tolling agreement for five years and the scale up factor is only a factor of three.

“All these learnings are going into the Sarnia plant, which will be complete in early 2015 and then take three-to-five months to complete the commissioning process.”

Looking past the Sarnia plant start-up, Hartmann says the strategy is to target the large and established BDO market, to develop next-generation succinic acid derivatives and to reduce production costs, via continuous improvement.

Longer term, the company is looking to expand its product portfolio and add additional building block chemicals. First on the list are bio-based precursors for polyamides, such as adipic acid. “We have the ability to use the same organism to get to adipic acid”, says Hartmann, “but it is still at the developmental stage. But we think we can get there with a cost-competitive product.”

He explains the market for adipic acid is huge and it would be a huge addition to the company and for its shareholders, “but we are not ready yet to build a plant.” Cash flows from the first three plants for succinic acid and BDO will be available to make the science work, he adds.

In the meantime, BioAmber raised $35.8m in a share issue this July, following on from its IPO in 18 months ago in 2013, which raised $80m. The money, it says, will be used to finance working capital and for other general corporate expenses. The new shares were sold at $12, up from the $10 at the IPO.

This is good news, says Hartmann, and is important for the whole bio-based chemicals sector, which has suffered lately from less than positive news, making it harder to attract interest and raise finance. “By hitting our milestones and minimising risks through take-or-pay deals, we succeeded in getting our IPO away and raising further money.”

In future, he adds, with capacity online it will be easier to access debt funding, which would reduce the need to use equity to finance future expansion.

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