Prospects for companies in the green chemicals space look bright as government regulations and changing consumer preferences drive increasing demand for petrochemical products produced from environmentally sustainable materials.
That’s the view of Jean-Francois Huc, President and Chief Executive Officer of BioAmber Inc.
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), a Montreal-headquartered company that is working to produce commercial quantities of succinic acid and 1,4 butanediol for use in the global petrochemicals industry.
BioAmber is among a handful of companies that aim to address the challenges facing the global petrochemicals industry, including pollution and the rising cost of the raw materials.
It hopes to achieve that goal by producing succinic acid and its derivative 1,4 butanediol (BDO) using corn starch feedstock instead of petroleum.
Succinic acid is a chemical building block that is used to manufacture a diverse range of products, ranging from plastics and spandex to food additives and personal care products.
BDO is a large volume commodity chemical that is used to manufacture plastics, fibers and polyurethanes.
Since January 2010, BioAmber has been producing, bio-based succinic acid in a large demonstration plant in France.
Equipped with that experience, BioAmber and Japanese partner Mistui are spending $125 million to build a much larger manufacturing facility in Sarnia, Ontario. Once complete, it will rank as the largest of its kind in the world, with an initial capacity of 30,000 tonnes per year.
The plant is scheduled to be in commercial production early next year.
Having already lined up take or pay agreements with PTTMCC Biochem (a joint venture between Mitsubishi Chemical Corp. of Japan and Thailand energy giant PTT Public Company Ltd.), and U.S. petrochemicals company Vinmar International Ltd., BioAmber is already scouting around for a suitable location for a second manufacturing plant.
It is likely to be built in either Canada or the U.S., Huc said.
BioAmber has said production in Sarnia will be carbon neutral and will benefit from the use of waste steam, Ontario’s low intensity power grid and engineering improvements based on its operating experience in France.
Such features, the company has said, will allow the plant to save on 200,000 tonnes of greenhouse gases per year, an amount that is the equivalent of taking 45,000 cars off the road, it said.
During an interview with Stockhouse, Huc said that in his view green chemistry is roughly where the Internet was in the late 1990s.
“Fifteen years from now, we are not going to believe how much of our agriculture is used in the production of petrochemicals,’’ he said.
“People want greener more socially responsible products.”
A biochemist from Sudbury, Ont., Huc says BioAmber’s main competitors are located in Europe.
They include Succinity GmbH, a joint venture between Corbion Purac and German chemical company BASF SE, which has launched a test plant in Spain with an annual capacity of 10,000 tonnes.
Dutch life sciences firm Royal DSM N.V. and Roquette Freres, the French starch derivatives company have embarked on a joint venture to produce sustainable succinic acid in Italy.
But Huc believes that BioAmber is four years ahead of its competitors.
Meanwhile, he said BioAmber has priced an equity offering that is expected to raise $33.6 million at $12 a share.
Huc said net proceeds -- which are expected to be $31 million -- will be used to strengthen the company’s balance sheet and reduce a shortfall that emerged when BioAmber raised only $80 million from its IPO last year, instead of the planned $125 million.
“Markets are in good shape and the company has met all of its milestones,’’ he said.
BioAmber shares closed at $11.87 Thursday, leaving a market cap of $254 million, based on 21.4 million shares outstanding. The 52-week range is $15.29 and $3.96.
Other publicly-traded companies in the green chemistry space include:
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), a San Francisco-based biotechnology company, which is deploying technology to transform a range of plant-based sugars into high-value oils.
Solazyme shares were off 3% to $9.71 Thursday, leaving a market cap of $737.7 million, based on 76 million shares outstanding. The 52-week range is $15 and $8.
Colorado-based Gevo Inc.
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), Colorado is converting existing ethanol plants into biorefineries to make renewable building block products for the chemical and fuel industries.
Gevo shares eased 2.7% to 75 cents Thursday, leaving a market cap of $51.9 million, based on 69.1 million shares outstanding. The 52-week range is $2.18 and 73 cents.
In Canada, NanoStruck Technologies Inc.
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) has a suite of technologies that can remove molecular sized particles, including gold and base metals from mine tailings, using patented absorptive organic polymers. Its biomaterials, which are derived from crustacean shells or plant fibers, can also be used to clean out acids, oils and toxins in water.
The stock traded Friday at 7 cents, leaving a market cap of $6.4 million, based on 92 million shares outstanding. The 52-week range is 29 cents and 3.5 cents.
FULL DISCLOSURE: NanoStruck Technologies is a Stockhouse Publishing client.