Speaking of the recent BIO Pacific Rim Industrial Biotechnology summit, my ex-boss kindly forward to me a recent report from investment firm Jefferies & Company on their key takeaways about several discussions coming from the conference.

I need to knock on several investment firms’ doors again to be able to get these types of reports and share it to the blog readers ;).

According to Jefferies’ equity analyst Laurence Alexander, 2013 will be a key “validation year” for most biobased chemicals and next generation biofuels technologies.

“The nascent renewables industry is seeing differentiation on the use of sugars, oils, and, increasingly, syngas as potential feedstocks. Given the range of biotech and thermocatalytic conversion processes, the variations in related co-products, and the differences in the level of new infrastructure investment that will be required to support feedstock collection and product commercialization, the first round of projects will exploit “pockets of opportunity” where local arbitrages and incentives reinforce each other.”

“Companies such as BASF, DSM, DuPont and Novozymes will likely use the next 5 years to evaluate which technologies and feedstocks are most likely to cement market-leading economics.”

Alexander pointed out that DuPont’s bio-isoprene project in collaboration with Goodyear is on track and has reportedly achieved all key production metrics except yields (currently around 80% of target), with corn sugar as the initial feedstock and work on other sugar feedstocks ongoing.

DuPont is protecting this effort with more than 200 patent applications (~35 families), and expects to move on to a pilot plant validation.

The report also noted capacity activities in the bio-succinic acid area such as Reverdia’s (DSM-Roquette JV) 10,000 tonne/year facility in Cassano Spinola, Italy, which is expected to be operational by the end of 2012; Myriant’s 13,600 tonnes/year facility in Louisiana targeted for the first quarter of 2013 (which is said to be oversold under 5-year contracts); and Succinity’s (BASF-Purac JV) 10,000 tonnes/year facility in Spain expected to be online by the fourth quarter of 2013.

Other bio-based chemicals activities that could change industry scale in the next 4-6 quarters, according to Alexander, include:

• Biobased adipic acid could be validated at 30%-50% lower cash costs than current production by the end of 2013, said Alexander.

• Biobased acrylic acid based on sugar or syngas feedstocks should be validated by a 275 tpy plant in 2013 and a 45,000 tpy plant in 2015 particularly relevant to Dow Chemical and Novozymes

• Direct production of biobased BDO (1,4 butanediol) should be validated by an 18,000 tpy facility in 2013 (Blogger’s note: I’m assuming this is the Genomatica-Novamont project)

• Braskem’s 30,000 tonnes/year ethanol-to-propylene plant is slated for 4Q13

• US biobutanol production should be validated in 2013 as well (DuPont’s Butamax JV now has producers operating around 900m gal/year of ethanol evaluating its technology as part of the ‘early adopters’ group)

• Solazyme-Roquette JV should expand capacity to 5,000 tonnes/year by mid-2013, and we expect the 100,000 tonnes/year Bunge JV to validate its sugar-to-chemicals platform by early 2014

Finally, Alexander said they still expect BioProcess Algae (a JV between ethanol producer Green Plains, Clarcor Inc. and BioProcessH2O.) to establish process economics in 2013, which could transform the investment thesis on Green Plains.

Jefferies also expects that around 250m gal/year of US cellulosic ethanol capacity are expected to be onstream by 2014.

By the way, ICIS just released the winners of this year’s Innovation Awards and according to Roland Berger Strategy Consultants, innovation (and capacity activities) in the industrial biotechnology arena is indeed speeding up but it will still take time for these technologies to emerge and mature…like bioplastics and oleochemicals (lipids-based chemicals).

Neil Checker of Roland Berger Strategy Consultants noted that these new technologies still need to follow these “Biovalues”:

• No competition for scarce resources such as food or agricultural land
• Cost-competitive with petrochemical based products at $100/bbl, and comparable capital intensity
• Carbon dioxide netural

Before I forget, I just wanted to congratulate this year’s ICIS Innovation awardees: Clariant, Dow Chemical, Novomer, and Rhodia.

LET’S CONNECT!