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Solazyme partners with Sasol on erucic algal oils

The oleochemical industry is definitely getting more and more interesting as erucic acid (C22:1), traditionally sourced from high erucic rapeseed oils (HERO), can now be sourced from algal oils as is the case with Solazyme’s recent announcement.

I remember the old days when I used to cover this niche market for Chemical Market Reporter. The last time I had an update on HERO pricing was in 2006 when it was around 80 cents/lb, while in 2008, HE rapeseed contracts was around $9/bushel including freight incentives and buyer guarantees.

HERO contains around 48% erucic acid or more. Erucic acid is a key raw ingredient for the fatty amide erucamide, used mostly in plastic film application. Other end uses of erucic acid are found in pharmaceuticals, cosmetics and personal care, and as additives in industrial lubricants and biofuels.

Solazyme said it has finalized commercial terms with Sasol Olefins and Surfactants GmbH for the supply of erucic acid algal oils for use in downstream derivatives such as behenyl alcohol. Sasol produces and sells C22 derivatives such as behenyl alcohol for use in markets such as paper, water treatment, personal care, lubricants, oil and gas, paints, inks, coatings and adhesives.

The supply deal covers multiple years with binding minimums and increasing supply quantities of tailored algal oil. Pricing is expected to be competitive and indexed to Solazyme’s raw material costs. Initial commercial production of high erucic algal oils is expected at one or more Solazyme or Solazyme partner manufacturing facilities such as the 100 ktpy Solazyme Bunge Renewable Oils facility in Sao Paolo State, Brazil, and in Solazyme’s/ADM’s Clinton, Iowa, facility (initial capacity of 20 ktpy).

Solazyme and Sasol also signed a letter of intent to expand the relationship to a broad collaboration, including joint manufacturing and marketing of multiple tailored oils.

According to Solazyme, HERO consistently maintains an attractive average selling price due to specialized farming dynamics. Pricing for erucic acid is consistently over $2,500/ton and often approaches $4,000/ton depending on market factors and shipment quantities. The highest concentration of erucic acid available in substantial commercial volumes is said to be a bit over 50%.

Solazyme said the market for HERO is 150 ktpy, and is growing to 320 ktpy by 2023 based on their estimates. The company is also developing HERO for its current partner Mitsui. This is their second tailored oil deal with Mitsui after high myristic acid oils. Solazyme said its joint development deal with Mitsui is ahead of schedule.

A little bit of an update on Solazyme’s second quarter earnings call yesterday, Solazyme said it is on track with their capacity projects coming in online in the fourth quarter this year for the Moema, Brazil, plant. The project is said to be nearly 80% complete and on track with engineering timelines, construction plans and budget.

Meanwhile, Solazyme announced that it is ahead of schedule with the commissioning of the ADM Clinton facility, which was scheduled in early 2014. Solazyme said it is now moving forward with their start-up production activity within the next few months, where capacity is initially targeted at 20 ktpy. The Clinton facility is expected to ramp to its nameplate capacity within the next 12-18 months. Solazyme is also looking in expansion options to 100 ktpy for the Clinton plant.

“There are several reasons we’ve been able to accelerate our commissioning at Clinton. First, our partnership with ADM has gone well, both on the manufacturing and market development sides. In particular, ADM’s Clinton manufacturing team is very strong and is doing a great job in supporting the commercialization of Solazyme’s technology. Second, the permitting process has gone quicker than expected. Third, we’ve decided to leverage an existing partnership to augment our downstream processing capabilities.” – Solazyme

American Natural Processors (ANP), Solazyme’s partner since 2009, has been operating a downstream oil extraction and finishing facility in Galva, Iowa, for Solazyme’s oils. Solazyme said ANP will do the refining and finishing of the algal oils produced from biomass at the Clinton facility, which will significantly lower capital costs and reduced risk.

About Doris de Guzman

Will Green Chemistry save the world or is it hype? Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives aimed at preventing pollution; replacing ingredients; and using renewable feedstocks in Green Chemistry. She has been covering the oleochemicals market for 15 years and spread her beat to inorganics, biofuels and green chemistry.

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