this is pretty big news
http://www.redherring.com/article.aspx?a=17358SunOpta Goes to China
Food company says its plant will be the country’s first cellulosic ethanol plant.
June 22, 2006
SunOpta said Thursday that it is selling what will be the first cellulosic ethanol plant in China.
Murray Burke, head of the organic and natural food company’s BioProcess Group, made the announcement at the International Fuel Ethanol Workshop & Expo in Milwaukee, Wisconsin.
SunOpta’s bioprocess group made up only 0.7 percent of the company’s $133.3-million first-quarter revenue this year, with food making up 89.5 percent and minerals making up the rest.
But the news could help position the company as a technology leader in the world’s fastest-growing large economy.
Donald Hearl, project manager for a fluid management program at Pall Fuels and Chemicals, said he thought the announcement was “exciting.” “I guess they found a way to do it,” he said.
“Cellulosic ethanol” is ethanol made from grasses or agricultural waste—plant parts that are not used for food—instead of crops like corn or sugarcane.
‘A lot of places can’t afford to stop eating in order to make fuel.’
-Andrew Richard,
So far, details on this particular cellulosic ethanol plant are scarce. SunOpta, a publicly traded company, didn’t disclose the buyer, the proposed location, the price of the plant, or when it would be completed.
Andrew Richard, director of technology and development at SunOpta, said it would be a pilot plant, but didn’t give details about the planned size. “An official announcement will be coming,” he said.
He did say that the project would modify existing starch factories, instead of building new plants from scratch.
SunOpta hasn’t decided how aggressively to pursue the Chinese market, but does see great potential there, he said.
“Their energy issues are as pressing or more pressing than the United States’,” he said. “They will have higher demand than the United States, and they are not sitting north or south of the tar sands of Canada. China could possibly be a big market. But it’s more difficult to implement technology in China than in other places. It’s a tremendous opportunity, and a tremendous challenge, for the industry.”
For instance, long-term relationship building is needed to enter the Chinese market effectively, he said.
Tackling ‘the Holy Grail’
In between sessions at the conference, Mr. Richard said SunOpta is also pursuing what one of its investors, Robert Pontius, calls “the Holy Grail” for ethanol—the ability to convert C5, or hemicellulose, into ethanol.
Ethanol today is made from six-carbon strands of sugars, C6, leaving five-carbon strands as byproducts. The ability to convert five-carbon strands would expand production and open up a much larger market.
So far, it has proven too expensive to be viable. But Mr. Richard said SunOpta is doing pilot development on a project to convert oat fiber waste—which the company currently pays to get rid of—into ethanol.
“We will net positive for that by getting rid of that cost, but the ethanol portion will be profitable in its own way, too,” he said. “We’re hoping to become an owner and operator of C5 facilities and avoid a byproduct charge.”
He wouldn’t explain the technology, but said a technology announcement would be coming soon.
The Basics
A number of companies are working on cellulosic ethanol, but none have gotten past the demonstration stage.
Iogen, for example, has a demonstration plant with the capacity to produce just under 1 million gallons of ethanol yearly (see Iogen’s Ethanol Ploy).
Abengoa Bioenergy, a SunOpta partner, is building the first “commercial-scale demonstration” biomass-to-ethanol plant in Babilafuente (Salamanca), Spain. It is expected to be completed this year with a capacity of about 1.3 million gallons per year.
Technically, “commercial scale” is 1 million gallons per year or more, but many in the industry have different definitions. “Ten million gallons is really the commercially viable size accepted by the industry,” Mr. Hearl said.
Iogen, which plans to begin building a commercial plant in 2007, defines it as producing “at least 20 million gallons per year,” Jeff Passmore, executive vice president, said in May (see Waste-Based Ethanol: $30M).
Other competitors include GreenFuel Technologies and Farmacule BioIndustries, among many others.
SunOpta’s Technology
SunOpta has a steam explosion technology that it claims can lower the capital and operational costs more than its competitors.
The company has experience, as it built the first cellulosic ethanol plant 20 years ago, in France, and SunOpta can also provide process guarantees, Mr. Richard said. Those are big advantages in a capital-intensive, risk-averse industry (see VCs Are Wary of Cleantech).
But even Mr. Richard admits that there are large hurdles for cellulosic ethanol, particularly the fact that it still costs more than ethanol from corn and sugarcane.
“No one now would build a cellulosic plant if they could build a starch plant, but in three to four years, we’re going to run out of starch,” he said. “A lot of places can’t afford to stop eating in order to make fuel.”
Even if fossil fuel prices go down, Mr. Richard says, there will still be a place for ethanol in the future. “The biggest advantage of cellulosic ethanol is energy security,” he said. “That’s an issue that hasn’t existed before. When prices were high before, energy security was not an issue like it is now.”
Contact the writer:
JKho@RedHerring.com
....thats why stock is moving big today
- this is becoming a $20-$30 stock real quick
