Cargill Buying Dow's Stake in Partnership

Cargill has agreed to buy out Dow Chemical's 50% interest in their Cargill Dow polylactic acid (PLA) joint venture. The companies have not disclosed the terms of the deal.

The Minnetonka, Minn.-based partnership, which started in 1997, makes PLA and markets PLA-based fibers and packaging plastics. PLA is made by polymerizing lactic acid that has been fermented from corn-derived glucose.

The joint venture, which employs 230 people, has been expensive to get off the ground. In 2002, the company started up a 300 million-lb-per-year PLA plant at Cargill's corn-fed biorefinery in Blair, Neb., which, along with other business expenses, cost $300 million. Last year, Dow posted a $148 million charge for a loan guarantee for Cargill Dow.

In a conference call with analysts last week, Andrew N. Liveris, Dow's president and CEO, said, "Customers are not willing to pay a premium for environmentally friendly polymers."

From a raw material standpoint, the business is a good fit for Cargill, which invented the technology and is developing a number of different businesses based on biomass feedstocks. One is 3-hydroxypropionic acid, a glucose-based raw material for products such as acrylamide, acrylic acid, and 1,3-propanediol (C&EN, Dec. 15, 2003, page 17).

Cargill says it will run the business as a wholly owned subsidiary under a new name. Kathleen M. Bader, president and CEO of Cargill Dow, will stay on to head the new company.